Jordan’s effort to cut subsidies and tap into reserves may not be enough to bridge the Arab nation’s widening budget deficit as $3.7 billion of debt matures this year and the energy bill spirals.
The country is drawing on foreign reserves and cutting subsidies to access cash after its oil and electricity import bill surged 54 percent to 3.7 billion dinars ($5.2 billion) in 2011, according to statistics department data. Foreign-currency reserves slumped 11 percent in the first quarter from December to $9.36 billion, central bank data show.
Covering the state’s expenses may get harder without issuing new debt after the government this week doubled its 2012 budget deficit forecast to 9.3 percent of economic output, the highest in at least a decade. That exceeds the International Monetary Fund’s deficit forecasts for Lebanon, Morocco and Tunisia. Jordan’s new government, sworn in this month, approved measures to cut spending by 300 million dinars, the official Petra news agency reported May 19.
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