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Minister of Finance reviews the experience of Jordan in the field of support system
4/11/2018 2:34:00 PM

H.E. Minister of Finance, Omar Malhas, explained the change of trend in fiscal policy in Jordan from traditional measures to longer-term structural policies that would be more equitable and inclusive growth wise among community, including the adoption of social programs to support the less fortunate.

This statement came in the context of a paper presented by Minister Malhas at the meeting of the Arab finance ministers held in the Dead Sea entitled "The Hashemite Kingdom of Jordan Experience in the Field of Support System", which was presented on his behalf by the Secretary General of the Ministry of Finance, Dr. Ezzedine Kanakriya.

In the paper, H.E. Malhas added that the government has expanded its fiscal policy in adopting methodologies that avoid negative impact on purchasing power as far as possible and aim to reduce distortions in economy, restore confidence in the fundamentals of the national economy and gradually raise economic growth rates.

The Minister of Finance's paper also included an explanation of reforms that included government support that targeted various sectors. The paper also presented a brief description of the direction of fiscal policy in Jordan.

In the fuels sector, the value of government subsidies to fuel amounted to 3% of GDP annually by the end of 2011. As a result of the increase in the value of this subsidy, the government implemented reform measures through the liberalization of fuel prices. Fuel prices, the government worked to provide direct monetary support to citizens in accordance with a mechanism aimed at redirecting support to those who deserve it if the price of a oil barrel exceeded $ 100.

With regard to subsidizing bread, H.E.'s paper considered that this form of support may have been the most controversial due to its relation to subsidizing the price of bread, and the average subsidy for flour has averaged about half a percent of GDP per year. The rate of bread consumption, which is consumed by all who reside in the Kingdom, benefiting Jordanian and non-Jordanian, poor and rich, in addition to the occurrence of unacceptable distortions in the mechanism of the distribution of flour on the bakery, the government, according to what the Minister of Finance, To eliminate flour and substitutes support FT guidance to support the value of the target of low- and middle-income category.

The summary of the Minister of Finance's paper concluded that Jordan has thus ended the direct support for commodities borne by the budget and directed towards direct monetary support for the eligible category, while there is still an inter-subsidy of cooking gas for homes and electricity.

With regard to water, according to the paper, the Government is working through the financial and economic reform program to reach the state of operational balance through specific medium-term actions.

In the past two years, the government has begun the process of reforming the general tax on sales by reducing tax exemptions for most goods and services to 10 percent and 16 percent. However, some basic foodstuffs and medicines reduction of exemptions on general sales tax in line with the government's intention, within the financial and economic reform program, to strengthen the social safety net system, which also includes the aid and scholarship fund, the social security package, the promotion of productivity and the relief of the displaced fund student needy and the establishment and maintenance of housing for poor families and the establishment of centers for people with special needs, and as much as expected spending on the social safety net for the year 2018 by about 3 percent of gross domestic product (GDP).