VZCZCXRO6039
RR RUEHLMC RUEHMA
DE RUEHAM #0320/01 0351014
ZNR UUUUU ZZH
R 041014Z FEB 10
FM AMEMBASSY AMMAN
TO RUEHC/SECSTATE WASHDC 6847
INFO RUEHGB/AMEMBASSY BAGHDAD 6375
RUEHLB/AMEMBASSY BEIRUT 3168
RUEHEG/AMEMBASSY CAIRO 0028
RUEHDM/AMEMBASSY DAMASCUS 4331
RUEHMA/AMEMBASSY MALABO
RUEHRH/AMEMBASSY RIYADH 2291
RUEHTV/AMEMBASSY TEL AVIV 2025
RUEHTU/AMEMBASSY TUNIS 1080
RUEHJI/AMCONSUL JEDDAH 0958
RUEHJM/AMCONSUL JERUSALEM 5779
RUEHLMC/MILLENNIUM CHALLENGE CORP WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHDC
RHEBAAA/DEPT OF ENERGY WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHDC

UNCLAS SECTION 01 OF 03 AMMAN 000320 
 
SENSITIVE 
SIPDIS 
 
STATE FOR NEA/ELA AND EEB 
STATE PASS USTR 
TUNIS FOR FSI STUDENT WONG 
MALABO FOR MOSS 
 
E.O. 12958: N/A 
TAGS: ECON ECIN EFIN EAID PGOV JO
SUBJECT:  Jordan's 2010 Budget Hits Government Agencies Hard with 
Capital Expenditure, Hiring and Travel Cuts 
 
REFS: A. 09 Amman 2673 
¶B. 09 Amman 2572 
¶C. 09 Amman 2408 
¶D. 09 Amman 2190 
¶E. 09 Amman 2064 
¶F. 09 Amman 1932 
¶G. 09 Amman 1646 
¶H. 08 Amman 2982 
 
¶1. (SBU) Summary:  The severe cuts to the 2010 budget have hit 
Government of Jordan (GOJ) ministries hard (ref A).  With a 
projected deficit of $1.43 billion, the 2010 budget of $7.71 billion 
includes 20% cuts to capital expenditures and 1.4% cuts to current 
expenditures, and will impact GOJ entities by curtailing their 
ability to hire new employees, and forcing cuts in overtime, 
official travel, and purchases of vehicles and furniture.  The tight 
budget could also impact the USG as Jordan will likely request 
additional financial and technical assistance to compensate for 
budget shortfalls.  Existing reform and development projects 
requiring new staff or construction will also face financial 
constraints.  Budget difficulties will be more pronounced during the 
second half of 2010, as revenues are expected to decrease from 2009 
levels, due to lower income and sales tax revenues.   End summary. 
 
¶2. (SBU) A recurring theme during recent EconOff engagement with GOJ 
officials from a broad spectrum of ministries and other agencies is 
the significant impact of Jordan's budget deficit and the cuts in 
the 2010 budget on GOJ entities.  Jordan's 2010 budget, with $6.74 
billion in projected revenues, $7.71 billion in expenditures, was 
approved on December 8, one day before the cabinet shake-up (ref A). 
 The budgeted deficit before grants for 2010 is targeted at $1.4 
billion or 5.8% of Jordan's GDP (estimated at $24.7 billion for 
2010)(ref G).  EconOffs have heard from GOJ contacts, both during 
the last quarter of 2009 and through January 2010, that the budget 
crisis of 2009 and the cuts included in the 2010 budget will 
particularly impact GOJ public sector capital expenditure projects 
as well as the day-to-day operations of all GOJ ministries and other 
entities by severely limiting overtime, new hiring, and official 
travel.  New furniture and vehicle purchases will also be 
curtailed. 
 
Capital Expenditures Hit Hardest 
-------------------------------- 
 
¶3. (SBU) In reviewing the details of the 2010 budget, capital 
expenditures appear to have taken the hardest hits.  The Ministries 
of Information and Communications Technology, Culture, and 
Environment all had at least 30% cuts in their capital expenditure 
budgets.  The capital expenditure budget of the Ministry of Defense 
will be slashed 48%, with the remaining capital expenditure funds 
dedicated to a military academy project.  The few ministries with 
increases to capital expenditure budgets were the Ministry of Energy 
and Mineral Resources, whose expenditures are related to Jordan's 
nuclear energy project, and the Ministry of Transportation, which 
had a revenue influx, in part to cover the costs of land acquisition 
for a rail line between Amman and Zarqa, an industrial town 15 
kilometers northeast of the capital (ref D). 
 
Making Ends Meet 
---------------- 
 
¶4. (SBU) Zeroing in on the budgets for certain GOJ entities gives a 
better picture of how the 2010 budget will impact GOJ operations. 
Starting at the top, even the Royal Court will see 18% cuts in its 
budget, including cuts to salaries by $10 million, capital 
expenditures set at $0, equipment purchases cut from $1.4 million to 
$46,000, a phone and communications budget cut from $1.8 million in 
2009 to $170,000, and a decrease in the fuel budget from $2.5 
million to $170,000. 
 
¶5. (SBU) The Ministry of the Environment (MOE) has been hit with a 
 
AMMAN 00000320  002 OF 003 
 
 
35% cut in its capital expenditure budget.  Because of the cuts, the 
MOE will increase its focus on public-private-partnerships (PPP) to 
carry out some of its critical programs.  For example, Jordan's 
National Agenda calls for a medical and hazardous waste program. 
The GOJ was intending to carry out the project independently, but is 
instead moving the plan forward as a PPP with a $42 million 
investment.  The MOE is also a focal point for 19 treaties and its 
officials therefore must conduct official travel.  The Prime 
Ministry has been accommodating, but MOE is trimming the size of its 
delegations and traveling at the expense of others whenever 
possible.  Foreign Ministry officials commented that whenever 
possible, diplomats from Jordanian embassies will attend events in 
host or nearby countries, cutting traveling expenses but also 
limiting technical expertise. 
 
Less Travel, Fewer New Hires 
---------------------------- 
 
¶6. (SBU) The Jordan Institution for Standards and Metrology (JISM), 
Jordan's standards and safety regulatory agency and a key GOJ 
interlocutor on Intellectual Property Rights issues, complained to 
EmbOffs that the amounts slashed from travel budgets were arbitrary 
and that JISM will not be able to attend many of the conferences and 
meetings in which it usually participates.  JISM is in the process 
of prioritizing its travel requirements, focusing first on events of 
those international bodies where JISM plays a leadership role. 
 
¶7. (SBU) The leadership of the Jordan Investment Board (JIB) told 
EconOffs that the cuts have not had a great impact on its travel 
budget because much of JIB's travel is in advance of or along with 
the King's travel and thus covered by the Royal Court.  Like JISM 
and other agencies, however, there are no plans to hire new staff 
despite Jordan's need and desire to further promote foreign 
investment in Jordan. 
 
¶8. (SBU) The Jordan Food and Drug Administration (JFDA) asserted to 
EconOffs that the cuts have impacted not only their travel budget, 
but also plans for expansion.  The JFDA wanted to open a Zarqa 
office since most of Jordan's packaged food is manufactured there. 
Those plans are now on hold.  Inspections will also be affected by 
the cuts and JFDA has had to prioritize training options. 
 
¶9. (SBU) Contacts at Jordan's Ministry of Industry and Trade 
explained to EconOffs that most of its travel is not for conferences 
and seminars, but rather for bilateral or multilateral trade talks 
and as a result will not take significant cuts.  They told EconOffs 
that MOIT will, however, cut overtime by 30% by curtailing Saturday 
work to keep the Ministry dark an extra day of the week, an 
energy-saving measure that should save the Ministry 15% in 
electrical use, preserving both the environment and the Ministry's 
budget. 
 
Impacts of the Cuts on the USG 
------------------------------ 
 
¶10. (SBU) Comment:  In the 2010 budget, current expenditures, which 
cover salaries and pensions for civilian and military employees, are 
already at $6.4 billion and account for 83% of expenses.  The budget 
cuts leave little room for new hiring, and any new hiring that does 
take place would further increase the deficit.  Further reason for 
concern is that Jordan's 2010 revenues are expected to be lower 
compared to 2009 revenues, because 2009 saw an actual increase in 
income and sales tax revenue based on strong growth in 2008 (ref B). 
 Weak growth in 2009 will translate to lower income and sales tax 
revenues this year (taxes on 2009 income will be paid in 2010). 
This along with a continued downward trend for the collection of 
land sales and other fees by the GOJ in 2010 portends an even more 
precarious budget situation during the second half of 2010. 
 
¶11. (SBU) Comment continued:  These budget issues will certainly 
create new policy considerations for the USG in the year ahead. 
 
AMMAN 00000320  003 OF 003 
 
 
Post anticipates even more requests from the GOJ for financial and 
technical assistance.  The budget crunch will likely become an 
obstacle or cause for delays in key reform and development projects 
of interest to the U.S., particularly for those that require the 
hiring of additional Jordanian staff or new construction at GOJ 
expense.  As examples, implementation of the Megaports Initiative, 
standing up an independent and robust Anti-Money Laundering Unit, 
and increasing labor inspectors under the Ministry of Labor all 
require new staff positions and might be impacted, although GOJ 
interlocutors assert these particular programs will be able to 
secure funding and that shifting personnel within ministries or 
between them is also an option.  End comment. 
 
BEECROFT