Mohamad Al-Ississ unveils Jordan's 2024 fiscal vision

Finance Minister Mohamad Al-Ississ. (File photo: Jordan News)
AMMAN — On Wednesday, Finance Minister Mohamad Al-Ississ outlined the main features of the draft of the General Budget Law for the fiscal year 2024 in a legislative session before the House of Representatives. He noted that the government aims to achieve a "turning point in the initial deficit, attaining the first surplus in 2028."اضافة اعلان

Al-Ississ highlighted that reforms in the tax system and administration aim to maintain monetary stability, stimulate growth, and increase reliance on internal resources to cover public expenditures, reported Al-Mamlaka.

He added that the 2024 budget project embodies the continuation of the financial reform approach, sustaining Jordan's exceptional performance in implementing structural reforms in public finance progressively and fairly. These reforms have shielded Jordan from the woes that befell other economies in recent years.

The minister explained that the government will persist in measures aimed at expanding the tax base; rationalizing tax exemptions while enhancing incentives and advantages to create an attractive environment for investors. It will also enforce legislative reforms previously approved by the House of Representatives, fully implementing electronic invoicing and tracking system, and imposing strict control on border smuggling.

Income tax revenues will rise by approximately JD 325 million or 20 percent in 2024. This is in line with efforts focused on increasing tax revenues without raising tax brackets. Sales tax revenues are expected to increase by about JD 286 million or 6.4 percent, driven by the nominal growth of 5.1 percent in output.

Al-Ississ added that the contribution of income tax to tax revenues will increase to 27 percent in 2024, compared to around 22.3 percent in 2020. Meanwhile, the contribution of sales tax revenues will decrease to about 66 percent in 2024, compared to 71 percent in 2020.

These measures align with the Royal directives to "improve revenues by combating tax and customs evasion and avoidance without burdening citizens and the private sector excessively." This requires the ongoing development of the tax and customs systems to safeguard the rights of the public treasury and enable it to provide optimal services deserving of citizens.

He added that in commitment to the Royal directives to progress the implementation of the economic reform vision and enhancing the public sector in relevant government entities, JD 348 million was allocated for related projects in the 2024 budget.

Al-Ississ emphasized that "providing sustainable Jordanian water sources is a strategic priority for Jordan. Achieving water independence and commitment to royal directives, the government will continue to prioritize the desalination and the National Water Carrier Project. This priority is reflected in the 2024 budget as one of the most important strategic projects in the economic reform vision."

The 2024 budget allocated funds are to enhance social protection in various areas, raising allocations for the National Aid Fund and Unified Cash Support to JD 262 million to support low-income families.

"Due to shocks on the supply sector in global markets may extend for long periods, and to ensure the stability of commodity prices, especially essential food items in the local market, the government will continue enhancing the strategic wheat and barley reserves for sufficient periods, increasing grain storage capacity, and accelerating the implementation of the national strategy for food security," said the Al-Ississ.

He added that the government will maintain the prices of bread and gas cylinders. The budget for 2024 allocated approximately JD 289 million for supporting such commodities, including JD 63 million to support gas cylinders alone.

Al-Ississ mentioned that the government has given significant attention to improving the education sector. Education allocations in 2024 increased by about JD 91 million compared to 2023, reaching around JD 1.436 billion. He affirmed that financial allocations continue to double to support financially dependent university students, as well as support for government and Royal charity universities and school nutrition initiatives.

The qualitative development of healthcare services acts as a lever for quantitative expansion for all citizens across the country. Allocated funds for health in the 2024 budget, including the Ministry of Health, Prince Hamzah Hospital, and Royal Medical Services, increased by JD 156 million or 14 percent compared to 2023, reaching around JD 1.275 billion.

Social protection allocations in 2024 amounted to about JD 2.349 billion, an increase of JD 128 million or 6 percent compared to 2023.

JD 40 million will be allocated to the Industry Support Fund, approximately JD 9 million will be provided to industrial cities with natural gas to reduce energy costs in production operations, including allocations to implement the national strategy for exports. This aims to provide support to key sectors in the national economy, stimulate economic activities supporting growth, particularly in the industrial and export sectors.

The government will allocate JD 74 million to the Ministry of Tourism to stimulate tourism, considering Jordan's attractive tourism potential. Tourism is a key industry in economic growth and job creation.

Al-Ississ affirmed that current expenditures for 2024 amounted to JD 10.642 billion, an increase of about JD 854 million or 8.7 percent compared to 2023. This increase is attributed to the rise in allocations for the military apparatus, public security apparatus, and an increase in military and civil service salaries and civilian retiree pensions.

He added that the increase in current expenditures is also due to the rise in public debt interest allocations in 2024 by about JOD 277 million compared to 2023, given the continued increase in global interest rates due to policies aimed at global inflation containment.

He emphasized that the government allocated JOD 100 million for emergency expenses in the 2024 budget. This allocation will address any financial requirements in case of developments or emergencies as they arise.

The allocations for the salaries of the civil, military, public security, and safety apparatuses, as well as civilian and military retirement allowances, constituted 61 percent of the total current expenditures. If the allocations for public debt interest are added, the percentage becomes 80 percent of the total current expenditures.

Al-Ississ stated that the operational expenses for the civil apparatus in 2024 amounted to about JD 559 million, representing only 5 percent of the total current expenditures. This reflects the government's policy of controlling and rationalizing expenses. Health sector expenditures accounted for about 41 percent of operational expenditures, with pharmaceuticals, supplies, and medical consumables comprising about 58 percent of them.

He affirmed that the operational expenses for the rest of the civil apparatus amounted to only JD 331 million, reflecting the government's efficiency in managing public finances.

Regarding capital expenditures, they were estimated at about JD 1,729 million in 2024, an increase of JD 182 million or 11.8 percent from their level in 2023. This is the highest value in the history of general budgets.

The allocations for projects related to the economic reform vision and the public sector modernization constituted 20.2 percent of these expenditures. Meanwhile, military and security apparatus projects constituted 16.9 percent and the development of municipalities and decentralization projects constituted 18 percent.

Al-Ississ explained that general expenditures were estimated at about JD 12,371 million, an increase of JD 1,035 million or 9.1 percent from their level in 2023.

Regarding revenues, the minister stated that local revenues for 2024 were estimated at JD 9,579 million, an increase of JD 873 million or 10 percent from their level in 2023. Tax revenues are expected to increase by about JD 673 million or 10.2 percent without raising tax rates.

Non-tax revenues in 2024 would increase by about JD 200 million or 9.4 percent, emphasizing that "it is necessary to note that regional events cast shadows on revenue realization in 2023 despite its success."

The estimated revenues for 2024 are based on several assumptions, the most prominent of which is the continuation of the regional situation without significant developments within the geographic and time context. External grant estimates for 2024 were around JD 724 million or 7 percent of the total revenues of JD 10,303 million.

General revenues would increase by about JD 844 million or 8.9 percent from their level in 2023. Al-Ississ clarified that expected revenue developments indicate an improvement in self-reliance, with the percentage of local revenue coverage of current expenditures reaching 90 percent in 2024 compared to 88.9 percent in 2023 and 74.4 percent in 2020.

He added that data shows a gradual improvement in the sustainability of public finance and public debt. For the fourth consecutive year, the initial budget deficit, comparing local revenues to general expenditures excluding public debt service, will decrease to about 2.1 percent of GDP in 2024, compared to 5.6 percent in 2020, with a decrease of 62 percent

The government will reach a turning point in the initial deficit, achieving the first surplus in 2028. Additionally, the total public debt to GDP ratio will decrease for the third consecutive year, reaching about 88 percent in 2024. It will continue to gradually decline in the following years, reaching 79 percent in 2028.

Regarding government units, Al-Ississ stated that the total revenues for government units were budgeted at about JD 852 million, compared to JD 790 million in 2023.

The total expenditures for government units amounted to about JD 1,662 million, distributed as JD 1,097 million for current expenditures and JD 565 million for capital expenditures. This is compared to a total expenditure of JD 1,408 million in 2023.

He indicated that the net deficit before financing for all government units in 2024 was about JD 810 million, compared to JD 618 million in 2023. He clarified that "if we exclude the deficits of both the Water Authority and the National Electric Power Company, estimated at about JD 851 million, the net deficit turns into a surplus of about JD 41 million."

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