Selective Budgeting: On the 2018 Budget Bill

By Jumana Ghunaimat

تم نشره في Mon 20 November / Nov 2017. 01:00 AM - آخر تعديل في Mon 20 November / Nov 2017. 11:53 PM
  • Jumana Ghunaimat

Earlier this week, the council of ministers endorsed the 2018 Budget Bill, ahead of its review for ratification by the House of Representatives.

Obviously, there are discrepancies in the Budget and the fact that it has been expanded, despite the evident economic crisis.

Operational and current expenditures in the 2018 Budget have increased by nearly JOD400 million, whereas debt interest has also increased by some JOD70 million.

All in all, the Budget has grown from JOD8.4 billion to around JOD9 billion, indicating an overall expansion in public spending, by nearly JOD600 million!

Even though the government has failed to raise domestic tax revenues to JOD5.2 billion as estimated for the year 2017, they seem somehow convinced they will succeed this time!

Something must have changed since. Otherwise, why would the government risk further spending expansions, when actual tax revenues have fallen JOD700 million short from the target estimate for 2017! It does not make any sense!

If anything, the only thing it makes for is an even bigger deficit problem!

Since when is more spending the answer to a growing deficit? How does it help? What is the government planning to do?

Well, as far as we know, the government plans to substitute bread subsidies with direct cash subsidies. Rumour has it the government is also planning to suspend tax exemptions!

Interestingly enough, the Treasury used to allocated some JOD135 million, on an annual basis, to bread subsidies, according to the 2017 Budget. This time, the government has allocated JOD171 million to cash substitutes for bread subsidies and sales tax exemptions under the Social Security Network Programme clause.

Obviously, the government has not been paying attention to the International Monetary Fund (IMF). Or perhaps the government has been picking and choosing which recommendations to follow and which to ignore. Because it seems they chose to ignore the recommendations regarding deficit and expenditure control, but went with bread de-subsidisation and growing domestic revenues!

It sounds a lot like selective budgeting, except the selections are not that great!

Now, how on earth is the government going to make an addition JOD900 million in tax revenues in 2018, with such a humble growth rate, estimated at best at 2.3 per cent?!

The government must be dreaming! Otherwise, maybe they should enlighten us as to how they plan to attain such a goal!

On top of it all, Dr Hani Mulqi’s government has only just begun paying off the postponed one billion dollars, incurred under Dr Abdullah Nsoor’s government. Naturally, this only adds to the government’s liabilities, for years to come!

Meanwhile, military expenditures were also increased under the 2018 Budget Bill to JOD2.5 billion, from JOD2.3 billion in 2017. The section has been split into two sub-categories; the military and the security and public safety sections.

The highlight of the 2018 Budget Bill, despite the decline in foreign grants to some JOD700 million, is that public spending is still expanding!

Where does this put us in regards to our aspirations of self-sufficiency and fixing our own problems? How are we planning to get there with a growing budget and growth rate and an income that does not even cover our expenses?!

How are we going to make JOD9 million in domestic revenues, to cover our expenses, with the economy in such a state?! What assumptions is this Budget based on?

Budgets are usually based on realistic assumptions, both domestic and regional, rooted in quantifiable indications that stem from current, tangible developments in reality.

Of course, nothing about our domestic or regional reality indicates that these figures are in any way attainable.

The increase in spending is irrational, and the shortcoming results of the 2017 Budget are proof enough; if we were unable to attain the objects of the budget this year, what makes the government think we can make it next year?

This article is an edited translation of the Arabic version, published by AlGhad.