Revenue is projected to reach 41.4 billion dirhams next year, WAM said. That puts the budget shortfall of the world's No. 4 oil exporter at 400 million dirhams, a mere 0.04 percent of its economic output, according to Reuters calculations.

Health, education and social services will be the key budget priorities, Prime Minister and Dubai ruler Sheikh Mohammed bin Rashid Al-Maktoum said during Tuesday's Cabinet meeting.    

Some 1.6 billion dirhams should go on infrastructure projects next year, the WAM said.

The federal budget accounts for roughly 11 percent of total government spending in the UAE, the world's second-largest Arab economy, with the most occurring at the level of individual emirates, mainly in oil-rich Abu Dhabi. 

Oil receipts are not directly included in the federal budget but grants from Abu Dhabi made up almost a third of the total income in 2010, while enterprise profits and various fees accounted for 70 percent, finance ministry data show. 

"Once we get the Dubai and Abu Dhabi budget for 2012 we can get a clearer understanding of what the pace of spending is," said Shady Shaher, senior economist at Standard Chartered.

"We are still relatively bullish on oil for 2012 ... we have an average price for Brent at about $117 (per barrel). Higher oil prices will give Abu Dhabi in particular ... space to spend more if needed," he said.

Abu Dhabi, which sits on 10 percent of global oil reserves and accounts for 90 percent of UAE oil output, spent 245.5 billion dirhams last year, 6 percent less than in 2009.

The emirate, which accounts for some 71 percent of UAE fiscal spending, did not publish its 2011 budget plan. Dubai, which restructured nearly $25 billion in debt in 2010, planned expenditures of 33.7 billion dirhams for this year.      

Fiscal policy is a key tool for UAE policymakers to steer the hydrocarbon-reliant economy. Its dirham currency is pegged to the US dollar. 

The 2012 budget still needs to be discussed by the Federal National Council, a government advisory body with no legislative powers, before it is signed by the president.

The Cabinet also approved additional federal expenditures worth 698 million dirhams for 2011, including 144 million for the Health Ministry, the WAM said.

The UAE, which has avoided the social unrest rocking nearby Bahrain, Oman and Yemen this year, set its budget spending at 41 billion dirhams and revenue at 38 billion dirhams for 2011.

Analysts polled by Reuters in September forecast the UAE would book a consolidated fiscal surplus of 7.8 percent of GDP in 2011 thanks to robust crude prices of over $100 per barrel.

"For next year, we see overall consolidated fiscal spending increasing by 8 percent. We expect ... investment spending to be the main driver of consolidated government spending, including toward the northern emirates," said Monica Malik, chief economist at EFG-Hermes in Dubai.

The OPEC member country does not publish consolidated fiscal data. The International Monetary Fund forecast overall UAE government expenditure would decline to 22.6 percent of GDP in 2011 from last year's 24.7 percent.

In March, when the social turmoil swept through the region, the UAE pledged to invest $1.6 billion on infrastructure in the less developed northern emirates over three years.

The Gulf Arab federation of seven emirates spent 39.6 billion dirhams from its federal budget in 2010, the least in three years, ending the year with a 207 million dirham surplus, or 0.02 percent of gross domestic product.