The next time you are moved to bemoan the effects of the economic downturn on your pay cheque, take heart - at least you are not a Jordanian cabinet minister. Ministers in Amman have volunteered to take a 20 per cent pay cut, hoping it will set an example and help cut government spending. The saved money will go to a fund for the poor, the government news agency Petra reported.
The decision follows the move by the ratings agency Standard & Poor's (S&P) to downgrade Jordan's sovereign debt to the brink of "junk" status last week. The kingdom saw its budget deficit balloon last year as the global economic crisis hit and foreign grants dried up. S&P pointed to weaker fiscal flexibility and rising government debt. "Primarily because of the global economic slowdown and a decrease in external grants, the general government deficit [including the social security balance and local government] increased to an estimated 7.8 per cent of GDP last year, from a broadly balanced position during the previous five years," S&P said.
The country's cabinet ministers may have taken heart from the decision by S&P to maintain a stable outlook for the country. S&P said it hoped the situation would stabilise this year given expectations that growth would pick up and the government would cut spending. Jordan imports most of its oil and relies heavily on foreign grants and investments for income. But last year the inflow from grants more than halved and the country's fiscal deficit grew to 1.44 billion Jordanian dinars (Dh7.49bn). This year, the government expects to halve its budget deficit to 3.9 per cent of GDP.