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Features of the new budget Fahed Fanek

Dec 10,2017 - Last updated at Dec 10,2017

The draft budget for 2018 indicates that public expenditure will form around 32 per cent of the gross domestic product (GDP).

This is obviously a very high ratio: it reveals the fact that Jordan’s public sector is vast, so are salaries, wages, retirement sand subsidies etc.

The draft budget assumes that external grants Jordan is expected to receive during 2018 will be 10 per cent down compared to the previous year. It could be even lower in the coming year.

There is no sign that some extra efforts at the diplomatic level will succeed in raising grants above the level that donor countries wish to accord.

Foreign grants make some 2.5 per cent of GDP, an indication that they are still very important. Economic growth depends, to a certain extent, on receiving sizeable amounts of Arab and foreign grants, as was the case always.

Budget deficit is estimated to reach JD543 million or 1.9 per cent of GDP. This amount may rise if Parliament managed to block some new taxes and hike in prices of electricity and water. In that case, debt/GDP ratio will remain the same, contrary to the target of lower ratio according to the economic reform programme agreed upon with the International Monetary Fund.

It may not be appropriate to compare figures of the draft budget with the corresponding figures in the previous year. Such practice assumes that the previous year’s budget was ideal, and that all we need is some reasonable growth in every category of the budget as influenced by economic growth and inflation rate.

Perhaps the best way to have a meaningful measure is to compare the New Year amounts as a percentage of GDP. This will serve another purpose of deciding whether we are going in the right direction. Of course, new factors that may arise should be taken into account.

The estimated figures for domestic revenue have no practical benefit. The proceeds maybe influenced to a great extent by good or bad circumstances resulting in more or less amounts. We have to accept the results as we have no other choice.

Likewise, if budget figures’ exaggerated foreign grants did not materialise, the Ministry of Finance can not do anything about it.

In other words, revenue figures included in the budget are simply sort of projection that may or may not come about.

Foreign grants are influenced by the regional circumstances and the role that Jordan is playing.


This differs completely when it comes to the expenditure side of the budget where the figures are binding and must not be exceed unless covered by a supplementary law.

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