Capital spending plays a pivotal role in fostering economic growth and realizing national development strategies. In Jordan, however, recent analysis by the Jordan Economic Forum reveals a widening gap between the ambitions of the Economic Modernization Vision and the reality of how capital expenditures are planned and allocated. This disconnect raises critical concerns about the government’s ability to steer the economy toward a productive and sustainable path.

 

According to the policy paper, Jordan’s capital expenditures have remained largely stagnant over recent years, fluctuating between JD 1.1 billion and JD 1.5 billion. While spending peaked in 2022 at JD 1.512 billion, it declined to JD 1.468 billion in the 2025 draft budget. This inconsistent trend highlights the absence of a medium- or long-term public investment strategy, undermining the stability and continuity required for effective development planning. Without a strong institutional framework to guide investment and evaluate outcomes, major projects risk delay or inefficiency.

 

When viewed in a global context, Jordan’s capital spending is modest. Over the past decade, capital expenditure as a share of GDP has ranged between 2.7 per cent and 4.6 per cent—significantly below the 5 per cent to 7 per cent range typical for developing countries. This underinvestment limits the state’s ability to stimulate growth, create jobs, and reduce regional disparities. Instead, the economy remains dependent on current expenditures and consumption-led growth—an approach that falls short of the modernization vision’s aspirations.

 

The structure of Jordan’s capital spending also reveals significant imbalances. A large share of funds is directed toward economic affairs, infrastructure, and general public services. Meanwhile, some essential sectors such as environmental sustainability and social protection receive less than 2.5 per cent of total capital expenditures in the 2025 budget. These sectors are key to inclusive and resilient development, and their marginalization signals a continuation of outdated spending priorities.

 

This misalignment is particularly evident in the lack of funding for projects related to innovation, entrepreneurship, and sustainable resources—core elements of the modernization agenda. Approximately 19.2 per cent of capital expenditures are allocated to sectors that are not directly connected to the vision’s strategic priorities.

 

Geographic distribution of spending presents another major challenge. Around 90 per cent of capital expenditures are allocated to central government projects, leaving just 9.2 per cent for governorates. Such centralization exacerbates regional disparities, limits local development opportunities, and reduces the responsiveness of public investment to community needs.

 

To address these challenges, the policy paper offers a series of important recommendations. These include developing a medium-term strategic framework for capital spending, gradually increasing capital expenditure to 6 per cent of GDP by 2030, and realigning spending priorities with the modernization vision. It also proposes the creation of an independent investment fund for strategic projects, expanding the role of the private sector and international financing in development, and increasing the governorates’ share of capital spending to at least 25 per cent.

 

If implemented effectively, these reforms could enhance the efficiency, equity, and impact of public investment—providing the Economic Modernization Vision with the financial tools it needs to succeed. However, achieving this will require more than technical adjustments. It calls for a strong institutional commitment to rethinking how public funds are allocated, and ensuring that investment decisions are guided by long-term national priorities rather than short-term constraints.

 

Ultimately, the issue is not simply the amount of capital spending, but how it is allocated, implemented, and monitored. Without structural reform in the management of public investment and stronger partnerships with the private sector, the gap between ambition and reality will persist. Without such reforms, the promise of modernization risks remaining unfulfilled.

 

Raad Mahmoud Al-Tal is Head of the Economics Department – University of Jordan- r.tal@ju.edu.jo