Jordan cabinet approves $13bn budget for 2019

(AFP)
Updated 29 November 2018
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Jordan cabinet approves $13bn budget for 2019

  • Finance Minister Izzedin Kanakrieh said the budget, which will be sent to parliament for approval, envisaged a deficit equal to 2 percent of Jordan’s gross domestic product
  • An earlier version of the bill triggered some of the largest protests in years last summer that brought down the previous government

AMMAN: Jordan’s cabinet approved on Wednesday a 9.25 billion dinar ($13 billion) budget for 2019 as part of a reform of public finances to ease the country’s record debt burden and spur economic growth hit by conflict in the region, officials said.
Finance Minister Izzedin Kanakrieh said the budget, which will be sent to parliament for approval, envisaged a deficit equal to 2 percent of Jordan’s gross domestic product.
The cabinet expects state revenues of 8.6 billion dinars next year, boosted by IMF-backed tax increases to help the kingdom restore fiscal prudence for a sustained recovery, the officials added.
Estimates in the projected budget include around 600 million dinars in foreign aid. Direct cash support by major donors traditionally covers chronic budget shortfalls.
Kanakrieh told the pro-government al Mamlaka television station that a tax bill that parliament approved earlier this month will help the government to cut down on rampant tax evasion.
Critics say the tax bill will dampen domestic consumption and deal a blow to investor sentiment, already hit by political uncertainty over risks of a new wave of protests.
An earlier version of the bill triggered some of the largest protests in years last summer that brought down the previous government.
Prime Minister Omar al Razzaz has pushed the new tax bill, saying its passage was needed to get a clean bill of health from the IMF and lower the cost of servicing over $1.4 billion in foreign debt due next year.
Jordan’s economy has been badly hit by conflict in neighboring Syria and Iraq, both traditionally major trading partners.
Its public finances are under strain and the government is struggling to curb a public debt of over $37 billion, equivalent to 96 percent of GDP.
An expansionist fiscal policy in previous years characterised by job creation in the public sector had pushed the debt to record levels.
Over the last two years the kingdom has raised general sales taxes and cut subsidies under an IMF austerity program aimed at lowering public debt to 77 percent of GDP by 2021.
Jordan cannot expect high levels of aid that have underpinned the stability of the kingdom to be maintained indefinitely, Western donors say.
But the austerity steps have hurt the economy, with growth expected to continue to stagnate at around 2 percent next year. That is almost half the levels seen over the last decade during a boom period fed by high aid levels and capital inflows and investments.
While the government has focused on fiscal reforms, it has refrained from public wage reforms that remain a red line, donors say.
Economists say maintaining a large bureaucracy which consumes the bulk of state expenditure is increasingly untenable.


FlyDubai ends 2018 with $43.5m loss

Updated 6 min 56 sec ago
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FlyDubai ends 2018 with $43.5m loss

DUBAI: The Dubai government-owned budget carrier FlyDubai said on Wednesday that its revenues increased to $1.7 billion in 2018, though the airline ended the year with a loss of $43.5 million.
The airline that flies out of both Dubai International Airport and Dubai World Central’s Al Maktoum International Airport blamed fuel costs, rising interest rates and “unfavorable currency exchange movements” for the loss. It had made $1.5 billion in revenue in 2017, earning a narrow profit of $10 million that year. “In line with expectations, 2018 was a challenging year, however we have continued to invest in our capacity and increased revenue,” FlyDubai CEO Ghaith Al-Ghaith said.
FlyDubai, which now has a code-share deal and tighter relationship with Dubai’s long-haul carrier Emirates, offers bargain flights to locations both served and not by its well-known elder sibling. FlyDubai began operations nearly 10 years ago and its 4,000 staff now serve over 90 destinations.
The carrier flew 11 million passengers last year, slightly up from the 10.9 million it flew in 2017.