Ammon News -

Minister of Finance Mohamad Al-Ississ Sunday stressed that the 2021 state budget is geared toward propelling growth, bailing the economy out of recession and putting public debt back on a downward trajectory.

Presenting the 2021 state budget draft law and the draft for the year’s budgets of independent public institutions to the Lower House of Parliament, the minister said the budget is not expansionary in the way "we aspire for" because of the coronavirus pandemic.

When preparing the 2021 budget, the government was keen on balancing financial and economic stability away from contractionary policies, he added.

In light of global economic uncertainty, Al-Ississ indicated, the government will make quarterly reviews of public revenues and expenditures, and take the necessary decisions in a timely manner whenever the epidemiological situation requires any necessary readjustments.

Highlighting the main projections upon which the 2021 draft budget was based, the finance minister said the Gross Domestic Product (GDP) is expected to grow 2.5 percent in fixed prices and 3.8 in current prices.

However, Al-Ississ said a 2.5-percent GDP growth forecast is not optimistic, but rather "realistic and painful", and indicates the Jordanian economy has lost two years of growth, noting that such growth projections depend on the assumption that economic activity will continue without any shutdowns, and if otherwise, these growth rates expectations will not be fulfilled.

With regard to inflation, the minister said it is projected to rise to a "healthy and acceptable" level at 1.3 percent, reflecting recovery and economic rebound.

The minister also indicated that national exports are expected to grow by 6.5 percent as the world continues to recover from the fallout of the pandemic, pledging further support to national industries and lower operating costs.

Al-Ississ asserted that this year’s budget is geared toward development given the unprecedented contraction in economic growth, a fact, he added, that requires extra public spending to stimulate growth.

The current economic reality requires the prioritization of job creation and economic growth, the minister said, adding that the budget is an instrument to set the ground to achieve these goals.

Accordingly, Al-Ississ added, the government decided to significantly expand capital spending, increase the National Aid Fund’s appropriations and reinstate an increment to public payrolls, without introducing any new or hiking existing taxes.

"Economic prudence dictates that we set the deficit curve and public debt on a gradual downward path without harming growth and job creation opportunities. Financial stability will only be achieved by growth and combating evasion and tax and customs avoidance," the minister emphasized.

Detailing the 2021 budget figures, the minister said current expenditures are projected at JD8.749 billion, up by JD333 million or 3.9 percent compared with the 2020 figures. He noted that 65 percent of current spending will be used to finance public payrolls.

As for capital spending, Al-Ississ indicated that it was increased by 24.4 percent to a total of JD1.181 billion, adding that the government also earmarked an amount of JD85 million for public-private projects.

According to the minister, total expenditures in the 2021 budget are estimated at JD9.93 billion or 31.2 percent of GDP, compared with JD9.365 billion or 30.6 percent of GDP in 2020.

Turning to public revenues projections, Al-Ississ said the state is expected to collect JD7.875 billion in 2021, up by JD674 million from the 2020 figure.

Foreign aid and grants are expected to total JD577 million in 2021 against JD851 million in the 2020 budget, adding that the decline in foreign aid projections aims to ensure accurate forecasting, the minister explained.

The minister indicated that the 2021 budget is projected to post a post-foreign aid deficit of JD2.055 billion or 6.5 percent of GDP, compared with JD2.164 billion in 2020.