The future outlook for the budgetary system of UAE is quite positive as the Government has announced the intention of completely renovating the budgetary system. The current budgetary system will be replaced by a new zero-based budgeting system. The zero-based budget will be implemented from 2011 and the budget period of the new system would be three years instead of 1 year. According to the Government officials the new budgetary system would contribute to the transparency in preparation of budgets and increase the effectiveness in implementation of various proposals (Ramavarman, 2009).
In zero based budgeting system the budgeting starts from a base of zero and all functions in an organization are analyzed for the needs and costs and the budget is designed according to these needs and costs for the future period regardless of the previous budget. The zero based budgeting system is cost effective as it evades the fluctuations in a previous budget but it is more prolonged than a usual budgetary system. In zero based budgeting system the cost and benefits associated to operations are estimated and the resulting increase in value is determined (Economist.com, 2009).
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