It will also be difficult for the government to achieve its deficit target of 6 per cent of GDP in the 2001 budget, said Shaer, who chairs the Upper House Finance and Economic Affairs Committee. Shaer attributes the economic slump to the deteriorating situation in the Palestinian territories and the consequences of the Sept. 11 attacks on the US and their negative impact on the global economy. Official statistics show that the deficit jumped by 22 per cent to JD293 million during the first eight months of this year as compared to the same period the year before. Aggravated by the economic fallout of the terrorist attacks on New York and Washington, the global economy is suffering its slowest growth in a decade. Tourism sources say that tourist arrivals from US and Europe plunged by 60 per cent during the first half of this year.
Economists also see transportation and exports being affected.
The January-August report of the Finance Ministry showed that capital expenditure rose by 16 per cent to JD177 million, while current expenditure increased by 4 per cent to around JD1.160 billion compared to the same period of 2000. In addition there was a 0.6 per cent drop in domestic revenues. The increase in current expenditure has been repeatedly blamed on the natural growth in wages, salaries and allowances, pension expenses, interest payments on domestic debt and new posts created at the Education Ministry. Shaer sees one way out of the current predicament would be through reforming the pension system. A total of JD294.4 million of the JD1.8 billion earmarked for current expenditure in this year's budget will be spent on pension payments.