The cabinet of the United Arab Emirates approved a slightly smaller federal budget for 2016, state news agency WAM reported on Sunday, in a sign that the country is curbing expenditure because of low oil prices.

Next year's budget was set at Dh48.56 billion ($13.2 billion) with a zero deficit, down from this year's Dh49.1 billion budget plan.

The UAE federal budget traditionally accounts for only around 14 per cent of total fiscal spending in the country; the seven individual emirates, mainly oil-producing Abu Dhabi, provide the rest.

But the decision to cut federal spending, after at least several straight years of rises, suggests UAE authorities in general are becoming more cautious about spending because of the blow to state revenues from cheap oil.

On a consolidated basis, including both the federal government and the individual emirates, the International Monetary Fund expects the UAE this year to post its first budget deficit this year since 2009.

In addition to cutting or slowing spending on projects seen as non-essential, the UAE has been moving more aggressively than other Gulf Arab states to save money by reducing energy subsidies. In August it abandoned a system of fixed gasoline prices in favour of one linked to global oil prices. – Reuters