Budget performance in 2015

The Treasury’s books of accounts for 2014 are not finalised yet, and the figures of the 2015 draft budget are not yet awaiting the final approval by Parliament.

However, preliminary estimates reflect a plan which, if adhered to, will allow fiscal performance to make additional progress in the new year.

The new budget aims at raising domestic revenues by 9 per cent, which is an ambitious growth rate, as it exceeds the total of the economic growth and inflation rates. 

To be on the safe side, the budget expects a decline in foreign grants by 3.5 per cent, thus total revenue will rise by 6.9 per cent in current prices.

This is obviously a reasonable rate, as it is equal to the real growth of the gross domestic product of 3.9 per cent and inflation rate at 3 per cent.

The small increase is meant to accommodate the regular annual increments of employee salaries and fill the new vacancies in the education and public health ministries.

In this manner, current expenditure in 2015 would be less in constant prices than in 2014. 

Although actual capital expenditure in 2014 was very high, thanks to the Gulf states grant, the new budget aims at further increasing capital expenditure in 2015 by 5.3 per cent, even though grants are expected to be lower than in the previous year.

The final planned outcome is that total revenue will rise at a rate almost double the rate of total rate of expenditure growth, a state of affairs that will result in a substantial narrowing of the budget deficit before and after grants, an important step in the right direction in 2015.

If the budget as presented by the government is adhered to throughout 2015, Jordan’s self-sufficiency will gain five percentage points, to exceed 90 per cent, another indicator that the country will be going in the right direction this year.

The main problem that was, and still is, causing deficit in the public sector are the losses sustained by the National Electric Power Company, which are covered by loans guaranteed by the Treasury and added to the public debt.

In other words, the increase in public debt in 2015 and during the last four years is caused by this problem that the government is trying to correct while facing resistance from people and Parliament.

The latter, as a guardian of the public interest, is supposed to push the government hard to implement the economic reform programme in order to reduce the budget deficit and reduce the need for borrowing.

Unfortunately, parliamentarians are resisting the process, delayed the approval of the budget and delayed progress towards self-sufficiency.