During the second half of 2023, Treasury revenues began to decline noticeably due to the repercussions of the war in Gaza and lower revenues from the tobacco and vehicle sectors, driven by the growing use of alternative tobacco products and the increasing adoption of electric vehicles.
اضافة اعلان
Despite these clear warning signs, the 2024 Budget Law was prepared without proactive measures to offset the decline in revenues.
This ultimately resulted in a gap of nearly JD 900 million between projected and actual revenues a shortfall whose effects continue to weigh on Jordan’s fiscal reform efforts to this day.
Now, as preparations begin for the 2027 Budget Law, the need to learn from the lessons of the 2024 budget has become even more urgent.
The coming year is expected to bring additional fiscal challenges that require proactive risk assessment rather than relying on conventional revenue and expenditure estimates.
The government will face a dual challenge: maintaining revenue growth while controlling expenditures, all while continuing to implement the Economic Modernization Vision, expanding capital spending, and meeting new financial commitments.
The most significant of these are the proposed salary increases for public sector employees and pensioners, estimated to cost around JD 250 million, in addition to approximately JD 150 million allocated for new initiatives and capital projects.
Together, these commitments will place an additional fiscal burden of nearly JD 400 million.
Government projections for continued economic growth are also subject to external risks that cannot be ignored. Ongoing regional tensions could affect tourism, trade, transportation, and investment, ultimately impacting revenues from sales tax, income tax, and customs duties.
At the same time, debt servicing costs and social support programs remain among the largest expenditure items, limiting fiscal flexibility.
In response, the government will need to strengthen tax compliance, broaden the tax base, and improve revenue collection efficiency, while simultaneously implementing plans to reduce operating expenditures and enhance spending efficiency without compromising the quality of public services.
More importantly, however, the government should adopt a different approach in preparing the 2027 budget one based on fiscal prudence and risk management rather than assuming that current economic indicators will remain unchanged.
This requires a comprehensive review of all decisions that have affected or may affect the performance of public finances, whether related to exemptions, fees, legislation, or other policies that have influenced public revenues.
It also calls for a careful reassessment of the tax structure, not with the aim of imposing new taxes, but to identify loopholes, distortions, and unresolved issues that have not been adequately evaluated or where timely decisions have yet to be made.
Such a review must be guided by one fundamental principle: safeguarding citizens' living standards and avoiding the imposition of additional financial burdens.
Instead, the priority should be improving public financial management, addressing structural imbalances, and maximizing revenues through better policies and more effective administration.
The key lesson from the 2024 budget is that ignoring early warning indicators came at a significant cost to public finances.
The success of the 2027 budget will not be measured solely by the accuracy of its figures, but by the government's ability to anticipate risks, implement precautionary measures, and correct imbalances before they evolve into new fiscal gaps.
