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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