Rising revenue and falling spending cut Jordan’s budget gap by 19.4% y/y to JOD374mn ($527mn) in the first seven months of the year, preliminary data from the finance ministry showed.

Excluding grants, the budget gap also narrowed to JOD682mn in January-July from JOD792mn a year earlier.

Jordan’s 2015 state budget forecasts a JOD688mn net deficit after foreign grants. The expected budget gap will equal to 2.5% of the forecast GDP in 2015.

The Jordanian government has signed official agreements for a total of $996mn in foreign aid up to end-May. Jordan traditionally relies on foreign grants to help address its chronic fiscal deficit.

Earlier this week, Jordan and the US signed four grant agreements worth $430mn, of which $231.4mn will go to the state budget before end-2015. The money will help further support Jordan’s fiscal balance this year

Foreign grants reached JOD308mn at end-July, down from JOD330mn the year before.

Total budget revenue edged up 0.7% y/y to JOD3.84bn at end-July whereas spending fell 1.4% y/y to JOD4.22bn. Domestic budget income grew 1.5% y/y to JOD3.54bn over the period due to higher tax collection on strong local and tourism demand mainly in Q3. Tax proceeds increased 4.4% y/y to JOD2.42bn in January-July (66% of total domestic income).

Tax on goods and services grew 1.1% y/y and those on international trade edged up 0.5%. Income and profit tax climbed 16.3% y/y over the period.

Property tax, however, remained in the red, falling 13.4% y/y in January-July mainly du high base effects.

Current spending dropped 1.8% y/y to JOD3.74bn (88% of the total) at end-July whereas capital spending rose 2.4% y/y to JOD472mn.