AMMAN, 2 December 2004 — Jordan’s Cabinet on Tuesday adopted a deficit budget for fiscal 2005 that envisaged spending 3.33 billion Jordanian dinars ($4.7 billion), which represents a 19 percent increase over that of 2004, according to Finance Minister Mohammad Abu Hammour.
The budget projections put the deficit at 270 million dinars ($381 million) which represents 3.3 percent as a ratio of the country’s gross domestic product (GDP), he told a press conference late Tuesday.
Abu Hammour pointed out that the projected spending included 310 million dinars ($438 million) for subsidizing oil derivatives, but revealed a five-year plan for liberalizing energy prices, saying such subsides “distorts the country’s economic cycle”. The budget sets oil prices at an average of $42 per barrel instead of $26 in the 2004 budget, he noticed.
Economic analysts predicted the government would resort to hiking fuel prices early in the new year.
The revenues were estimated at 3.06 billion dinars ($4.3 billion), including 1.06 billion dinars ($1.5 billion) as grants.
“For the first time, the government is including in the grant estimates the value of oil grants according to world prices rather than the prices at which the government sells crude oil to the Jordan Petroleum Refinery,” the Finance Minister said.
Jordan is currently receiving about 100,000 barrels of crude per day (bpd) as gifts from Saudi Arabia, Kuwait and the United Arab Emirates. The three Gulf countries volunteered to supply Jordan with its energy needs following the rupture of Iraqi oil exports that came to a halt on the eve of the US-led war on the former Iraqi regime of President Saddam Hussein in March last year.
“The 2005 budget estimates take into account the introduction of public finance reforms as well as deepening transparency and revelation,” Abu Hammour said.
He predicted a growth rate of 5 percent and an inflation rate of 2.5 percent for the coming year.