2011 Kingdom’s most difficult fiscal year – Abu Hammour

AMMAN (JT) –– Minister of Finance Mohammad Abu Hammour on Sunday said that 2011 is proving to be Jordan’s most difficult fiscal year yet, due to a drop in key economic indicators.

The minister noted that the JD1.024 billion the Kingdom received in grants so far helped the government avoid taking “difficult” decisions, such as hiking the prices of certain goods and services.

He also pointed to the energy sector as posing the biggest challenge to Jordan’s economy this year.

During the inauguration of a workshop on enhancing fiscal monitoring, the minister said the irregular supply of natural gas from Egypt due to several sabotage attacks this year on the pipeline in the Sinai Peninsula put additional burdens on the Kingdom’s economy, according to a statement e-mailed to The Jordan Times.

Resorting to the use of heavy fuel instead of natural gas increased the cost of electricity generation more than fourfold, he said, adding that the financial deficit of the state-owned National Electric Power Company (NEPCO) is projected to reach JD1.1 billion by the end of the year, a sum almost equal to the entire deficit in the state budget.

The minister pointed out that the government has guaranteed NEPCO loans worth JD450 million, which resulted in expanding public debt to around JD12 billion, or 57.1 per cent of the gross domestic product (GDP).

Abu Hammour said Jordan’s debt-to-GDP ratio is expected to reach 65 per cent by the end of the year.

Other economic challenges, according to Abu Hammour, include the rise in international oil and commodity prices, while the country’s energy bill is set to reach $4.5 billion by the end of this year.

During the first seven months of 2011, remittances from Jordanian expatriates dropped by 4.8 per cent, while tourism revenues declined by 16 per cent, which also contributed to the woes of the country’s economy, the minister said.

The economy grew by 2.3 per cent in the first half of this year, insufficient to create jobs when the population growth rate is almost equal.

jordantimes