Amman: In a comprehensive presentation before the Lower House of Parliament on Wednesday, Minister of Finance, Muhammad Ississ, unveiled the 2024 draft budget bill, a strategic fiscal plan crafted amidst global economic headwinds and regional instability.
The budget, characterized by its unprecedented flexibility, aims to bolster Jordan’s political stance and economic resilience.
In his address, Ississ elucidated the government’s pragmatic approach. “This budget hedges, anticipates options, and deals with reality,” he stated, underscoring a commitment to leveraging financial allocations as instruments of strength.
Notably, the budget allocates historical highs to security services and armed forces, reflecting the government’s prioritization of national stability.
The 2024 budget mirrors the government’s blueprint for enhancing legislative-executive cooperation and openness to diversified opinions, especially pivotal in the current critical juncture of the Arab and Islamic nation’s history.
Ississ emphasi
zed the budget’s role in stabilizing and preventing economic volatility while aligning closely with citizen aspirations.
Contextualizing the Budget Within Global Economic Challenges, Ississ began by contextualizing the budget against the backdrop of global economic challenges, including the lingering aftermath of the COVID-19 pandemic, geopolitical strife, particularly the Russian-Ukrainian conflict, and the resultant inflationary trends that have ushered in a period of global stagflation.
This global economic milieu, as Ississ noted, has impelled nations to adopt contractionary policies, prioritizing inflation containment over economic recovery, thereby hampering efforts to regain pre-pandemic growth trajectories.
Jordan’s New Financial and Monetary Reform Program
Ississ highlighted a new agreement with the IMF on a financial and monetary reform program worth $1.2 billion, extending to 2028.
This program, based on principles like avoiding tax increases and enhancing capital spending, aims to put public
debt on a gradual decline, targeting about 79 percent of GDP by 2028.
It is designed to bolster Jordan’s economy in the face of external shocks and enhance the country’s ability to fulfill its obligations while implementing structural reforms.
Credit Rating Stability and Economic Resilience
The minister also pointed to Jordan’s success in maintaining its credit rating despite the challenges posed by the pandemic, the Russian-Ukrainian conflict, and global stagflation. This achievement is attributed to the prudent management of financial and monetary policies by the Ministry of Finance and the Central Bank of Jordan.
Projected Economic Growth and Challenges
Ississ presented a cautiously optimistic outlook for Jordan’s economy. He forecasted that the national economy is expected to achieve a growth of 2.6 percent at constant prices in 2023, slightly up from 2.4 percent in 2022.
However, he acknowledged that this growth rate, while steady, is not sufficient to significantly improve the living standards of
Jordanian citizens. It underscores the importance of continuing with financial and monetary policies that reinforce the national economy’s overall framework.
Inflation and Price Stability
The minister highlighted the government’s success in maintaining a moderate level of price increases, thereby protecting the purchasing power of citizens’ incomes.
A World Bank report was cited, confirming that food prices in Jordan remained stable, with an increase rate not exceeding 1.7 percent during the first ten months of 2023. This stability in food prices contrasts sharply with the significant increases seen in other countries.
Unemployment and Revenue Growth
Addressing the challenge of unemployment, Ississ noted that the government is working hard to reduce the unemployment rate, which stood at about 22.3 percent during the third quarter of 2023. He emphasized that the primary path to reducing unemployment lies in restoring growth momentum at higher rates and through financial and monetary stability.
Fiscal Pol
icy Success and Public Debt
The minister also discussed the fiscal policy’s success in enhancing the momentum of domestic revenues, which rose by about 584 million dinars, or 7 percent, from their level in 2022.
He highlighted the re-estimated income tax revenues for 2023, which exceeded the estimate by about 80 million dinars, driven by the success of tax reforms and measures to combat tax evasion and avoidance.
Public Debt Interest and Financial Obligations
Ississ touched upon the challenge posed by the rise in the public debt interest bill, which resulted from the US Federal Reserve’s decision to continue raising interest rates until July 2023. He assured that despite these challenges, the government’s approach to managing public debt has been effective, enabling Jordan to fulfill its internal and external financial obligations without compromising economic performance.
Strategic Fiscal Management and Capital Expenditures
Ississ continued his comprehensive overview of Jordan’s fiscal discipline and s
trategic investments under the 2024 budget. He emphasized the government’s commitment to fulfilling its financial obligations while balancing the need for economic performance improvement.
This delicate equilibrium is reflected in Jordan’s approach to managing its public debt and in the strategic allocation of capital expenditures.
Historic Highs in Capital Expenditures
The 2024 budget marks a significant increase in capital expenditures, reaching the highest value in the history of Jordan’s public budgets. These expenditures are crucial for driving economic growth and modernization.
Ississ highlighted that the budget allocates approximately 1,729 million Jordanian dinars for capital expenditures in 2024, an increase of 182 million Jordanian dinars, or 11.8 percent, compared to 2023.
Economic Modernization and Sectoral Investments
The budget emphasizes Jordan’s Economic Modernization Vision, with substantial investments allocated to projects that aim to enhance public sector efficiency and stimulate eco
nomic activity. These include key projects in various sectors such as municipal development, decentralization, and infrastructure improvements, vital for Jordan’s long-term economic stability and growth.
Revenue Growth and Economic Independence
Turning to revenue projections, Ississ underscored the expected increase in local revenues for 2024, indicative of Jordan’s growing economic self-reliance. Tax revenues are projected to rise by about 673 million Jordanian dinars, or 10.2 percent, without increasing tax rates, showcasing the effectiveness of the government’s fiscal policies and tax administration.
Foreign Grants and Public Finance Sustainability
The minister also pointed out the role of foreign grants in the 2024 budget. These grants are estimated to be approximately 724 million Jordanian dinars, representing a significant portion of public revenues. The blend of local revenue growth and foreign grants contributes to the overall health and sustainability of Jordan’s public finances.
Continued Commi
tment to Fiscal Reforms and Economic Stability
In conclusion, Ississ reiterated the government’s unwavering commitment to continuing its path of fiscal reforms and economic stability.
He highlighted the importance of maintaining a balance between the requirements of economic stability, controlling public spending, and meeting the needs of citizens.
This balanced approach is crucial for Jordan to navigate the complexities of the current global economic landscape and to build a resilient and prosperous future.
Addressing Future Economic Challenges
In the concluding segment of his address, Ississ shifted focus to the future, outlining the Jordanian government’s strategies for addressing forthcoming economic challenges while reinforcing the nation’s economic resilience.
He stressed the importance of remaining vigilant and adaptable in the face of potential regional developments and global economic shifts.
Projections for 2024 and Beyond
Looking ahead, Ississ provided a forward-looking perspective on Jorda
n’s economic trajectory:
The national economy is expected to continue its recovery, with a projected growth of about 2.6 percent in 2024. This growth is underpinned by the government’s vision of economic modernization and supported by ongoing structural reforms aimed at stimulating growth.
Inflation in 2024 is anticipated to remain moderate, not exceeding 2.7 percent. This stability is vital for maintaining financial and monetary stability and is a key indicator of the government’s success in preventing a decline in the purchasing power of citizens.
The current account deficit is projected to decline to 6.5 percent of GDP, with improvements in the trade balance, increased remittances from Jordanians working abroad, and a rise in foreign investments.
Responding to Regional Uncertainty and Global Tensions, Ississ acknowledged that regional uncertainty and global tensions pose significant risks to the path of growth recovery.
He emphasized the government’s commitment to preparing for various scenarios and a
dapting its strategies in response to the dynamic regional and international landscape.
The Draft General Budget Law for 2024
The minister concluded his presentation by discussing the draft general budget law for 2024, which aligns with Jordan’s economic and financial reform trajectory. He underscored the budget’s alignment with national priorities and its focus on structural reforms, fiscal discipline, and economic stability.
The budget, as Ississ noted, is a testament to the government’s pragmatic and strategic approach to financial management, aiming to safeguard the nation’s economic future.
A Resilient and Forward-Looking Jordan
The budget reflects a comprehensive and strategic response to the current global economic challenges, balancing the need for fiscal prudence with the imperative of economic growth and stability.
As Jordan navigates through these uncertain times, the 2024 budget stands as a blueprint for resilience, growth, and the continued prosperity of the nation.
Source: Jordan News Agen
cy