Jordan's budget deficit shrinks 43% y/y to USD 694mn in Jan-Aug 2013

By bne IntelliNews October 25, 2013

Rising foreign grants helped narrow Jordan's state budget gap by 43% y/y to JOD 493mn (USD 694mn) in the first eight months of 2013 despite growing spending mainly on debt servicing and the national electricity company, daily Ad-dustour reported on October 25 citing finance ministry data. Excluding grants, the budget gap widened 13.3% y/y to JOD 1.017bn.

Revenue (including grants) climbed 23% y/y to JOD 3.888bn and spending rose 8.4% to JOD 4.381bn. Foreign grants jumped to JOD 524.6mn in January-August from just JOD 25.2mn a year earlier. Jordan expects to get JOD 850mn (USD 1.2bn) worth of foreign grants in 2013. The Jordanian government has secured JOD 2.978bn (USD 4.2bn) worth of grants and loans in the first nine months of 2013, according to the finance ministry.

Higher grants, austerity measures and falling energy imports will also help Jordan improve its external balances in 2013. Favourable seasonal factors and lower crude oil prices (mainly in H1) cut Jordan’s energy imports by 19% y/y in January-August. Jordan’s budget deficit will shrink to 4.8% of GDP in 2013 from 8.2% the year before, the IMF forecasts.

Tax proceeds rose 11% y/y at end-August lifted by a 15% increase in proceeds of the tax on sales and services. Taxes on property sales climbed 17% y/y and that on income and profits rose 0.1%. Current spending rose 6.5% y/y in January-August on higher military wages and social contributions and debt servicing. Capital spending climbed 28.3% mainly due to a low prior-year base.

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