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Fast growing public debt in 2015

Mar 13,2016 - Last updated at Mar 13,2016

What happened in the public debt area during 2015 is not pleasant. Net outstanding debt rose by JD2.3 billion ($3.2 billion), of which 40 per cent in local loans denominated in Jordanian dinars, and 60 per cent in foreign loans denominated in US dollars.

The ratio of the foreign debt component, used as an indicator for risk, rose from 39.1 per cent at the end of 2014 to 41.1 per cent at the end of 2015.

The government is shifting from local to foreign borrowing. Fresh data from the Ministry of Finance shows that public debt rose by 11.1 per cent in 2015.

Foreign debt rose by 17 per cent, one of the highest percentages of debt growth on record.

Official estimates put the growth rate of the gross domestic product in 2015 at 5 per cent in current prices; thus, the public debt was rising at double the rate of growth of GDP, a very unhealthy state of affairs.

No wonder that under the circumstances, the ratio of net debt as a percentage of GDP rose from 80.9 per cent at the end of 2014 to 85 per cent at the end of 2015.

The gross debt, before deducting government deposits with local banks, reached JD24.9 billion, equal to 90.6 per cent of the GDP.

The JD2.3 billion increase of debt during last year is a record high.

If net debt rose by JD2.3 billion in 2015, then the total deficit in the central government budget and the budgets of other independent governmental units must have reached a similar amount. 

This is equal to 8.6 per cent of GDP, a budget deficit percentage that is much higher than anticipated by the central budget and the combined budgets of all governmental units.

This high rate of fiscal deficit is much higher than the one envisaged by the economic reform programmed. It is also much higher than the one projected by the Ten Year Vision in its first or base year.

The missing Qatari grant is not enough to explain this high deficit. The Qatari grant for 2015 was $250 million (JD177 million). It can be responsible for 7.7 per cent of total deficit, but what about the remaining 92.3 per cent of the deficit?

Unless there is a major shift in the financial policy, there is no indication that the deficit and growth of debt in 2016 will be much better than in 2015. On the contrary, it is expected that external borrowing in foreign currencies will rise faster.


Foreign borrowing is presented to the public opinion as a political achievement because the loans are soft, interest rates are low and the duration of the loans are long, but that is only a way to carry the burden further to future governments.

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