Amman- Finance Minister Abdulhakim Shebli presented the 2025 draft budget law to the Lower House of Parliament, outlining a comprehensive policy framework aimed at maintaining financial stability, advancing reform, and addressing the socio-economic needs of citizens amidst regional uncertainties and economic headwinds.
اضافة اعلان
Minister Shebli described the budget as not merely a financial plan but a "comprehensive national document" reflecting government priorities and reforms in line with recent policy objectives.
The 2025 draft incorporates government-led programs and key services, promising proactive responses to structural challenges and priorities identified by Prime Minister's recent statements, he said.
Despite regional political and security volatility, Shebli highlighted the Jordanian economy’s resilience, evidenced by a successful second review of the national financial reform program with the International Monetary Fund (IMF). This review affirmed the nation’s ability to maintain fiscal stability and navigate challenges through sound monetary policies and structural reforms.
Credit rating agencies have reaffirmed Jordan’s stable credit rating, further reflecting investor confidence in the country’s prudent fiscal approach, commitment to reforms, and strong institutional framework.
Key Economic Performance Indicators
Preliminary data for the first half of 2024 suggests steady progress in core economic fundamentals:
- GDP Growth: The Jordanian economy grew by 2.2% (constant prices) in the first half of 2024, with projections estimating a full-year growth of 2.3%.
- Unemployment Rates: The unemployment rate decreased to 21.4% during the first half of 2024, down from 22.1% in the same period the previous year.
- Trade Balance: The trade deficit narrowed by 3% during the first three quarters of 2024, totaling approximately 6.9 billion dinars.
- Remittances: Remittances from Jordanian workers abroad increased by 3.2% in the first three quarters, reaching 1.875 billion dinars.
The draft budget underscores the role of monetary stability in supporting economic performance. Jordan’s foreign exchange reserves surpassed 20 billion dollars, sufficient to cover eight months of essential goods and services imports, bolstering the dinar’s stability and maintaining purchasing power.
Shebli credited prudent monetary policies for maintaining low inflation levels, which stood at just 1.6% during the reporting period. These policies, combined with enhanced foreign exchange reserves, have sustained investor confidence and financial stability.
Despite a modest recovery in some sectors, security and geopolitical developments have dampened local revenue projections. Shebli’s address highlighted a need for targeted financial adjustments to mitigate these challenges while supporting growth and maintaining fiscal stability.
Economic Forecast: Local Revenues Fall Short Despite Gains in Aid
The 2025 budget underscores that local revenues are expected to reach around 186 million dinars higher than 2023, amounting to a total of approximately 10.538 billion dinars. However, this remains below previous estimates, reflecting challenges in tax collections and local economic performance.
At the same time, foreign aid is projected at 739 million dinars in 2025, a vital source of financial support amid revenue shortfalls and strategic reform plans.
The government has adjusted its fiscal spending to prioritize essential infrastructure projects and social welfare commitments. In response to the shortfall, government spending for 2025 will include 10.538 billion dinars of current expenditures and 1.26 billion dinars in capital investments, with the total public spending amounting to 11.798 billion dinars.
Deficit Projections and Debt Risks in a Challenging Fiscal Landscape
Addressing the fiscal shortfall, Shebli projected the 2025 budget deficit at 2.441 billion dinars, equivalent to 6.5% of GDP. Furthermore, the primary deficit is expected to stand at 2.9% of GDP, indicating persistent pressures on public finances.
The draft highlights that public debt will rise to approximately 90% of GDP in 2025, exacerbated by rising borrowing costs and structural spending commitments. Shebli reaffirmed Jordan's commitment to servicing debt and maintaining transparency in coordination with international creditors.
Debt servicing payments have escalated over time, reaching 1.006 billion dinars in 2023, up from 743 million dinars in 2022. The government is actively exploring strategies to replace higher-cost debt with more affordable financing options to stabilize debt repayment rates and limit the fiscal burden.
Reform Agenda: Stimulus, Tax Relief, and Private Sector Incentives
To counterbalance declining revenues and stimulate economic growth, the government has introduced a suite of fiscal reforms. These reforms are aimed at boosting private-sector participation and easing the financial burden on citizens. Key proposals include:
- Tax exemptions and restructuring measures for real estate and strategic sectors.
- Broadening financial incentives for technology, information services, and innovation-focused industries.
- Support mechanisms to encourage private investment, particularly in the infrastructure and services sectors.
Moreover, the Central Bank’s recent decisions to lower interest rates will complement these measures, aiming to improve borrowing conditions and investor confidence.
Long-Term Vision: Economic Growth Through Strategic Infrastructure and Public-Private Partnerships
The proposed 2025 budget aligns with Jordan's National Economic Reform Vision, prioritizing key infrastructure projects and private-sector growth to offset reliance on external financing and debt obligations. Shebli emphasized that sustained economic reforms will hinge on achieving higher GDP growth rates and addressing unemployment, which remains a key social challenge.
The government’s multi-faceted approach seeks to balance fiscal discipline with growth-oriented spending particularly in sectors like technology, renewable energy, and infrastructure modernization to create jobs and expand Jordan’s economic base.
Private Sector: A Key Partner in Economic Recovery
Recognizing the critical role of the private sector, Shebli stressed creating a competitive environment to attract investment and incentivize innovation. Strategic tax breaks, regulatory reforms, and public-private partnerships are integral to ensuring that the private sector can drive much-needed economic growth and employment opportunities.
The minister said the draft budget for 2025 marks a pivotal policy roadmap that seeks to balance fiscal consolidation, economic diversification, and infrastructure-driven development amid a challenging macroeconomic landscape.
This forward-looking fiscal blueprint demonstrates a deliberate effort to align public spending with strategic priorities while addressing structural deficits and bolstering investor confidence to sustain growth over the medium term, he added.
The 2025 General Budget Law has been designed with a clear focus on realism, economic feasibility, and strategic projections grounded in data and measurable trends, according to Shebli.
The economic outlook predicts 2.5% growth in real GDP for 2025, with this trajectory expected to maintain momentum and reach 3% by 2026 and 2027. Similarly, nominal GDP is expected to experience an increase of 4.9% in 2025, followed by 5.6% in each of the subsequent two years. These projections stem from anticipated growth across key sectors, including construction, manufacturing, and tourism.
The government has identified several critical drivers for this growth, such as rising exports, a reduction in interest rates fostering investment opportunities, and ongoing and upcoming infrastructure initiatives.
Strategic projects like major transport networks, new hospitals, and the expansion of educational facilities are expected to act as pivotal growth engines. These projects will catalyze demand, support employment opportunities, and strengthen overall economic stability.
Inflation is expected to remain stable, with forecasts predicting 2.2% in 2025, followed by a slight increase to 2.5% in 2026. However, this will then decrease again to 2.3% by 2027. These controlled inflation rates reflect the government’s commitment to maintaining economic stability while protecting the purchasing power of the population.
Measures will include stabilizing the prices of key commodities such as bread, gas, and other essentials while maintaining sufficient strategic stockpiles to ensure supply security.
Trade balance improvements and expected gains in tourism revenues are anticipated to drive a steady reduction in the current account deficit. It is projected to stand at 4.6% of GDP in 2025, with expectations that this will narrow to 4.1% in 2026 and 3.8% by 2027. This reduction underscores strategic diversification efforts and strengthened economic partnerships.
The 2025 budget is an embodiment of focused priorities. A sum of 300 million dinars has been allocated to strategic projects that support the modernization of government services, infrastructure, and technological innovation across key sectors.
Among these priorities is a strong commitment to employment creation, particularly in sectors poised for growth such as education, health, agriculture, tourism, and infrastructure. Notable allocations include 50 million dinars for the National Water Carrier Project and 55 million dinars to support and enhance tourism infrastructure.
A further 45 million dinars has been earmarked to support industrial growth, innovation, and private sector development. The energy sector also receives attention, with 27 million dinars set aside for oil exploration and developing natural gas infrastructure, particularly in industrial cities.
Social protection remains at the core of the government’s vision, with 280 million dinars allocated to the National Aid Fund. This will expand social protection coverage by approximately 15,000 families, providing much-needed financial support to the most vulnerable.
In addition, 75 million dinars will support a wide range of student assistance programs, directly benefiting 53,000 students and ensuring equitable access to educational opportunities. Health care initiatives also receive robust support, with 30 million dinars directed toward improving health access and expanding medical supplies to meet rising demand.
The education sector is another priority. With 1.286 billion dinars allocated to the Ministry of Education, significant investments will target school construction, repairs, and the advancement of technical and vocational education.
An additional 116 million dinars will go toward improving infrastructure and aligning the education system with labor market needs. Strategic projects will also include training programs for teachers and expanding early childhood education access, ensuring foundational growth for future generations.
In health care, 807 million dinars are budgeted for 2025 to support the modernization of health facilities, strengthen affordable access to medications, and invest in vital health infrastructure. Among the critical initiatives are 101 million dinars allocated to the expansion of major hospitals and other key health service projects, including the Princess Basma Hospital expansion and other strategic health infrastructure upgrades. These investments are central to ensuring affordable, efficient, and modern health care services across the country.
These strategic financial allocations are not merely numbers but reflect a deliberate, multi-dimensional approach to strengthening the economy, modernizing services, and ensuring the well-being of citizens. They represent investments in long-term growth, social protection, health care access, employment opportunities, and quality of life. The 2025 budget serves as both a roadmap for economic growth and a reflection of the government’s commitment to stability, equity, and progress.
The 2025 draft budget projects current expenditures of 11.042 billion dinars, marking an increase of 504 million dinars, or 4.8%, relative to the 2024 estimates. This uptick reflects heightened spending on public service wages, operational costs, and key government priorities.
Civil service wage allocations are projected at 2.150 billion dinars, representing a rise of 122 million dinars, driven by natural wage adjustments and the integration of new employees into the civil workforce.
Defense and public security remain central to the budget, with 3.178 billion dinars earmarked for military and security forces to maintain national stability and strategic objectives. Concurrently, operational costs for the civil service are expected to reach 553 million dinars, reflecting the government’s strategic commitment to channeling funds toward priority operational expenditures.
Combined, expenditures on civil and military service salaries, pensions, and public security are expected to total 6.630 billion dinars, accounting for 60% of the total current expenditures. This allocation underscores the significant fiscal commitments required to maintain government obligations, including monthly salary disbursements exceeding 550 million dinars.
On the capital expenditure front, the 2025 draft budget estimates total investment spending at 1.469 billion dinars, a 209 million dinar, or 16.5%, increase compared with the previous year.
The allocation breakdown identifies strategic investment priorities: 44.5% will target government ministry and agency projects, 22% will focus on local development and decentralization efforts, 17% will support military and public security infrastructure, and the remaining 17% will finance modernization and structural economic reform initiatives.
The total public spending in 2025 is projected at 12.511 billion dinars, reflecting a 713 million dinar, or 6%, increase from the 2024 figure. Minister Shebli reiterated that the draft budget maintains a dual focus: preserving fiscal discipline while addressing immediate citizen needs, prioritizing key development initiatives, and advancing public sector modernization.
In alignment with the Prime Minister’s guidance, the government is set to formulate a three-year financial strategy to address the issue of delayed payments. This strategic approach aims to ensure the timely settlement of arrears, prevent further accumulation, and strengthen fiscal stability.
Shebli emphasized that the government will adopt forward-looking financial policies, encourage private-sector investment, and expand public-private partnerships to support vital infrastructure and development projects.
The 2025 draft budget reflects the government’s strategic intent to maintain macroeconomic stability, address structural challenges, and allocate resources to pressing economic and social priorities. As it progresses through parliamentary review, the budget sets the stage for government action to sustain essential services, invest in infrastructure, and maintain fiscal prudence while responding to both present and future challenges.
Local revenue projections for 2025 are estimated at 9.498 billion dinars, marking a 10% increase or 880 million dinars over the 2024 forecast. This growth is largely driven by a robust uptick in tax receipts, which are expected to rise by 804 million dinars, equivalent to 12.7%, thanks to enhanced tax and customs collection efficiencies without any changes to existing tax policies.
Non-tax revenues are expected to grow by 76 million dinars, or 3.3%, which will result in local revenues covering approximately 86% of current spending needs for 2025, compared with 82% in the prior year. This reflects a steady improvement in the fiscal resilience of local finances.
Foreign grants are projected at 734 million dinars for the year. This represents a decline in their contribution to overall government expenditures, falling to 5.9% of total spending in 2025, down from 6.3% in 2024. This trend signals the government’s gradual reduction in dependence on external aid while focusing on strengthening domestic revenue mobilization.
Overall, total general government revenues are forecasted at 10.233 billion dinars for 2025, an increase of 875 million dinars or 9.4% compared to the 9.357 billion dinars estimated for 2024. This reflects a combination of improved tax revenue collection and stable non-tax revenue trends.
The budget deficit, net of foreign grants, is expected to total 2.278 billion dinars, or 5.7% of GDP, a reduction from 6.5% in 2024. Furthermore, the primary deficit is projected to decline to 812 million dinars, equivalent to 2% of GDP a marked improvement from 2.9% the previous year. These adjustments underscore a strategic shift in government expenditure toward prioritized spending and fiscal discipline.
Public debt is expected to account for 90% of GDP in 2025, with a clear trajectory toward 80% of GDP by 2028 under the ongoing financial reform agenda. This gradual deleveraging is a critical component of the government’s strategy to balance debt sustainability with development goals.
Government units are expected to generate 1.011 billion dinars in revenues, while their total expenditures are estimated at 1.799 billion dinars. Of these, 1.188 billion dinars will be directed toward current expenditures, and 611 million dinars toward capital spending. This will result in a net deficit across all government units of 788 million dinars. However, excluding the 823 million dinars deficit tied to the Water Authority and National Electricity Company a proxy for indirect support to those sectors the net outcome shifts to a modest surplus of 35 million dinars.
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