Mohammad Abu Hammour said the additional sum beyond the 6.369 billion dinars ($8.98 bn) of allocated state spending was accrued expenditure to cover public sector pay hikes and a rise in food and energy subsidies.
“These extra sums will support food items and energy prices (affected by)...the global increase in oil prices, and freeze prices of gasoline in the local market,” Abu Hammour said.
At least $1.44 billion in foreign grants, which the kingdom received so far this year, would help cover the extra spending and help meet the 2011 budget deficit target of 1.160 billion dinars, or 5.5 percent of gross domestic product (GDP), Abu Hammour said.
“The (supplementary budget) is fully covered by extra foreign aid and does not include any increase in the 2011 estimated budget deficit,” Abu Hammour said.
Surging global wheat prices have raised the cost of bread subsidies while higher oil prices have increased subsidies on ordinary gasoline.
The country’s energy bill was projected to rise to $4.5 billion in 2011 from $3 billion last year, with higher costs for imported diesel to cover the country’s electricity needs after the disruption of Egyptian gas that provides most of its electricity generating capacity.
“These extra sums will (help to pay for) food items and energy prices as a result of the global increase in oil prices and to freeze prices of gasoline in the local market,” Abu Hammour said.
At least $1.44 billion in foreign grants that the kingdom has received so far this year would help cover the extra spending and ensure that the 2011 budget deficit target estimated at 1.160 billion dinars or 5.5 percent of gross domestic product (GDP) is met, Abu Hammour said.
“The annex is fully covered by extra foreign aid and does not include any increase in the 2011 estimated budget deficit,” Abu Hammour said.
The surge in global wheat prices has raised the cost of bread subsidies while higher oil prices have increased subsidies on ordinary gasoline.
The country’s energy bill was projected to rise to $4.5 billion in 2011 compared to $3 billion last year with a higher cost of imported diesel to cover the country’s electricity needs after the disruption of Egyptian gas supplies needed for most of the country’s electricity generation.
Analysts say the biggest challenge Jordan faces in 2011 is more private investment for job creation, but it will have to contend with powerful domestic lobbies demanding more subsidies.
Although Jordan liberalized energy prices several years ago, it retained subsidies that have recently included a freeze on further gasoline hikes to head off any kind of unrest such as that seen in other Arab countries.
The welfare package was introduced in January after food price protests swept across North Africa and the Middle East.
“This annex will meet real needs and aims at easing the economic pressures on people,” Abu Hammour added.
Jordan witnessed weeks of protests earlier this year when people called for political reforms, but it has so far escaped greater turmoil.
Abu Hammour said further fiscal consolidation was critical to ensure a robust upturn and maintain a target of cutting the budget deficit to 3 percent of gross domestic product by 2014.
The economy should grow around 3 percent this year with signs of a steady rise in quarterly growth that reached 2.3 percent in Q1 2011, he added.
Total state revenues, including foreign aid, were forecast to rise 7 percent to reach 5.208 billion dinars in the new 2011 budget estimates against readjusted 2010 budget figures.
Abu Hammour said the fiscal outlook was underpinned by forecasts of higher foreign aid — that traditionally covers budget inflows and more capital inflows along with revenue boosting measures, including raising electricity tariffs.
The bulk of the extra spending in the supplementary budget — 384 million dinars — was earmarked for grain and fuel subsidies. The rest were handouts to public sector employees.
