Jordan apex bank asks govt to control spending

"We have a runaway budget and our current account deficit is chronic and growing,'' Faris Sharaf said in an interview from his office in Amman, Jordan, on Thursday. The shortfall "is financed by foreign direct investment and portfolio flows, but that's not sustainable and it's not an excuse to continue to live beyond our means.''

The landlocked nation that borders Iraq and Israel last month approved a budget that includes a 33 per cent increase in spending to 5.2 billion dinars ($7.3 billion) for this year. The fiscal deficit will widen to 5.6 per cent of gross domestic product, from 5.4 per cent of GDP in 2007.

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The country's inflation rate will probably jump to the highest in 18 years in 2008 after the government ended oil subsidies this month, pushing prices up as much as 76 per cent, Finance Minister Hamed Al Kasasbeh said in an interview Jan.28.

Inflation will accelerate to between 8 per cent and 9 per cent from 5.4 per cent last year.

"We need to start from the supply side and start improving our productivity, our competitiveness and enhancing the flexibility of our markets,'' Sharaf said. "On the demand side, the government needs to bring down its expenditures and the private sector needs to rationalise its consumption. Jordan can no longer continue to live beyond its means.''