Public finance is the backbone of any economy, reflecting the strength of the state and its ability to manage resources and meet citizens’ needs. In Jordan, public finance has remained one of the most urgent and complex issues over past decades, with accumulated imbalances and intertwined economic, political, and social factors making it the greatest challenge for any economic reform. The core problem lies in the chronic gap between revenues and expenditures, which annually translates into a budget deficit financed through domestic and external borrowing. As deficits accumulate, public debt has reached alarming levels, and debt servicing consumes a significant portion of the budget, leaving little room for development spending or investment in new projects.

 

Even more concerning, a large portion of borrowing is not directed toward investment or capital projects but to cover current expenditures such as salaries, pensions, and debt service. This creates a vicious cycle: deficits generate new borrowing, high debt consumes resources, and weak growth limits the government’s ability to increase revenues. Consequently, the economy becomes trapped by its debt, unable to escape its consequences without fundamental reforms.

 

Government decisions and policy choices have often intensified financial pressures, especially when made under political or social constraints. These choices, combined with structural weaknesses in budget management, have limited the state’s ability to control spending and raise revenues effectively.

 

The situation is further complicated by external constraints on fiscal policy, which reduce flexibility in responding to economic slowdowns. Weak budget discipline and accumulating unpaid obligations create new financial pressures, undermining transparency and distorting the true size of the deficit. Together, these factors deepen Jordan’s public finance challenges and highlight the need for comprehensive reform.

 

These challenges have highlighted the importance of a coordinated and strategic approach to public finance. Without clear priorities, effective monitoring, and accountability mechanisms, efforts to reduce deficits and manage debt remain fragmented and less effective. A national strategy must integrate fiscal planning with broader economic and social policies, ensuring that resources are allocated efficiently while supporting sustainable growth and stability.

 

Jordan’s public finance crisis is not merely a numbers problem; it is the result of accumulated policies, decisions, and circumstances. Addressing it requires comprehensive solutions. Recognizing the magnitude of the problem is the first step toward building a true national strategy for reform, capable of restoring balance to public finance and placing the economy on a path of sustainable growth. Delaying action further would increase the burden on future generations and reduce the state’s capacity to meet citizens’ needs.

 

Economics Department – The University of Jordan