Gov't endorses 2018 draft state budget, projects deficit at 1.8pct of GDP | Business | Ammon News

Gov't endorses 2018 draft state budget, projects deficit at 1.8pct of GDP

[11/19/2017 3:28:13 PM]

AMMONNEWS - The Cabinet on Sunday endorsed a draft 2018 state budget law projecting public revenues at JOD8.496 billion and foreign grants at JOD700 million while post-grant deficit is forecast at JOD543 million or 1.8 per cent of estimated Gross Domestic Product (GDP) for 2018.

In 2018, local revenues are projected to cover 86.2 percent of public spending and 98.9 percent of current expenditure, reflecting commitment to enhancing self-reliance as envisaged in the Royal Directives. According to the draft state budget, the gross value of public spending in 2018 is forecast at JOD9.039 billion, up by JOD572 million. The largest chunk of public spending will go to current expenditure at JOD7.886 billion, indicating an increase of 6 percent compared with 2017.

The rise in current spending is driven by a normal growth in public servants' and pensioners' salaries, higher interest on public debt and the repayment of financial dues from previous years.

Capital spending has been allocated JOD1.153 billion and the door will remain open to launching additional capital projects in partnership with the private sector. Operating expenses fell to JOD348 million compared with JOD376 million estimated for 2017 as a result of tightened spending and rationalization drive.

Excluding foreign grants, fiscal deficit is projected at JOD1.243 billion or 4.1 per cent of GDP compared with JOD1.587 billion and JOD1.714 billion in 2017 and 2016 respectively.

In the 2018 budget draft law, the amounts allocated to the social safety net surged to JOD788.8 million from JOD702.4 million estimated for 2017.

The draft budget law for 2018 is in line with the national financial and structural reform program and incorporates the decentralization scheme through allocating capital budgets for the Kingdom's various governorates.

The 2018 budget projects are based on rationalized public spending, tighter control on employment in the public sector and maintaining a halt in furniture and vehicle procurement for public agencies.

Additionally, the draft budget is based on better tax collection, more robust fight against tax evasion and dodging, stiffer penalties against evaders and gradual cuts of sales tax, services and customs' exemptions. With regards to the 2018 draft budget of government units, gross revenues are projected at JOD1.664 billion while spending is expected at JOD1.812 billion, signaling a deficit of JOD148 million.

Based on the above, the aggregate fiscal deficit (general budget and government units) is expected at JOD831 million or 2.8 percent of 2018 estimated budget against JOD1.035 billion or 3.6 percent of GDP in 2017.

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