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BUDGET TO CUT DEFICIT

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Jordan to raise state spending in 2014 with Gulf help

Amman, November 14, 2013

Jordan has set projected state expenditure at 8.1 billion dinars ($11.4 billion) for 2014, raising spending by 12.8 percent overall as it puts to work $5 billion in grants from oil rich Gulf states, the state news agency said on Thursday.

Officials said the proposed budget for next year, which was passed by the cabinet but needs parliamentary approval, emphasises fiscal prudence to bring down the country's 2014 deficit from a forecast 9 percent of GDP this year.

The kingdom went through an acute financial crisis last year as foreign aid fell, welfare payments soared and its energy import bill rose, forcing it to take a $2 billion International Monetary Fund loan.

Finance Minister Umayya Toukan said the budget, which is in line with targets set by the IMF to speed up reform of the aid-dependent economy, projected growth of 3.5 percent next year, a slight rise from 3.3 percent in 2013.

Toukan did not give the estimated 2014 deficit figure.

Jordan says the strain on its already stretched resources of accommodating more than 600,000 refugees from the crisis in neighouring Syria will cut around 2 percent off economic growth in 2013 and next year.

The IMF's growth projections are similar and also reflect the increase in government capital spending from GCC funding, higher domestic consumption and a recovery in exports.

Toukan said around half the proposed budget's capital investments would be withdrawals from a $5 billion fund set up in December 2011 by a summit of the GCC to finance infrastructure projects.

The Gulf fund was set up to help its regional ally alleviate the impact of the wave of Arab political unrest.

Jordan hopes to secure more than $1.4 billion in foreign grants next year to ease the impact of the Syrian crisis. – Reuters
 




Tags: Jordan | Budget | IMF | state spending | GCC aid |

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