“The government cannot touch or change 90 percent of the expenditure allocations in the budget. This prompted the kingdom to switch to more expensive diesel fuel to generate electricity. But they are just postponing problems at a higher cost,” said Jawad Anani, a leading economist and former deputy prime minister.Įarlier this year, Jordan’s economy was officially expected to grow around 3 percent in 2011, much slower than the average 7 percent seen over the last decade during a boom fed by high aid levels and capital inflows and investments.īut even 3 percent may not be attainable, officials now concede privately, as the kingdom is still struggling to recover from the global downturn of 2008-2009, which cut remittances from Jordanian expatriates in the Gulf.Īnother blow to state finances is a record energy bill that is expected to top $4.5 billion after the disruption of Egyptian gas supplies to Jordan due to sabotage of the pipeline in the Sinai region. They are pursuing a policy of political convenience and appeasement. “The government is saying the deficit is a small price to pay in return for maintaining social peace and security. Including debt incurred by the national electric power company and guaranteed by the government, it is already above a legal limit set by Jordan of 60 percent, according to the finance ministry. Public debt was already rising before the additional spending - at the end of August it stood at 12 billion dinars or 57 percent of GDP. That makes the government’s budget deficit target this year, 5.5 percent of gross domestic product, look much too optimistic economists and bankers think the deficit will be nearly 7 percent. This has prompted the government to increase state spending this year by over 700 million dinars from its original plan to 6.95 billion dinars ($9.8 billion) through two supplementary annexes to the 2011 budget. Millions of dollars of state money have been channelled to tribal areas that provide the backbone of support for the Hashemite royal family regime. Now, political unrest across the Arab world has pushed Jordan into a big increase in government spending on salaries, food and energy subsidies and its social safety network, in an effort to head off domestic protests by placating the country’s poor. Just several years ago, Jordan was viewed by many businessmen as an economic success story under reforms guided by the International Monetary Fund, it became one of the Middle East’s most open economies. “Am I conceited because I speak my view and don’t agree with government policies that will create problems in the future?” Faris Abdul Hamid Sharaf told reporters, responding to public criticism of him by Prime Minister Marouf al-Bakhit.

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