Font Size

- Aa +

Sun 7 Nov 2010 04:25 PM

Font Size

- Aa +

Jordan's budget deficit to fall to 5% next year - finance minister

Kingdom's projected budget deficit after grants for this year is JOD1bn, or $1.4bn

Jordan's budget deficit to fall to 5% next year - finance minister
ECONOMY WATCH: Jordan’s economic growth will accelerate to 5 percent in 2011, 5.5 percent in 2012 and 6 percent the following year, finance minister Abu Hammour said.

Jordan plans to cut the budget deficit to five percent of gross domestic product next year from a revised 5.3 percent in 2010, finance minister Mohammad Abu Hammour said.

“The budget for next year was prepared on the expectation that the global and regional economies are recovering from the repercussions of the global recession, which will have a positive impact on Jordan’s economy,” Abu Hammour said in a statement on the website of the Ministry of Finance.

Jordan’s economic growth will accelerate to 5 percent in 2011, 5.5 percent in 2012 and 6 percent the following year, Abu Hammour said. Inflation next year is forecast at 4 percent, dropping to 3.5 percent in 2012 and 3 percent in 2013.

Jordan, one of the smallest economies in the Middle East, imports more than 90 percent of its oil and relies on foreign investment and grants to finance deficits in the budget and the current account.

The economy grew an annual 2.9 percent in the second quarter, led by the mining and transport industries. The rate compares with 2 percent growth in the previous quarter. Growth was 2.3 percent in 2009.

In a May interview, Abu Hammour said the economy would grow as much as 4 percent this year, while the International Monetary Fund says it may grow by 3.4 percent in 2010 and 4.2 next year, as regional growth accelerates.

“The 2011 budget will continue to control operational expenses, especially items related to fuel, electricity, water, communication and travel expenses, while maintaining a hiring freeze in all public institutions except the ministries of health and education,” Abu Hammour said in the statement. Overall spending will increase by about 6.2 percent next year to 6.2 billion Jordanian dinars ($8.7bn), he said.

The projected budget deficit after grants for this year is 1 billion dinars ($1.4bn) or a revised 5.3 percent of GDP from 6 percent. The fiscal deficit for next year is forecast at 1.06 billion dinars or 5 percent of GDP. The deficit is forecast fall to 4 percent in 2012 and 3 percent by 2013, Abu Hammour said.

Foreign grants more than doubled in the first eight months of the year to 249 million dinars ($352m), compared with 103 million dinars in the same period of 2009. The kingdom’s budget deficit narrowed to 428 million dinars in the first eight months of this year, from 758 million dinars in the same period in 2009, after the receipt of grants and a reduction in government spending.