Jordan’s economic growth will accelerate to 5 percent in 2011 from a projected 4 percent this year, Finance Minister Mohammad Abu Hammour said.
“This will be a result of measures the government has taken like lowering of the income tax by between 15 and 50 percent on various industries and big infrastructure projects like a railway project, and the current expansion of the airport,” Abu Hammour said in a telephone interview from Amman today. “The economy has also been on the rebound and exports in the first 8 months grew 15 percent.”
Jordan’s economic growth accelerated to an annual 2.9 percent in the second quarter, led by the mining and transport industries. The rate compares with 2 percent growth in the previous quarter. Growth was 2.3 percent in 2009.
In a May interview Abu Hammour said the economy would grow as much as 4 percent this year, while the International Monetary Fund says it may grow by 3.4 percent in 2010 and 4.2 next year, as regional growth accelerates. Jordan, one of the smallest economies in the Middle East, imports more than 90 percent of its oil and relies on foreign investment and grants to finance deficits in the budget and the current account.
Foreign grants more than doubled in the first eight months of the year to 249 million dinars ($352 million), compared with 103 million dinars in the same period of 2009.
The kingdom’s budget deficit narrowed to 428 million dinars in the first eight months of this year from 758 million dinars in the same period in 2009 after the receipt of grants and a reduction in government spending. The projected budget deficit for this year after grants is 1 billion dinars or 6 percent of gross domestic product, compared with about 9 percent last year.
The government plans to cut the fiscal deficit to 5 percent next year and reduce operational expenses by 15 percent while increasing capital expenditures by 16 percent, Abu Hammour said.
Jordan hired JPMorgan Chase & Co., HSBC Holdings Plc, Credit Suisse Group AG and Arab Bank Plc last month to manage the sale of a $500 million Eurobond to help finance the nation’s budget deficit.
The bond was rated today Ba2 by Moody’s Investors Service and BB by Standard & Poor’s in line with the country’s long-term foreign-currency debt ratings.
Jordan’s foreign debt increased by 1.6 percent to 3.93 billion dinars in the first seven months of the year, the Ministry of Finance said in a report last month. Domestic debt increased 10.6 percent to 6.4 billion dinars.