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Budget deficit under control

Oct 23,2016 - Last updated at Oct 23,2016

The International Monetary Fund (IMF) wants budget deficit this year not to exceed JD918 million.

The budget for 2016 estimated deficit to be around JD907 million, an indication that the political will to abide by the IMF programme is strong.

The question now is whether things will actually go in that direction, or the final result will be different.

Eight months into this year, official budget figures show that the deficit, accounted for before foreign grants and excluding the deficits or surpluses of the independent governmental units, is JD651 million.

If things continue in this direction, budget deficit by the end of this year will reach JD976 million, and the target will be missed by only JD58 million.

This relatively immaterial amount is not serious. Budget deficit is not defined only in absolute figures, but also as a ratio of the gross domestic product.

The assumption is that the budget deficit in 2016 will be of the order of 3.33 per cent of GDP, to decline to 2.54 per cent in 2017. 

These are obviously realistic and attainable objectives.

Fiscal performance is so far going according to the plan, in order to achieve the required reduction of deficit as called for by the economic reform programme agreed upon with the IMF.

The Ministry of Finance proved its ability to again reduce budget deficit in 2017 by JD165 million to satisfy the conditions of the IMF programme.

In this respect, one should admit some uncertain points in analyses, especially on whether the targeted budget deficit required by the IMF programme is to be accounted for before or after foreign grants, and whether or not it includes the deficits and surpluses of the independent governmental units or just the central government budget. 

Neither do we know whether the budget figures for the first eight months include all amounts due to vendors and contractors, or there are many unpaid amounts that may change the picture.

To be fair, one should give due credit to the Ministry of Finance, which succeeded in improving budget performance.

The ministry was able to raise local revenue by 10.9 per cent, while general expenditure grew by only 5.1 per cent.

This improvement allowed self-sufficiency to rise to around 98 per cent, one of the highest rates attained in recent years.

Had it not been for the unexpected decline in foreign grants by 17 per cent, the picture would have been much better.

Generally speaking, fiscal management in 2016 is so far more than satisfactory and will hopefully continue to be so.

At one time, the Ministry of Finance used to be identified as the weak point in the management of the Jordanian economy, a state of affairs that caused more deficit and higher debt.

Now it is considered the strong and active point in administering Jordan’s finances.


Success or failure of the economic reform programme during the coming three years will most likely be decided at the Ministry of Finance.

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