Jordan's gross domestic and foreign debt rose 17 percent last year, breaching a legal limit, due to heavy government borrowing to finance subsidies and make up for weak revenue, finance ministry data showed on Thursday.

The latest preliminary figures show that public debt at l3.4 billion dinars ($19 billion) now comprises 65.7 percent of projected gross domestic product in 2011, exceeding a legal limit of 60 percent of GDP, as economic strains reduce local revenue and foreign aid.

Regional political uncertainty has forced the government to extend costly subsidies. The economy has been hit by poor domestic demand and lower foreign cash flows, including remittances from expatriates in the Gulf. Key hard currency earners such as tourism have also been hit.

The country has resorted increasingly to domestic borrowing to finance growing public debt, issuing more Treasury bills and bonds.

Gross net domestic debt stood at 8.91 billion dinars at the end of December. Foreign debt, mostly to major Western donors and international financial institutions, dropped 2.7 percent to 4.48 billion dinars at end of December against the same period at the end of 2010, the data showed.

Bankers say government plans to tap more project finance from donors this year was aimed at reducing reliance on local bank borrowing to free more funds for private investors while also seeking new types of financing.  -Reuters