Self-sufficiency at 70.5 per cent

The rate of self-sufficiency, calculated as a percentage of the current expenditure that is covered by domestic revenue, as shown in the official budget, rose from 76.2 per cent in 2012 to 84.7 per cent in 2013, very low but moving in the right direction.

If that is true, it means that 15.3 per cent of the current recurring cost of running the government in 2013 and 23.8 per cent in 2012 were covered by sources other than the domestic revenue.

They were, in fact, financed by foreign grants and local and foreign loans. 

A self-sufficiency rate of 84.7 per cent, the percentage of coverage of current expenditure by domestic revenue, is not healthy or acceptable.

It is not normal to spend for the day-to-day running of the government amounts that exceed the domestic revenue by 18 per cent.

Either the current expenditure is inflated to an unacceptable level or domestic revenues are understandably low.

The above level of self-sufficiency is bad enough, but the actual situation is even worse.

The above official picture is based on the budget figures that do not include the actual cost of subsidising electricity and water.

Amounts paid to the National Electric Power Company and the Water Authority are treated in the Ministry of Finance’s books of accounts as advances.

Whatever government guarantee bank loans are extended to these two institutions are added directly to the public debt, without having to go through the budget.

In order to arrive at the real rate of fiscal self-sufficiency, one must add the cost of electricity and water subsidies as actually part of the current expenditure.

In my estimate, the amount is JD1,210.7 million in 2013 and JD1,384.4 million in 2012.

This way, it becomes clear that the self-sufficiency rate in 2013 was only 70.5 per cent, not 84.7 per cent, and was around 62.6 per cent in 2012, and not 76.2 per cent. All these rates are very low and should not be allowed to continue in a country that seeks to be independent.

Based on the above corrections, the actual current expenditure of the government is not JD6,045.5 million, as shown in the budget, it is JD7,256.2 million in 2013 and JD7,557.2 million in 2012.

The difference is the subsidy of electricity and water, not accounted for in the budget.

The above-mentioned difference between the official figures and the correct figures of current expenditure was calculated as the difference between the official deficit shown by the budget and the increase in public debt, reduced by the excess of capital expenditure over foreign grants.