Jordan’s government submitted for parliamentary debate the new 2015 state budget, forecasting a JOD688mn ($971mn) net deficit after foreign grants, down from an expected JOD911mn gap this year, state news agency Petra reported. The expected budget gap will equal to 2.5% of the forecast GDP in 2015.

Finance minister Umayya Toukan told deputies that the budget gap will narrow further to 2.1% in 2016 and 1.4% in 2017. The government’s budget gap forecasts over the near-to-medium term accommodate the IMF’s recommendations.

Excluding foreign grants, Jordan’s budget deficit will reach JOD1.8bn in 2015, accounting for 6.5% of the forecast GDP, down from JOD2.8bn estimated for this year.

The 2015 state budget implies JOD8.09bn in total spending. Nearly JOD6.922bn will go to current spending, marking a 2.9% y/y increase, Toukan said, attributing the rise to the routine annual hike of public salaries and compensations.

Capital spending in 2015 will reach JOD1.175bn, of which JOD510mn will be covered by the Gulf Cooperation Council’s (GCC) grant program to Jordan, the minister said.

As to budget revenue in 2015, the government projects JOD6.28bn in total, up 9% y/y, Toukan said. The reading will be supported by higher tax (up 4.9%) and non-tax (up 8%) proceeds. The government is also projecting JOD1.128bn in foreign grants in 2015, split into JOD806mn from the GCC and JOD322mn from the US and EU.

Including grants, Jordan’s budget income will consequently grow 6.9% y/y to JOD7.408bn in 2015, according to Toukan.

The Jordanian government remains committed to fiscal consolidation, the IMF said last week following the completion of the fifth review on Jordan under the USD 2bn 36-month Stand-By Arrangement (SBA) approved in August 2012.

Fiscal measures for 2015, including contingencies, guarantee that public debt will revert to downward path, starting in 2016, the IMF underscored. The income tax law currently under discussion in parliament is also a welcome note, the IMF said. Additional tax reforms, however, are crucial and should focus on making the tax system more progressive and on removing tax exemptions, the IMF commended.