Jordan's fiscal deficit could rise to JD2.93bn (US$4bn) this year if economic conditions in the country do not improve, the Jordan Times reported, citing Minister of Finance Suleiman Hafez.
The deficit would be JD2.06bn after the receipt of foreign aid and grants, the Amman-based newspaper reported, citing Hafez. The kingdom's debt would rise to JD17.5bn by the end of the year from JD14.3bn.
The overall budget deficit increased to about 6 percent of GDP in 2011 as a result of commodity subsidies, other social spending and borrowing by the government on behalf of Jordan’s National Electric Power Company to cover more costly imported fuel oil used during extensive periods of interrupted natural gas supply when saboteurs attacked pipelines in Egypt.
"Jordan remains highly dependent on commodity imports oil and grains, tourism receipts, remittances and FDI flows, and external grants,'' the International Monetary Fund said in a report last month.
The kingdom "is also facing risks from a further deterioration in its terms of trade, unrest in neighbouring countries, and the prospect of further disruptions to natural gas pipeline flows from Egypt," it added.
Government subsidies in total account for about JD2.386bn annually, the newspaper cited Hafez as saying. The treasury incurs JD40m a year for every US$1 above the price of US$100 a barrel of oil, the newspaper reported.
The kingdom's public debt-to-GDP ratio increased to about 64 percent at end 2011.
Jordan, one of the smallest economies in the Arab world, imports almost all of its energy needs and finances its budget and current-account deficits with foreign investment and grants from Gulf states, the EU and the US.
Jordan's economy is forecast to grow 2.8 percent this year from an estimated 2.5 percent in 2011, while inflation is projected to rise to 4.9 percent from 4.4 percent last year, according to the IMF.For all the latest banking and finance news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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