Debt-to-GDP Unlikely to Decrease in 2018, Tax Revenues Likely to Subside: Economists

AMMAN —AlGhad— Economists and financial experts Mufleh Aqel and Mohammad Bashir expressed their concerns to AlGhad that the government will not be able to drive down the Debt-to-GDP rate next year, despite claims by Finance Minister Omar Malhas, that the economic measures introduced in the 2018 Budget Bill will do just that.

In his Budget Bill speech at Parliament yesterday, Sunday, Minister Malhas said that the proposed economic procedures will drive down debt-to-GDP to 93.6 per cent.

More so, he claims that these measures should drive the rate to GDP further down to 90.3 and 86.2 per cent by 2020.

On the other hand, financial expert Mufleh Aqel underlined that the government’s 2018 Budget sounds a little too optimistic, in terms of domestic revenues and growth in GDP.

He stressed that the deficit will almost certainly be larger than the government expects it to, especially in light of the expansion in public spending.

Meanwhile, he highlighted, the assumption that revenues will respond in kind to the increase in taxation, excisions and withdrawn subsidies is inaccurate.

In fact, it is more likely that revenues from taxation will subside in the light of increased costs and diminishing purchasing power and incomes.

Likewise, financial expert Mohammad Bashir explained that the government’s outlook on the Budget is “as usual” far too optimistic and unrealistic.

He reaffirms that domestic revenues from taxation will indeed decline.

The result of the government’s apparently myopic economic planning is most probably an increase in the deficit, the economists confirm, contrary to the Minister’s claims.

The deficit is estimated to decline to 1.8 per cent after grants, from 2017’s 2.6 per cent, according to the government.

The government’s hopes are to reduce the deficit to 0.4 per cent by the end of 2019 and achieve an excess of some JOD96 million, or 0.3 per cent, in the public budget by 2020.

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