The budget shortfall of the UAE member was set at AED1.83 billion ($498.2 million) or 0.6 percent of its 2010 gross domestic product, down from a 3.78 billion gap or 1.3 percent of GDP planned for 2011.
Spending is projected at AED32.26 billion, the statement said, slightly down from 33.68 billion planned for 2011. Revenues have been set at AED30.43 billion, up from 29.91 billion projected for 2011.
The statement did not say whether Dubai planned to issue government bonds to finance the gap. The emirate's government launched a $500 million 10-year bond in June.
Dubai carrier Emirates raised $1 billion in a five-year issue the same month, yielding 5.125 percent, which attracted orders of over $5 billion.
The Gulf trade and business hub, whose budget stands at around 14 percent of that of Abu Dhabi, does not release regular updates on its fiscal performance.
Dubai relies on various fees, taxes and customs duties for around 85 percent of its budget revenues since it lacks oil wealth of Abu Dhabi.
Fiscal policy is a key tool for UAE policymakers to steer the oil-reliant economy, as the central bank's flexibility is limited by the OPEC member's currency peg to the US dollar.
Most of UAE government expenditure is undertaken by the individual emirates with Dubai accounting for around 11 percent of the total.
Dubai, which narrowly averted a bond default in 2009, could use money raised by its sovereign wealth fund to help repay $3.8 billion in bonds owed by state-linked firms which mature next year, a source said.
Dubai has clawed its way back from the depths of its debt crisis, helped by an economic revival in trade and tourism and its safe-haven status amid the regional social revolts, but still faces the challenge of big debt repayments.
