Jordan Times
Saturday, November 6, 1999
2000 budget to spur growth
By Suleiman Al Khalidi
AMMAN (R) — Finance Minister Michel Marto said on Friday the country's 2000 budget focuses on fiscal prudence and aims to kickstart the economy back to healthy growth.
Marto said the new budget seeks to reduce the budget deficit to 7.0 per cent of gross domestic product (GDP), excluding grants, compared to 7.8 per cent this year. It also aims to double the country's economic growth rate by next year.
“Our budgetary aim is to keep decreasing the deficit while maintaining sustainable growth with the ultimate aim of a having a balanced budget,” Marto told Reuters in an interview.
The budget is expected to be approved by the Cabinet on Saturday before being presented to Parliament later this month.
Marto said total state expenditure in 2000 was projected to rise around five per cent from an estimated JD2.1 billion ($2.96b) this year.
“The budget limits current expenditure without increasing the burden on low income groups and maintains amounts of capital expenditure that sustains higher growth,” Marto said.
Grants from donor countries, traditionally used to cover part of the budget shortfall, would reduce the budget deficit to around 2.4 per cent of GDP, Marto said.
The International Monetary Fund (IMF), which is overseeing a three-year economic reform plan in the country, has forecast Jordan's budget deficit including grants will amount to 3.3 per cent this year.
The fund says improved tax collection, higher sales tax and streamlined customs operations have improved Jordan's fiscal outlook.
Latest finance ministry figures show domestic revenues rose 16 per cent from January to September to $1.209 billion compared with the same period last year.
Marto said the 2000 budget would consolidate fiscal reforms, by advancing major tax reforms which unify corporate tax and simplify personal tax, while replacing General Sales Tax with a Value Added Tax (VAT) system.
Jordan is targeting a zero per cent deficit after grants by the end of the IMF programme, which began this year.
Marto said accelerated structural reforms should help boost GDP growth to between 3-4 per cent next year from an estimated 2 per cent this year.
“The business community is showing increased confidence in the economy. There is an increase in private sector investment,” Marto said.
The economy showed signs of a healthy pickup in the first half of this year.
Improvements in the services, tourism, manufacturing water and electricity industries and signs of an upturn in construction have raised optimism of a broader economic recovery after years of sluggish growth.
This was offset, however, by a sharp decline in agricultural output.
Jordan has recently stepped up privatisation and dismantled trade barriers that have significantly improved its chances of WTO (World Trade Organisation) membership by early next year.