AMMAN: Jordanian MPs are set to deliberate the 2021 state budget bill, which the government has described as the “most difficult in the kingdom’s history.”
The government submitted the draft budget law for 2021 and budgets of independent public institutions to the Lower House on Sunday, with an estimated post-foreign aid deficit of JOD2.06 billion ($2.89 billion), or 6.5 percent of gross domestic product (GDP), compared with JOD2.16 billion in 2020.
Minister of Finance Mohamad Al-Ississ said: “This year’s budget is the most difficult for Jordan ever. The coronavirus pandemic and exceptional regional circumstances have minimized growth.”
Presenting the draft budget bill to lawmakers, Al-Ississ said that the government, which won a vote of confidence from MPs last week, would not impose any new taxes in 2021, adding that while Jordanians had showed resilience in 2020, their economic conditions were hit hard by the pandemic and the accompanying containment measures.
MPs are expected to start debating the budget next month.
Jordan imposed a nationwide lockdown from March 17 to May 30 last year in a bid to curb the spread of COVID-19, before gradually reopening some sectors. Other areas of the economy remain closed until now.
“Jordanians have undertaken an unprecedented test in 2020,” the minister said, expecting the national economy to shrink by 3 percent in 2021.
Domestic revenues are estimated in the 2021 budget law at around JOD7.8 billion before foreign grants, which are expected to reach JOD577 million in the budget law, down from the JOD851 million in the re-estimated value for 2020.
BACKGROUND
Jordan imposed a nationwide lockdown from March 17 to May 30 last year in a bid to curb the spread of COVID-19.
The value of total expenditure in the 2021 budget is expected to reach JOD9.93 billion or 31.2 percent of GDP, compared with JOD9.37 billion or 30.6 percent of GDP in 2020.
The minister said that inflation rates were projected to rise to “healthy and reasonable” levels in 2021 at 1.3 percent, reflecting some economic rebound, expecting a 6.5 percent growth in national exports with the world’s gradual recovery from the pandemic.
Economist Khaled Zubaidi criticized the 2021 state budget law as contradictory and incapable of achieving the desired economic growth of 2 percent projected by the minister.
"The law talks about economic growth, rebound and job creation but how can this be realized in a budget with huge deficit," Zubaidi said.
The government recently said it had written off the US-guaranteed eurobonds due at a total value of $1.25 billion.
The unemployment rate in Jordan reached 23.9 percent in the third quarter of 2020, up by 4.8 percent compared with the same period of 2019, according to official figures.
Jordan’s economy is expected to grow by 1.8 percent in 2021 and 2 percent in 2022, according to a World Bank report.
It predicts a moderate recovery for the MENA region, with economies shrinking by about 5 percent in 2020 as a result of the pandemic, inflicting heavy job losses and a sharp increase in the number of people living below the poverty line of less than $5.50 a day.
It expected the MENA region's economies to recover modestly to 2.1 percent in 2021, reflecting the lasting damage from the pandemic and low oil prices.
