Jordan’s budget deficit decreased by 44.5 percent in the first eight months of 2010, as a result of an increase in domestic revenues and foreign aid, according to the latest figures from the Ministry of Finance.
In its latest monthly bulletin, the Jordanian Ministry of Finance reported that between January and August the kingdom’s deficit amounted to $602.96m, compared to $1.067bn in the same period last year.
The healthier outlook for the state’s finances was attributed to a 6.8 percent increase in domestic revenues and foreign aid, which rose to$4.425bn, Petra – the Jordan News Agency – reported.
Foreign aid into the country more than doubled to $350.38mm, up from $144.75m in 2009.
Overall state debt rose 7.9 percent to $14.68bn, amounting to 53.7 percent of total GDP.
Jordan’s debt situation and its budget deficit could be aided by plans to introduce new legislation which would allow the kingdom to issue its first ever sovereign sukuk.
Earlier this month, prominent Islamic bankers in Jordan, along with members of a top-level ministerial committee mandated with drafting the sukuk law, said new legislation set to be introduced in the next few weeks will help to widening Jordan’s borrowing options.
“The main prerequisites for the issuance of sukuk have been drafted. (The draft law) provides the regulatory framework … and I expect in two weeks’ time the draft law will be submitted to the cabinet,” committee leader and Minister of Religious Affairs Abdul Salam Abbadi told the Reuters Middle East Investment Summit earlier this month.
The draft law overcomes an impediment facing the government if it was to issue sukuk to finance major projects under Islamic-compliant Sharia terms, which require Islamic banks to first buy an asset which they then sell to the borrower.
By allowing the setting up of a special purpose vehicle (SPV) into which state assets are transferred, the law overcomes legislation preventing the government from forgoing title to assets or property when it borrows.
Sources within the committee said the draft law also offers guarantees that protect investors, approves the listing of sukuk on the local bourse, and allows for a secondary market in Islamic-compliant debt.