Amman, Dec. 8 (Petra) -- The Lower House of Parliament on Monday opened debate on the government’s draft budget for 2026, hearing a detailed report from the parliamentary Finance Committee that stressed the need to maintain fiscal discipline, support social protection, accelerate investment, and avoid new taxes while navigating geopolitical pressures and sluggish regional demand.

Prime Minister Jafar Hassan and members of the cabinet attended the session, chaired by Speaker Mazen Qadi. The committee’s rapporteur, MP Mohammed Al-Bustanji, presented the findings after 104 meetings held over thirteen days with ministries, institutions and units covered by the spending plan.

Finance Committee Chairman Nimer Al-Slaihat said the proposal was submitted earlier than usual to allow sufficient time for scrutiny and to improve government performance indicators. The committee said the draft budget aligns with the Kingdom’s Economic Modernisation Vision and the accompanying public-sector reform program, which were launched in 2022.

The committee noted that the government acted on the majority of recommendations attached to the 2025 budget, and said the early submission reflected a commitment by both the executive and legislative branches to complete the constitutional cycle before the end of 2025.

The report highlighted a revision of national accounts conducted by the Department of Statistics, which raised the value of Gross Domestic Product (GDP) to JD39.8 billion at constant prices for 2023 after incorporating new data sources and activities.

The restatement raised cumulative GDP by around 10% for the period 2008–2023. The committee said the revision would affect ratios for public debt and sovereign credit metrics and would feed through to results for 2024–2026.

Real GDP growth for 2025 is projected at 2.8%. The largest contributors were agriculture, which expanded by 8.6%, manufacturing at 5%, electricity and water at 4.9%, and social and personal services at 4%. Based on the committee’s assessment, GDP may reach JD45 billion by end-2025.

Inflation averaged 1.87% over the first ten months of 2025, driven mainly by personal goods, oils and fats, seafood, education services and coffee and tea products.

Exports rose 9.1% to JD6.99 billion during the first nine months of 2025, while re-exports increased 6.5%, bringing total exports to JD7.69 billion. Imports reached JD14.99 billion, widening the trade deficit by around 5% compared with the same period of 2024. Coverage of imports by exports stood at 51%.

Garments remained the top export category at JD1.24 billion, followed by nitrogenous fertilisers at JD808 million, jewellery at JD589 million, pharmaceuticals at JD470 million, raw phosphate at JD427 million and potash at JD412 million. Imports continued to be dominated by crude oil and petroleum products at JD1.95 billion, machinery and tools at JD1.25 billion, precious jewellery at JD1.2 billion, and vehicles and parts at JD1.16 billion.

Unemployment remained elevated, with an overall rate of 16.2% and 21.4% among Jordanians. The committee said a rise of 95,000 in registered Social Security contributors between January and mid-November 2025 suggests the decline in joblessness may be greater than reported.

Central bank reserves stood at USD24.1 billion, covering 9.1 months of imports, and were up by USD3.1 billion from end-2024. The committee praised monetary policy management, which helped maintain dinar stability and ease borrowing costs. Interest rates were lowered by half a percentage point in 2025.

Tourism revenue reached JD4.6 billion by October, up 6.5%. The sector’s contribution to GDP rose to 14.1% from 13.3% a year earlier. The committee said Aqaba and Amman had driven growth, while Dead Sea traffic was stable and visits to Petra and Wadi Rum declined. Low-cost carriers attracted 130,000 visitors.
Foreign assistance and strategic agreements

Between January and September, Jordan contracted USD1.7 billion in concessional loans, with rates ranging from 0.5% to 4% and maturities of 15–25 years. A multi-year EU support package worth EUR3 billion for 2026–2028 was signed to back the budget, refugee programs and host communities. The committee expressed appreciation for support from the United States, the EU, Germany and Japan.

The report highlighted diplomatic activism by King Abdullah II and Crown Prince Hussein, saying strategic partnerships with Asian and European leaders had boosted investment prospects and paved the way for a first EU-Jordan summit in 2026.

A major component of capital spending is the National Water Carrier, the largest water-infrastructure project in Jordan’s history. The scheme will desalinate 300 million cubic metres annually from the Red Sea at Aqaba and pipe it 450km to the rest of the country, covering about 40% of drinking-water demand.

Estimated cost is around JD4 billion under a public-private partnership model. Government budget contributions amount to JD300 million, while grants secured through the Ministry of Planning and International Cooperation total USD642 million. International financing of USD3.16 billion has been raised, alongside USD770 million in local bank financing and a possible USD1 billion investment from the Social Security Investment Fund. Work is scheduled to begin in early 2026.

The project is positioned as central to water security amid declining rainfall, population pressure and aquifer depletion, and will use renewable energy for operations.

Total revenue for 2026 is estimated at JD10.93 billion, up 9.1%. Tax revenue accounts for 70% of total revenue. The committee warned that sales tax remains regressive and contributes to higher burdens on lower-income households, particularly with inflation.

Tax revenue is projected at JD7.66 billion, an increase of 11% compared with the revised estimate for 2025. Income tax is expected to rise 10% to JD1.93 billion. Corporate income tax is forecast at JD1.32 billion, supported by better corporate results and expected profit growth. Personal income tax is projected to grow 12.7%.

General sales tax is forecast at JD5.18 billion, up 9.8%. The committee attributed part of the increase to vehicle tax restructuring, job creation, fuel demand and natural consumption growth. Customs duties are projected to rise 37% to JD360 million, though the committee said the target is challenging and may affect overall tax performance.

Non-tax revenue is estimated at JD2.54 billion, up 6.8%, driven by regulatory fees, telecommunications revenues, airport concession income, mining royalties and other charges. Grants are projected at JD735 million.

Total expenditure is budgeted at JD13.06 billion, up 6.4%. Current spending represents 87.8% of expenditure and capital spending 12.2%. Social safety-net allocations amount to JD804 million, including treatment coverage for 4.1 million cancer patients at King Hussein Cancer Centre, assistance for 248,000 families under the National Aid Fund, and food and commodity support for the population.

Current spending includes JD3.2 billion for the civil service, JD3.3 billion for the armed forces and security services, JD1.82 billion for pensions, JD2.26 billion in interest payments, JD280 million for recurring social aid, JD251 million for food subsidies and JD124 million for cancer care funding.

Capital expenditure totals JD1.6 billion, an increase of 16.8%, split among ongoing, under-implementation and new projects. Provincial development projects receive JD100 million.

The budget deficit is projected at JD2.13 billion, equivalent to around 4.6% of GDP, though ratios may shift once GDP restatement is fully incorporated.
Financing and public debt

Budget financing totals JD9.81 billion, mainly through domestic borrowing of JD5.54 billion, international budget-support loans of JD2.05 billion, domestic dollar-denominated bonds of JD1.46 billion, other foreign borrowing and project loans.

Public-debt service accounts for a large share of financing use: JD4.42 billion for domestic debt retirement, JD1.41 billion for dollar bonds, JD891 million to repay external loans and JD354 million for other foreign-currency instruments.
Government units and deficits

Revenues of 24 self-financing government units are projected at JD1.2 billion, including JD926 million from sales of goods and services. Several units report improved results, led by National Electric Power Company, which accounts for over half of revenue growth. Other contributors include the Civil Health Insurance Fund, Aqaba Development Company, Petra Regional Authority and Jordan Water Company.

Unit expenditures are forecast at JD1.24 billion in current spending and JD629 million in capital spending. The consolidated deficit of government units is JD671 million, with the largest shortfalls in the Water Authority and the National Electric Power Company.

Committee recommendations: inflation protection, investment and reforms
The committee urged an increase in salaries for civil and military employees and retirees to compensate for cumulative inflation, and cautioned against introducing new taxes or shifting items into higher sales-tax brackets.

It called for a review of the sales-tax structure to better reflect income levels, a reduction in debt-service costs through concessional financing, and strict adherence to emergency-fund rules.

The committee recommended capping growth in operating expenditure of government units at no more than 25% of actual revenue growth, excluding financing obligations, and proposed establishing an investment fund for civil and military retirees and future contributors, to participate in major projects such as the planned "Amra City".

It also called for extending incentives for real-estate transactions, maintaining central-bank concessional credit schemes, attracting foreign investment via follow-up on royal visits, streamlining investment procedures, and expanding incentives in the provinces.

Sectoral recommendations covered small-business support, rural production schemes, vocational training, digital-government services, artificial-intelligence infrastructure, agricultural cooperatives, water-loss reduction, livestock surveys, and tourism product diversification.

The committee also urged continued funding for the armed forces and security services, a study of audit-oversight reforms at the Audit Bureau, and equal benefits for the Mufti of the Iftaa Department with those of Sharia judges.

The House will vote on the budget chapter by chapter, and then on the Finance Committee’s recommendations. The cabinet approved the draft on 5 November and forwarded it to Parliament on 11 November. The Finance Committee endorsed the draft on 7 December.

//Petra// AA

08/12/2025 14:57:03