DUBAI, Nov 20: The government of oil-rich United Arab Emirates has approved a 2008 state budget of 34.9 billion dirhams ($9.5 billion), a rise of almost 20 per cent over the previous year, the official WAM news agency reported on Tuesday.

The budget was approved during a UAE cabinet meeting chaired by Prime Minister Sheikh Mohammad bin Rashed al-Maktoum.

Sheikh Mohammad also ordered 70 per cent pay hike for “federal government employees, including civilians and security personnel of the interior ministry” from January 2008, WAM said, without giving details.

The seven-emirate federation, which is led by Abu Dhabi, has been awash in a windfall from soaring oil prices.

The International Monetary Fund said last month that inflation in the UAE, where housing costs have surged, is estimated to drop from 9.3 per cent in 2006 to 8 per cent in 2007 and 6.4 per cent the next year, following an anticipated increase in housing supply.

The IMF also forecast the UAE economy will grow by 7.7 per cent in 2007 and 6.6 per cent in 2008. —AFP