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Introduction
Governments across the world carry out the functions of collecting public revenue, keeping the funds and ensuring that they are used in ways that will benefit the citizens. These are not the solitary governments functions and consequently, governments set up institutions tasked with ensuring that these functions are carried out effectively. These institutions, through the governments, employ specialists in matters of economic policy formulation, and they are generally responsible for ensuring that functions are carried out effectively. However, the top leadership of these institutions comes from governments.
The major roles of these institutions are replicated in many countries, but small differences may be seen especially due to differences in economic levels. This report compares the Ministry of Finance in the United Arab Emirates and the HM treasury in the United Kingdom.
History and background information
The Ministry of Finance in the United Arab Emirates and Her Majesty Treasury in the United Kingdom are institutions set up by the two governments to run financial matters. Although the two institutions have related functions, they have quite a different history and aspects of management and operations.
History and background information of the UKs HM Treasury
Her Majesty Treasury in the United Kingdom is the governments economic and finance ministry tasked with maintaining control over public spending, directing the economic policy and working to achieve strong and sustainable economic growth (HM Treasury 1).
Currently headquartered in the capital London, the HM Treasury has had a rich history dating back to 1066 and has served the monarchy since then, with some changes attributed to the historical development of the Kingdom. Its existence for a long period has made the HM Treasury be one of the United Kingdoms stable and important institutions.
The history and background information of the UAEs Ministry of Finance
The Ministry of Finance in the United Arab Emirates has the responsibility of implementing government economic and financial policies.
The Ministry of Finance currently headquartered in Abu Dhabi, one of the emirates of the UAE. The ministrys history is not long when compared with the HM Treasury, but due to globalization, the government has used precedence to come up with a strong institution, including the ministry.
Environment
The United Kingdoms HM Treasury and the Ministry of Finance in the United Arab Emirates operate in political, economic, technological, and social environments.
The legal-political environment in the United Kingdom
Although the United Kingdom is a monarch, an elected legislature runs the day-to-day activities of the government. The elected government makes policies that are implemented by the ministries, including the HM Treasury.
That is to say, HM Treasury is answerable to the elected government headed by the Prime Minister. Changes in regimes of the elected government may result in variations of financial policies and consequently have alterations in the ministry affairs.
Additionally, the laws, as outlined in the United Kingdoms constitution, which the parliament may amend, guide the functions of the HM Treasury.
The legal and political environment in the United Arabs Emirates
The United Arab Emirates is a constitutional federation with a cabinet where the Ministry of Finance falls. The minister who heads the Ministry of Finance is therefore answerable to the Prime Minister. The government implements its economic and fiscal policies through this ministry. Like the HM Treasury, the ministry is guided by the constitution.
The economic environment in the United Kingdom
The United Kingdom is one of the economies in the world to have had many dynamics where at one time in history it was the strongest economy in the world. However, due to some reasons, including participation in war and global economic developments, the UK economy has dwindled relative to other economies like the USA.
Therefore, the HM Treasury has been affected by different economic waves. The average percentage of inflation from 1989 to 2015 is 2.67, with the highest, 8.50 percent recorded in April 1991, and the lowest -0.10 percent recorded in April 2015 (Trading Economics 1).
The global economic crisis has negatively affected the rate of employment. For instance, the lowest level was noted in 2008, but currently, it stands at 73.3%.
It is important to note that even though the United Kingdoms economy is relatively doing well, there are emerging and widening gaps between the UK economy and those of leading economies. For example, there is a wide gap between the US economy and the UK economy. That is, if the two economies are to be matched, the UK GDP will be raised by 31 percent approximately Sterling Pound 21000 per year for every household in the United Kingdom (HM Treasury, Government launches plan 1).
The economic environment in the United Arabs Emirates
The UAE economic environment is one of the global economies that have highly depended on the oil sector in the recent past. However, with the recent development of infrastructure, the economy has gained from such non-oil sectors. The change in over-reliance on oil has resulted in a drastic growth in the national GDP. With the diversification of economic activities, the ministry is faced with a diverse economy, and it, therefore, has to come up with inclusive policies.
Although the inflation rate has risen to 4.2 percent by June 2015, the levels have been manageable. On the other hand, the employment level has been at a steady rise.
Social environment
The HM Treasury serves the UK citizens and, therefore, it has to communicate with all stakeholders. Also, the agency must focus on the welfare of its employees.
Similarly, the UAEs Ministry of finance has a legal mandate to serve the UAE population and cater for the welfare of its employees.
Technological environment
The UK is one of the most technologically advanced countries and, therefore, HM Treasury has a good resource to enhance effectiveness and efficiency in carrying out its activities.
The UAE, on the other hand, has embraced technology with the ministry of finance taking a leading role among other ministries in the government. Also, the recent advancement in the infrastructure has enhanced effectiveness and efficiency.
Governance of the HM Treasury
At the helm of the HM Treasury, leadership is the Chancellor of the Exchequer who works with the assistance of the HM Treasury Board. The Chancellor is generally responsible for the day-to-day running of HM Treasury because of his position as the chair of the HM Treasury Board while receiving support from five ministers.
The board membership comprises of ministers, executives, and non-executive members. The none-executive members must support and challenge the ministerial team and the top HM treasury officials.
The Audit Committee assists the permanent secretary, who is the head of accounting in the ministry. The committee also gives support to the ministrys auditing officers in fund control and risk management.
Governance in the UAEs Ministry of Finance
The Minister of Finance and the Minister of State for Financial Affairs head the Ministry of Finance in the UAE and are answerable to the Prime minister. Two departmental heads are tasked to carry out the day-to-day business following their departmental roles. Some of the departments include Strategic Planning and Performance, Government Communication, Budget, and Development Revenue among others.
The HM Treasury strategy
The HM Treasury strategies are informed by the governments plans, where currently the government departments have published three-year business plans. To meet the governments financial and economic objectives, the HM Treasury has made up plans that are inclusive of the information on structures and budgets. The ministry also has a plan on how it can evaluate its performance against the set targets.
Among the major plans that HM Treasury has, the most important one is reducing the structural deficit fairly and responsibly. The ministry is set to ensure that all the collected tax is utilized most responsibly.
Second, the HM Treasury has plans to ensure that the UK economy is strong by striking a healthy balance between the public sector and private investments. To support the private sector, the ministry is set to encourage entrepreneurship by providing a suitable environment. With the private and public sector in play, the HM Treasury ultimate goal is to realize sustainable distribution of growth and a fairer and more balanced economy.
The third plan is geared toward ensuring that in the future, the financial crisis is avoided. To realize this, the ministry is planning to make drastic reforms in the financial regulatory framework, replacing the current framework with one that will promote responsibility and sustainability in the banking industry. With the framework, the regulator will check on lending practices and encourages healthy competition in the banking sector (UK Government 1).
Additionally, the HM Treasury has put up a strategy to respond to the recent public interest in knowing what the HM Treasury is doing. The ministry needs a cost-effective and time-conscious method of communication. As a result, the ministry has a plan to use the best technology and develop communication to enhance the needed efficacy and effectiveness.
The Ministry of Finance strategy
The federal government of the UAEs financial plan drives the Ministry of Finance when it comes to financial strategies. Currently, the ministry has what it calls Strategy of Excellence & Sustainability , which essentially takes the current regional and international financial practices to create a comprehensive 2014-2016 plan.
In the 2014-2016 strategic plan, there are properly laid down objectives to ensure that the ministry serves the government and the citizens satisfactorily. The first plan is to ensure that the ministry manages and develops the UAEs government economic and financial resources. The ministry has to ensure that plans to diversify sources of revenue are made while focusing on non-oil sectors.
Second, the ministry has the responsibility of making and implementing the federal governments budget. On this note, it is planning to ensure that the whole process is done with utmost efficacy. The ministry plans to make improvements to the federal government spending process, cash management efficiency and implement a zero-based budgeting system to achieve its goals. Third, the Ministry of Finance has to adopt and develop the latest financial systems to surge performance levels and objective use of financial resources.
To ensure competitiveness and balanced sustainable economic growth, the ministry has set the fourth objective of the plan, which puts importance on legislation and policy-making in the financial and economic sectors. These plans will ensure that there is a balance in private and public sector investments and enhance healthy competition.
The ministry is directing its activity to ensure it has a remarkable position regionally and internationally by making a positive and valuable contribution to financial matters. The ministry spells this out clearly in the object number five. This will enhance the UAEs government foreign relations (United Arab Emirates Ministry of Finance 1).
The HM Treasury Performance
The HM Treasury has had a relatively positive performance index in meeting the UKs government objectives of building a strong economy and a society that is full of opportunities and security for all economic stakeholders. The ministry has put in place macroeconomic policies that have brought about relative economic stability and sustainable growth.
Over the past decade, macroeconomic stability has put the UK in a sturdy position to respond to worldwide challenges and take advantage of the opportunities.
Strict fiscal regulation has contained inflation and checked the unemployment levels.
In meeting the objective of promoting fairness and creating economic opportunities, the ministry had adopted measures to ensure everyone maximizes their potential. When it comes to service delivery, the ministry has laid the foundation for improvement.
Therefore, it is evident that HM Treasury is doing well at setting strategy, defining priorities, and allocating resources effectively. Additionally, Open Data Strategy shows that the treasury is doing well in meeting government agenda despite facing some unprecedented challenges.
The Ministry of Finance in the UAE has also quite positive performances ranging from meeting government requirements in policy implementation to staff management.
The top leadership has put great efforts into developing employee potentials in the ministry with a strong belief that the efficiency of employees will improve the ministrys performance in meeting the government requirements. There is an emphasis on excellence and, therefore, employees are giving their best. For instance, in 2012, the leadership developed a corporate culture focused on meeting all stakeholders needs.
In matters of fiscal policy efficiency, the Ministry of Finance is doing considerably well. The good performance has made the ministry to be ranked first globally inefficacy of government policy on financial and economic matters, and seventh place for financial management in the public sector by the International Institute of Management Development in Switzerland. The Finance Minister has also received accolades for good performance, for example, he was named the Finance Minister of the Year in the Middle East and North Africa for 2012 by Emerging Markets Magazines.
The Ministry of Finance organizes workshops to provide a distinct, properly functioning internal atmosphere to make a strong and attractive investment environment so that it can enhance inclusiveness and fairness in sustainable development.
The Ministry of Finance has sent delegates to different global forums where there have been exchanges of financial management information. This approach reflects the focus on meeting the objective of making the ministry a major contributor to global financial matters while improving the countrys international relations. Some of these forums include the seventh annual meeting for the Islamic Development Bank held in Sudan, the Global Forum on Transparency and the Exchange of Information held in Madrid among others (United Arab Emirates Ministry of Finance 1).
Discussion
The HM Treasury of the United Kingdom and the Ministry of Finance of the federal government of the UAE have the mandates from their respective governments to implement fiscal and economic policies. The two institutions have major similarities and several differences. The similarities can largely be attributed to their duties while their differences could be due to the historical, political, and economic differences largely reflected in the two countries.
While the United Kingdoms history dates back to the 17th century while the history of the UAE dates to the mid-20th century. These differences in history and developments have created a stronger economy in the UK with relative stability in comparison to the institutions in the UAE. However, the UAE is making an impressive improvement in developing its institution. For instance, the structure of governance of the ministry of finance is more or less the same as that of the HM Treasury.
The economic environments of the two countries are slightly different with the UAE having a slightly higher inflation rate than the average rates of the UK. The employment levels are also slightly different in favor of the UK. However, the UAEs is registering steady growth especially due to its change from over-dependence on the oil industry to diversifying its sources of revenues.
When it comes to formulating strategies, the two institutions are highly dependent on the political and economic environments of their systems. The two governments have the objectives of ensuring sustainable economic growth and, therefore, the two institutions have adopted policies to help their government attain their objectives.
The performance of the two institutions against the set strategies is extremely commendable due to the level of commitment demonstrated by their leadership and the support from their respective governments. There is the timely achievement of majorities of the set goals despite the noted unprecedented challenges.
Way forward
The world economies are faced with uncertainties, necessitating set objectives and goal settings. The two institutions have set strategic plans with the influences of their respective economic development plans to have future robust economies to deal with possible challenges.
The UAE government through the ministry is reviewing taxation policies, a move that will drastically influence the economy by attracting foreign investment while still protecting the local industries (Silvia Razgova 1).
The idea of diversification of the sources of economic resources is taking shape in the UAE. The ministry should come up with policies that ensure that the strategy is effectively attained and is sustainable because over-reliance on oil is risky due to fluctuations in global oil prices.
The inflation and employment levels in the UAE are relatively in check. Therefore, the ministry of finance should act with deliberate caution to maintain the levels or make them better with the diversification of the economy and reviewed taxation.
HM Treasury, on the other hand, has a role to ensure that the widening productivity gap between the UK and the leading advanced economies is narrowed. HM Treasury should encourage long-term investment and promote dynamisms in the economy, as well as follow the strategic plan of 2015.
Works Cited
HM Treasury. About Us. 2015. Web.
. Government launches plan to fix the foundations of the British economy. 2015. Web.
Silvia Razgova. Tax change is necessary to diversify UAEs economy. The National Opinion. 2015. Web.
Trading Economics. United Kingdom Inflation Rate. 2015. Web.
UK Government. Business Plan 2012-2015. 2012. Web.
United Arabs Emirates Ministry of Finance. Ministry of Finance Annual Report 2014. 2014. Web.
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