Ayman Khalalieh, director of studies and economic policies at the ministry, claims its budget deficit this year will be JD700m, 5.2 per cent of gross domestic product (GDP).

The Finance Ministry forecast in July that the budget deficit would reach JD826m, 6.5 per cent of GDP, in 2008.

“We are trying to cut down current expenditure,” says Khalalieh. “Our re-estimate for the 2008 [budget deficit] is JD695-700m. I think it will go down to 4.6 per cent of GDP in 2009 because revenues are forecast to increase.”

Khalalieh was speaking after the ministry published figures showing a budget deficit of JD720m for the first eight months of the year.

To meet its revised full-year forecast, the government will have to run a budget surplus of at least JD20m ($28.2m) over the final four months of the year.

“t will either have to decrease expenditure or finance part of its investment plan from international sources,”says Luc Marchand, analyst at ratings agency Standard & Poor’s.

“n the case of Jordan, I do not think that is impossible.”

Amman has been helped by increases in aid from foreign donors. In September, the US announced it was increasing its grant to Jordan to JD467m a year, from JD316m a year, for the next five years.

This is more than the JD440m the Finance Ministry had expected from all donors this year (MEED 23:9:08).

Sales tax receipts are also expected to increase, by 17.7 per cent this year to JD1.1bn, because of Jordan’s high inflation.

However, government spending is also rising, with expenditure expected to be up 15 per cent to JD5.3bn for 2008.

The Finance Ministry told parliament in early October that it had budgeted for spending to increase by 13 per cent to JD5.9bn for 2009.

However, Khalalieh says the government will not spend the entire budget and that annual salary increases for public sector workers will be just 7 per cent.