Jordan's 2010 Budget Approved with High Deficit and Cuts to

UNCLAS SECTION 01 OF 02 AMMAN 002673 SIPDIS STATE FOR NEA/ELA AND EEB STATE PASS TO USTR (SFRANCESKI) MALABO FOR OMOSS TUNIS FOR FSI STUDENT JWONG E.O. 12958: N/A TAGS: EFIN ECON PGOV EAID JO SUBJECT: Jordan's 2010 Budget Approved with High Deficit and Cuts to Social Safety Net and Food Subsidies REFS: A. Amman 2671 ¶B. Amman 2572 ¶C. Amman 2563 ¶D. Amman 2408 ¶E. Amman 1646 ¶F. 08 Amman 2982 ¶1. (SBU) Prior to its December 9 resignation, as one of its last acts, Jordan's cabinet endorsed on December 8 the 2010 budget. As the parliament was dissolved on November 23, the cabinet passed the budget law as a provisional measure, meaning it is binding until a new parliament can review it (ref B). The budget, at JD5.5 billion ($7.7 billion) is 5.3% less than the 2009 revised budget JD5.8 billion ($8.1 billion) (ref E). The budget deficit is estimated at $1.4 billion before grants and if expected grants from the Gulf countries materialize, the projected deficit will shrink to $968 million (refs A and D). Revenues are projected to increase by 4.2% and reach $6.7 billion. 2010 Expenditures Cut 5.3% -------------- ¶2. (SBU) The 2010 budget includes a reduction in Government of Jordan (GOJ) expenditures from 2009's $8.1 billion to $7.7 billion. This cut will come at the cost of several politically painful measures adopted by the GOJ, including the elimination of a standing budget for the social safety net and a 46% reduction in food subsidies. Additionally, the capital expenditure budget for 2010 was slashed 20%, and current expenditures for 2010 were cut 1.4%. ¶3. (SBU) The 2010 budget highlights (in millions of U.S. dollars) follow: 2010 2009 % change -------------- Total Revenue 6,744 6,472 4.2 - Domestic Revenues 6,278 5,900 6.4 - Tax Revenues 4,265 4,038 5.6 - Non-Tax Revenues 2,012 1,862 8.0 - Foreign Grants 466 572 -18.6 Deficit after grants 968 1,665 -58.1 - percent of nominal GDP 3.9% 7.3% Deficit before grants 1,433 2,237 -35.6 - percent of nominal GDP 5.8% 9.8% Expenditures 7,712 8,137 -5.3 - Current 6,354 6,442 -1.4 - Civil 1,554 1,504 3.3 - Military 2,367 2,321 2.0 - Others 2,616 2,432 -7.1 - Pension 1,066 996 7.0 - Interest on Public Debt 664 569 16.7 - Social Safety Net 0 171 N/A - Wheat and Fodder Subsidy 106 197 -46.0 - Subsidy of Independent - Government Institutions 227 221 2.7 - Capital Expenditure 1,357 1,695 -20.0 Financing Budget Sources 3,938 5,351 -26.4 - Loans 3,938 3,778 4.2 - Foreign loans withdrawals 136 515 -73.6 - Domestic loans 7,433 6,118 21.5 - Privatization proceeds - - Uses (expenditures) - Deficit Offset 968 1665 -41.9 - Repayment of Domestic Loans 988 988 0 - Repayment of Foreign Loans 475 385 23.4 - Amortization of debt to CBJ 113 113 0 - Amortization of AMMAN 00002673 002 OF 002 - Domestic Debt 6,014 4,468 34.6 ¶4. (SBU) The Department of Budget will publish further budget details online once the budget is endorsed by the King. The above data was obtained directly from the Budget Department prior to its official public publication. The Budget Department's website address is www.gbd.gov.jo. Visit Amman's Classified Website at http://www.diplopedia.state.sgov.gov/index?ti tle =Embassy_Amman BEECROFT