Jordan’s 2024 General Budget: Strengths, weaknesses, recommendations

The Cabinet approved, in its session held on Wednesday, November 22, the draft General Budget Law for the fiscal year 2024, as a preliminary step for its referral to the National Assembly within the timeframe specified by the constitution. Among the highlights emphasised by the minister of Finance is that this budget is the fourth for the government without consecutive tax or fee increases. It includes the highest capital expenditure in the history of the Kingdom, raises allocations for social protection and maintains the government's principle of self-reliance in covering current expenses from local revenues, reaching 90 per cent.

Taking a quick look at the key points of the budget, we find both strengths and weaknesses. Notably, the strengths include: firstly, not raising taxes and fees, easing the burden on citizens and businesses, stimulating economic activity. Secondly, an increase in capital expenditure, focusing on development projects to enhance economic growth, provided they add value to the economy. Thirdly, improving allocations for social protection, a crucial requirement reflecting the government's care for vulnerable groups. Fourthly, the emphasis on self-reliance, showcasing a sustainable strategy to cover current expenses from local revenues. Fifthly, maintaining the Kingdom's credit rating signals economic stability and readiness for various forms of investment.

As for the weaknesses, they can be summarised as follows: Firstly, modest economic growth expectations, reflecting a challenge that the Jordanian economy has faced for nearly a decade and a half. Secondly, the rise in the initial deficit, which may increase pressure on the general budget and affect financial stability. Thirdly, the continued increase in the public debt as a percentage of GDP, despite the expected decrease in the overall public debt growth rate. Fourthly, expectations of global economic slowdown, potentially impacting Jordan's exports and posing economic challenges. Fifthly, the impact of regional developments, with repercussions on public finances and increasing challenges in achieving general revenues.

Therefore, addressing all potential challenges, such as the initial deficit and the ongoing increase in total debt, is crucial to enhancing the effectiveness of development measures and ensuring the sustainability of economic growth in the future.

To improve the economic situation and develop the general budget for 2024, the government could consider the following recommendations: Firstly, enhancing investment in major projects in water, energy and transportation to promote sustainable development. Secondly, developing the agricultural sector through modern technology and improving water harvesting and irrigation systems. Thirdly, boosting the tourism sector through promotional and marketing strategies and enhancing infrastructure to attract tourist inflows. Fourthly, diversifying revenue sources by promoting digital transformation and developing creative industries. Fifthly, improving financial transparency and accountability to build trust and attract more investments. Sixthly, enhancing public debt management by implementing effective strategies to achieve gradual reductions in the debt-to-GDP ratio. Seventhly, strengthening tax capabilities by improving tax collection quality and combating tax evasion to increase tax revenues. Eighthly, developing education and training programs to equip the workforce with skills meeting changing market needs. Ninthly, encouraging effective partnerships between the government and the private sector to finance and implement crucial economic projects.

Achieving these recommendations requires continuous efforts and effective collaboration between the government and various sectors within society.