Dr. Hamed Kasasbeh

The 2026 general government budget — which combines the central government and autonomous government units into one comprehensive fiscal picture — comes at a sensitive moment for the Jordanian economy. With rising financing pressures and a slowdown in regional recovery, the budget serves as a test of the state’s ability to maintain financial stability without compromising the growth momentum the economy urgently needs.

The expenditure outlook shows a total budget size of 15 billion dinars, divided between 13.1 billion dinars for the central government and 1.9 billion dinars for autonomous entities. This distribution reflects significant operational and service-related commitments across public institutions, leaving limited room for additional capital spending. Much of the budget is tied to essential salaries, services, and social support programs that cannot be easily reduced, which constrains the fiscal space available for stimulating production and investment.

The budget’s financing needs rise to nearly 13 billion dinars, representing about 86% of total general government spending. This unusually high reliance on financing indicates that most public resources are directed toward covering existing obligations rather than expanding productive capacity or improving service quality. As a result, the budget’s developmental impact remains limited at a time when the economy requires stronger and more active support.

A large portion of the financing envelope is allocated to public debt servicing, amortization, restructuring operations, and deficit coverage. While this approach reinforces confidence in Jordan’s sovereign commitments and helps preserve credit stability, it also reflects a defensive fiscal stance. The focus remains on containing pressures rather than generating growth, limiting the budget’s ability to channel resources toward productive investments that address the productivity gap and strengthen economic activity.

The government continues to rely heavily on domestic borrowing, whether through the banking sector or the Social Security Investment Fund. This pattern offers a degree of stability by reducing exposure to external financing volatility. However, it also raises important questions about potential crowding-out effects, especially on small and medium enterprises that depend on accessible and competitively priced credit to grow and innovate.

Despite these challenges, the budget rests on several structural strengths. Jordan’s consistent record in meeting debt obligations, its avoidance of arrears, and the stability of the banking system — with strong capital buffers and healthy liquidity — all provide a financial safety net that supports steady financing operations. The Social Security Investment Fund adds another layer of long-term stability by supplying reliable domestic liquidity, reducing pressure on debt markets and limiting reliance on external borrowing during periods of regional and global uncertainty.

Looking ahead, the priority is not simply reducing spending but improving the quality of spending and maximizing the economic return on every dinar invested. Redirecting resources toward high-value productive projects is becoming essential, especially in light of limited fiscal space. This shift becomes even more important when linked to the key growth drivers identified in the Economic Modernization Vision 2033, positioning the budget as an execution tool rather than a passive financial statement. Targeted investments in technology, industry, tourism, and advanced services can create value and meaningful employment.

The financial landscape also calls for a clearer framework for assessing the productivity of debt. Borrowing should be viewed as a strategic tool for expanding economic activity — not merely a mechanism for covering gaps. When financing is tied to projects with direct productive impact, such as infrastructure, industrial value chains, and digital public services, debt becomes a lever for growth rather than a future burden. This transformation is essential for a resource-limited economy seeking new and sustainable engines of expansion.

In the end, the 2026 budget demonstrates the state’s ability to maintain fiscal stability, but it also raises a critical question: Will the budget remain a tool for managing obligations, or evolve into a driver of growth? Fiscal discipline is necessary — but not sufficient — to raise productivity or generate employment. The true strength of the budget lies in its capacity to convert debt into investment, and investment into sustained economic growth that places Jordan’s economy on firmer and more resilient ground.