Jordan expects $1.1B deficit in 2024 budget, economic concerns rise

2. Vegetable market
(File photo: Ameer Khalifeh/Jordan News)
AMMAN – On Wednesday, the Minister of Finance, Mohamad Al-Ississ, announced an expected deficit of around $1.1 billion in the 2024 budget. Due to the region's political unrest, observers anticipate a rise in prices and a wave of inflation in Jordanian markets.اضافة اعلان

The new budget came weeks after an agreement with the International Monetary Fund (IMF) on a four-year reform program worth $1.2 billion, media sources reported.

Government commitment
The Jordanian government assured that it is committed to not raising taxes, in addition to continuing to support the gas and bread industries.

However, a large segment of Jordanians is concerned about the seriousness of these assurances, especially since Ississ said that 2024 is the year of self-reliance in light of the decline in the volume of international aid and grants, which left an impression of the possibility of price hikes in the coming days.

The minister clearly stated that Jordan will be affected in terms of the rise in shipping wages, just like other countries, by the disturbances in the Bab Al-Mandab Strait in the Red Sea. However, he expects energy prices not to be significantly affected as they are transported by land.

Emergency budget
Economic analyst Salama Al-Darawi affirmed that the fundamentals of any budget deficit are related to growing expenditures. Also attributing it to the absence of periodic reviews of the state financial law.

Darawi calls on MPs to monitor the financial procedures to prevent free spending and enhance parliamentary financial control mechanisms.

Darawi links the 2024 budget and the expected rise in prices to the war on Gaza, as it is a financial plan to face the repercussions of this war, calling for the issuance of an emergency budget.

However, he fears that this war will last for months, which will affect major sectors such as tourism, exports, and investments, as well as reduce the government’s ability to maintain its promises to not raise prices or impose new taxes.

Among the indicators that Darawi drew from to anticipate the decline in the tourism sector is the cancellation of more than 65 percent of hotel reservations, which will negatively affect the Kingdom’s income from hard currencies.

Darawi also referred to the decline in exports and the rise in international shipping and insurance costs. Also mentioning the possibility of fluctuations in global oil prices, which will lead to an increase in oil bills and the prices of basic foodstuffs.

However, the general budget data for this year revealed the government’s plan to borrow about $10.57 billion to cover the budget deficit and basic financial items.

Observers fear that the policy of expanding internal and external borrowing will contribute in one way or another to a wave of inflation in the markets.

What the Minister of Planning and International Cooperation, Zeina Toukan, mentioned is among the other unfavorable indicators in this context. She discussed the decline of countries providing financial aid to Syrian refugees in the country to about 22 percent, which means an additional burden on the state treasury.

Economic expert Amer Al-Shobaki confirmed that the prices of goods imported by Jordan will be significantly affected due to the rise in shipping and transportation costs due to their change in route. He adds that new values for these goods will result from their transportation and shipping to the Jordanian Port of Aqaba, where the shipping value for the container has risen from $1,000 to about $2,500.

Shobaki fears that social unrest will occur as a result of the expected rise in the prices of basic goods if the war in Gaza and the Red Sea disturbances continue.

Local concern
According to the Ipsos Consumer Confidence Index, the level of concern among Jordanians about the economic situation is rising, and according to the survey, three out of every five Jordanians fear rising living costs, inflation, and unemployment amid a state of uncertainty.

However, the World Bank’s expectations are completely different and are likely to dispel this concern, as they indicate relative stability.

Despite this, Jordanians express their concern about embarking on large-scale real estate purchases, which observers say will see a significant increase in prices after mid-year.

Observers and economic experts rely on Bloomberg’s economic and market expectations, which have recorded a 173 percent increase in sea freight rates due to the change in ship routes as well as transportation and insurance costs.

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