‘Foreign grants offset losses caused by regional turmoil’

By Omar Obeidat

AMMAN –– The grants worth JD1.024 billion the treasury has received recently in urgent aid saved the Kingdom from doubling its budget deficit, Finance Minister Mohammad Abu Hammour said Tuesday.

“The urgent grants we received from donor countries will have a neutral impact on the projected deficit for this year,” the minister told The Jordan Times, explaining the cash assistance, which will not contribute to erasing the deficit as forecast in the budget, was extended to cover extraordinary expenses and to help the country overcome financial difficulties caused by regional turmoil.

The deficit in the JD6.36 billion budget of this year is estimated at JD1.16 billion, or 5.5 per cent of the gross domestic product.

Donor countries decided the urgent assistance for the Kingdom because they are aware of the economic and financial conditions in Jordan and also because they want to support the political and economic reforms the country is implementing, Abu Hammour added.

He said that the cost of subsidising kerosene, diesel and gasoline in addition to supporting electricity tariffs may exceed the value of the deficit in the state budget.

The cost of supporting the prices of the oil derivatives is estimated at JD240 million, he noted, adding that the losses of the National Electric Power Company caused by the irregular supply of natural gas from Egypt due to several sabotage attacks on the pipeline in the Sinai are estimated at around JD700 million.

According to initial figures released by the finance ministry, the budget deficit during the first six months of the year reached JD259.9 million compared with JD167.2 million for the same period in 2010.

The figures also revealed that Jordan’s net public debt during the first six months of 2011 increased by JD819 million from its levels registered at the end of 2010, when it stood at JD11.462 billion, to reach JD12.281 billion.

Domestic debt stands at JD7.690 billion while foreign debt is JD4.591 billion, according to the ministry’s initial report.

jordantimes