The Jordanian General Budget 2026: Fiscal Realities and Structural Challenges Across Sectors

Jordan’s general budget has entered a complex phase laden with implications that transcend the familiar annual debates over figures, appropriations, and percentages. The budget is no longer merely an accounting document that measures the gap between revenues and expenditures or a financial report outlining next year’s needs. It has become a political instrument that reflects the state’s capacity to redefine its role, reorder priorities, and respond to a society evolving faster than its institutions, and to an economic and social reality that can no longer tolerate partial solutions or conventional policy responses.

In recent years, Jordan has faced compounded pressures: economic slowdown, rising living costs, declining purchasing power, regional instability, energy and water crises, and challenges related to climate, health, education, and unemployment. It is increasingly clear that the state’s ability to navigate these transformations depends less on the resources it possesses than on how the budget is managed as a political–economic document-one that determines who receives funding, which sectors are invested in, and which are allowed to decline.

Completing the draft budget before year-end is an important procedural milestone that indicates a degree of fiscal and administrative discipline. However, this procedural improvement does not obscure a deeper reality: the budget continues to be managed through mechanisms that governed previous phases-mechanisms that are no longer capable of producing realistic responses to contemporary challenges. Jordan is now confronted with transformations that cannot be addressed through gradualism or slow reform; they require a reconfiguration of the state’s approach to managing public finances.

This paper situates the budget discussion within a broader political and economic context and opens pathways for realistic policy options for decision-makers-options grounded in a comprehensive understanding of the challenges and in a vision capable of restructuring the budget as an inclusive national framework rather than a document replicated year after year.

The approach used in preparing the budget still operates within the same traditional framework, one that is governed by a culture of allocations bargaining.

The General Budget and Its Structural Design

Despite procedural improvements in this year’s budget preparation, the core approach remains anchored in a traditional framework that limits the state’s ability to use the budget as a strategic tool for guidance and transformation. The entire process is still governed by a culture of allocations bargaining rather than by national planning guided by priorities. Ministries continue to compete for the largest possible share of the fiscal pie, not based on objective needs assessments or nationally prioritized projects, but according to their capacity to defend demands within the financial system.

Each year, sizable capital appropriations are included in the budget to signal ambition for growth and broad development projects. However, execution typically reveals a persistent gap between announced plans and implemented outcomes. Many projects stall due to expenditure complexities, entrenched bureaucratic procedures, and limited flexibility to reallocate funds. As a result, much capital expenditure remains a set of accounting figures with little developmental impact.

Another entrenched feature of the fiscal structure is off-budget spending -also described as a shadow budget or extra-budgetary operations- where expenditures are effectively reconfigured after the budget has been approved, through reallocations or by diverting appropriations from ministries to other entities. This practice creates wide gaps between envisioned allocations and realized outcomes, placing ministries in a state of uncertainty that renders medium- and long-term planning difficult and sometimes infeasible.

These practices generate considerable ambiguity about the government’s actual priorities. A program or set of projects may appear central within the budget document, but implementation may proceed in entirely different directions. Consequently, the budget document alone does not reliably reveal a coherent government vision, since it frequently fails to reflect subsequent on-the-ground developments.

The broader problem is not limited to preparation mechanisms but rather extends to the underlying philosophy that governs the budget’s formulation and execution. For the budget to function as a driver of growth, it must move beyond a record of revenues and expenditures and become an economic and strategic roadmap aligned with sectoral needs, responsive to external shifts, and equipped with sufficient flexibility to respond to changing circumstances.

Public debt today is a crisis of mindset, not a crisis of numbers.

Improving procedural form is necessary but insufficient. What is required is a conceptual reconstruction of the budget-transforming it from an annual accounting exercise into a political–economic practice: a directional tool that reallocates resources according to national priorities and converts the budget from a financial record into a mechanism for policy-making, growth facilitation, and steering the country’s development trajectory.

Public Debt and the Deficit: A Crisis of Framework, Not Only Numbers

Public debt is among the most urgent files requiring fundamental rethinking-not only because it continues to rise despite fiscal containment efforts but because the manner of managing debt remains governed by an outdated framework misaligned with the current phase of the economy. The broader fiscal landscape shows mounting pressure on the treasury: expenditures in the last quarter of 2025 reached approximately 975 million dinars per month, while borrowing during a relatively short period approached two billion dinars, amid the accumulation of arrears that have not been addressed comprehensively or institutionally. Although previous commitments pledged a reduction of nearly six billion dinars in public debt, tangible progress toward this goal remains absent.

The issue extends beyond raw numbers to the methodology of debt management. Public debt is no longer systematically used to support development projects or stimulate economic activity; in many cases it has become a means of financing current expenditures, thereby stripping borrowing of its fundamental economic function. In the absence of a unified national debt management strategy, borrowing has taken on a reactive character akin to firefighting rather than coherent fiscal planning. This pattern reinforces the perception that public debt has ceased to be a catalyst for growth and has become a burden carried over year after year without addressing its structural causes.

The crisis is magnified by the fact that economic growth has not translated into labor market gains, weakening the tax base and making the state’s capacity to service debt or reduce the deficit more fragile. Although some sectors recorded solid growth-agriculture grew by approximately 9% and manufacturing by about 5%-this growth has not generated corresponding domestic employment. This outcome is attributable either to the sectors’ reliance on low-cost foreign labor or to their capital-intensive (rather than labor-intensive) nature.

Conversely, sectors with the greatest potential to create employment-such as tourism, information technology, and small and medium-sized enterprises-continue to suffer from weak investment and insufficient financial support.

Within this equation, the relationship between growth and debt becomes unhealthy and unstable:

Non–job-generating growth → weak tax base → persistent fiscal deficit → increased reliance on borrowing → an expanding closed cycle.

The situation is further complicated by the fact that a significant portion of debt is financed through short-term loans or debt rollover practices that postpone obligations without addressing root causes. This approach makes the state captive to obligations eroded by interest and by the rising cost of debt servicing, which has become one of the largest components of public expenditure.

The green economy in Jordan remains an underutilized opportunity, despite the availability of promising investments.

The absence of full transparency regarding the debt’s structure, maturity profile, cost, and creditor composition further widens the trust gap not only between citizens and government but also among state institutions. It also constrains policymakers’ ability to design long-term economic policies grounded in an accurate understanding of public finances.

What renders the debt and deficit challenge particularly serious is that it is primarily a crisis of mindset rather than merely a numerical crisis. Addressing public debt requires a shift from a logic of merely covering deficits to a logic of managing potential fiscal surpluses, and from short-term tactics to a clearly defined national strategy linked to growth, tax base expansion, productivity enhancement, and restructuring of sectors that absorb a disproportionate share of spending without yielding real returns.

Linking debt to growth, growth to employment, and employment to tax base expansion is the viable pathway out of the current dynamic. The solution cannot be limited to adjusting a line item here or reducing an expense there; it requires a fundamental transformation of the state’s fiscal and economic trajectory.

Public Expenditure: A Crisis of Management Before a Crisis of Finance

A close reading of the budget reveals that public expenditure suffers from a pronounced gap between what is approved on paper and what is implemented on the ground. Ministries, despite often having adequate appropriations, frequently cannot execute projects planned in their annual programs.

Financial regulations often change mid-year, forcing ministries to realign plans or seek alternatives. Consequently, projects stall and timelines are delayed. Moreover, appropriations are not always tailored to the specific nature of sectoral challenges-particularly in sectors requiring rapid intervention or seasonal flexibility, such as water, agriculture, and health-creating gaps between actual needs and what regulations permit.

The dysfunction extends beyond disbursement procedures and planning to the system of bonuses and allowances, which represent prominent sources of waste in public finances. Annual bonuses or allowances are disbursed in substantial amounts without linkage to performance metrics or measurable productivity, creating an additional fiscal burden, distorting public-sector incentive structures, and weakening motivation to improve performance or efficiency. Capital expenditure, which should act as a lever for economic growth, faces severe implementation delays; in many cases such spending is reduced to budgetary line items with no tangible impact on development or service improvement.

These imbalances-execution gaps, lack of flexibility, inefficient incentive structures, project delays, and planning disconnected from national priorities-pose not only fiscal challenges but also an urgent need to reconstruct the state’s executive machinery. In its current form, this machinery is a major obstacle to transforming the budget into a strategic instrument for development and reform.

Critical Sectors and the Budget

1. Water Sector: The Most Sensitive Sector

The water sector is experiencing a deepening crisis that goes beyond administrative and financial issues to present a direct threat to national security. Accumulated indicators reveal structural imbalances that no longer permit water management to be treated merely as a service or technical issue; it must be considered a pillar of the state’s economic, social, and political stability. The sector’s debt has risen to approximately 600 million dinars, while its priority projects require funding exceeding $2.3 billion, in addition to around $700 million for other projects that cannot be postponed.

This massive financial burden is compounded by a set of complex operational challenges. Repeated attacks on networks and infrastructure directly reduce operational capacity, while non-revenue water-reaching approximately 40% of total production-reflects substantial economic loss. Public awareness of efficient water use, both domestic and agricultural, remains weak, further intensifying pressure on an already fragile system.

Pumping costs have reached unprecedented levels; the sector consumes approximately 16% of national energy, making energy efficiency critical for sustainable operation. Without flexible emergency appropriations, response to sudden interruptions or major breakdowns depends on ad hoc measures rather than pre-funded rapid response plans. Slow completion of high-priority projects reveals a clear gap between planning, financing, and implementation, delaying network improvements and capacity increases.

These intersecting challenges underscore that water sector reform cannot rely on partial improvements or isolated measures. Water is central to agriculture, industry, tourism, and health; any disruption immediately affects production systems, the economy, and public services. Comprehensive reform of the sector is therefore essential to preserve state stability and capacity to meet future challenges.

2. Health Sector: High Funding, Misaligned Service

The health sector receives a relatively high share of the budget-about 12%-yet this funding does not translate into commensurate service quality. The healthcare system is characterized by multiple administrative frameworks, fragmented responsibilities, and high treatment costs, particularly for chronic diseases. Diseases related to smoking-especially lung and other smoking-related cancers-together with stress-related conditions and diabetes, contribute to growing healthcare costs that increase the fiscal burden annually.

This burden is compounded by the need to expand partnerships between the Ministry of Health and the King Hussein Cancer Center to ensure patient access to advanced diagnostic and treatment services and to distribute caseloads across hospitals in ways that reduce pressure and improve spending efficiency.

International experience indicates that an optimal model would shift the state’s role from direct service provider to service guarantor through the establishment of a national health insurance fund and unified procurement and purchasing arrangements for contracting with providers.

3. Climate and Environment: An Untapped Economic Dimension

The climate dimension has become a core component of economic sovereignty and cannot be relegated to a peripheral environmental issue addressed through slow, reactive measures. Climate change now directly affects resource management, food security, and the stability of water, energy, health, and transport sectors. These interconnections make ignoring the climate dimension a risk with far-reaching consequences, particularly in resource-constrained countries such as Jordan.

Despite recognition of the green economy’s potential, the budget reveals a large gap between stated awareness and allocated resources. While green opportunities offer promising investments totaling up to $295 million across various projects, direct environmental spending in the budget does not exceed 4.2 million dinars, including 900,000 dinars allocated to the Environmental Protection Unit. This disparity reflects the absence of an institutional framework capable of translating climate priorities into coherent fiscal policy.

The national landscape contains substantial opportunities, from early green hydrogen initiatives to energy-efficiency programs for buildings and a promising waste management sector that could provide both economic and environmental benefits. Transition to electric transport is not only an environmental option but an economic policy capable of reducing the energy bill and modernizing mobility. Reducing emissions from government buildings, linking water-energy-agriculture systems within a “climate security” framework, and scaling up well-designed green projects would all create value.

However, these opportunities will remain unrealized unless transformed into well-structured projects with measurable returns. Weak technical capacity in project design according to international standards and the absence of institutional coordination-where sectors operate in isolation-impede capitalization on natural interconnections between air, water, energy, and food systems.

A budget without a clear vision cannot confront the interconnected challenges of water security, energy, health, and climate transformations.

Achieving the required transformation in the climate dimension demands more mature governance: building technical capacities, unifying ministerial visions, and directing a portion of public expenditures to projects capable of generating measurable economic returns so that the green economy becomes an engine of growth and sustainability.

4. Transport Sector: Reforms Hampered by Financial Policies

Jordan has well-developed plans for transitioning to electric transport and integrating climate objectives into the transport sector. However, these efforts are undermined by sudden changes in fees and taxes. The absence of coordination between financial authorities and sectoral entities weakens the strategic dimension of transport policy, which should guide growth and urbanization trends for decades.

5. Private Sector: A Partner Yet to Be Realized

The private sector is central to any economic transformation, yet its role in Jordan reflects a paradox: expected to generate growth, create jobs, and attract investment, its performance falls short of expectations. This shortfall is rooted not in inherent weakness but in an environment lacking the fundamentals necessary for the private sector to act as a genuine development partner.

Investors face a complex system of overlapping fees on top of taxes, increasing the cost of market entry and expansion. Policy instability-sudden changes in financial and tax regulations-creates uncertainty that hinders long-term decisions. The absence of meaningful incentives further constrains investment, as the environment offers insufficient competitive advantages to encourage risk-taking and innovation.

Slow administrative procedures lengthen approval and licensing times, effectively freezing capital and reducing companies’ ability to seize opportunities. Weak development finance instruments limit access to funding for productive industries or promising projects that require substantial capital or long payback periods. In some areas, private firms also face unfair competition from public entities that enjoy exemptions and advantages unavailable to private counterparts, creating market distortions and dampening incentives for improvement.

Consequently, the private sector remains constrained and unable to fulfill its potential as a growth engine. Empowering this sector requires fundamental reforms to the business environment-policy stability, simplified procedures, targeted incentives, and enhanced development finance-so it can transition from a marginal actor to a central partner in growth and development.

Governance: The Core Institutional Constraint

Although the fiscal crisis appears to be about numbers, ratios, and the size of revenues and deficits, the deeper problem lies in the administrative and institutional structure and the methods of decision-making and implementation. Accumulated indicators suggest that the principal dysfunction is not the quantity of resources but the institutional capacity to manage and direct them. Governance thus emerges as the central institutional constraint that impedes sectoral performance regardless of available resources.

The crisis begins with authority and delegation within ministries and public institutions. Many executive leaders are constrained by rigid financial and administrative directives that lack the flexibility necessary for managing vital sectors that require rapid decision-making. Even minor adjustments to expenditure items or reallocations typically require a long sequence of approvals, turning public operations into a slow process reminiscent of pre-digital bureaucracy, despite advances in automation.

Technical competencies capable of preparing bankable projects eligible for domestic or international financing are scarce and often operate in an environment that does not reward performance. Employees able to prepare rigorous feasibility studies or funding-grade project proposals often find themselves constrained by administrative procedures, without clear career pathways or incentives that reward tangible results.

This human and administrative shortfall is exacerbated by the absence of institutional alignment between the economic modernization vision and the general budget framework. The strategic vision calls for a shift toward a productive, competitive economy based on innovation and private-sector partnerships, but the budget is prepared and managed according to a logic largely separate from these objectives. This contradiction between stated strategic goals and actual resource allocations undermines coherence.

At the highest level, a critical question remains unanswered: who leads fiscal decision-making in the state? Is it the Ministry of Finance, the Ministry of Planning, the Prime Minister’s Office, the requirements of international financial institutions, or sectoral pressures? This fragmentation generates inconsistent policies, separates planning from implementation, and weakens the state’s capacity to address challenges coherently. As a result, many financial decisions are reactive responses to pressures or crises rather than parts of a unified strategy.

This governance gap produces a serious disconnect between planning and execution. Major projects are announced but implementation is slow or stalled. Reform initiatives are proposed but fail to materialize. The wider this gap becomes, the less able the state is to convert resources into tangible achievements, increasing project costs and reducing the real impact of public spending.

The governance problem is not a minor administrative detail; it is the key to understanding deficits, debt accumulation, weak investment, project delays, resource waste, declining trust, and fragmented policies. Any financial or economic reform will remain incomplete unless institutional dysfunction is addressed and governance is reconstructed to unify fiscal decision-making, grant ministries flexibility, activate accountability, and link resources to outcomes rather than inputs.

Conclusion – Toward a Budget That Redefines the Role of the State

The challenges confronting Jordan’s budget have moved beyond traditional financial remedies and penetrated the institutional and intellectual fabric of the state. The budget, once prepared as a technical accounting document, has become a political and economic platform that determines the state’s future stance-whether it can manage accelerating transformations or remain trapped in continuous crisis management.

At a time when pressures related to climate, water, and energy are mounting, healthcare costs are rising, social gaps are widening, and regional volatility is intensifying, it is no longer feasible to manage the budget with last decade’s mindset. The interconnections between water security, the global energy crisis, public health, the transition to a green economy, and developmental needs require that the budget be treated as a strategic national planning tool rather than merely an annual obligation.

Decision-makers must therefore rethink the nature of the budget: how it is constructed, managed, and implemented. A budget without vision cannot address a reality in which sustainability, governance, private-sector engagement, digital transformation, and social justice are deeply intertwined. Without transforming the budget into a strategic roadmap, economic planning will remain disconnected from real challenges and public spending will continue to be reactive rather than initiative-driven.

Jordan’s path to economic reform requires moving from broad discourse to actionable, implementable interventions that produce measurable change on the ground. The first step is tax system reform: integrate income tax, sales tax, customs, and treasury operations on a unified electronic invoicing platform, and establish a data-integration unit to detect evasion patterns and close loopholes exploited for corruption. Such reforms would make revenue collection more transparent and fair and expand the tax base without overburdening vulnerable groups.

Simultaneously, borrowing policy must be redefined by creating a committee to approve debt-financed projects, preventing borrowing for current expenditures, and subjecting any new loan to an economic return study. Publishing quarterly reports detailing each loan’s economic impact would increase transparency and transform debt from a financing gap into a potential growth instrument.

The core of the crisis is not financial but institutional: governance is the state’s stalled engine room.

Because vital sectors require faster responses than the traditional financial system allows, the establishment of a national rapid-response fund for water, health, and agriculture-enabling ministries to disburse funds within 72 hours-would strengthen state capacity to address accelerating, security-sensitive challenges. Reforming the water and health sectors requires comprehensive restructuring beyond fragmentation: merging the Water Authority with the Jordan Water Company, unifying medical procurement across the Ministry of Health, university hospitals, and medical services under a centralized system, and linking expenditure to the actual performance of health institutions.

Jordan can launch a practical green renaissance through ready-to-implement projects: convert 50 public schools into model solar-powered schools within one year; establish a pilot green hydrogen zone in Ma’an or Al-Azraq; direct tax incentives toward targeted green industries such as recycling, smart agriculture, and solar electronics; and create a dedicated fund to finance youth initiatives in the green economy. Empowering the private sector requires targeted reforms-removing many pre-approval requirements and replacing them with an electronic notification system, reducing company registration time to 24 hours, establishing a “fast-track” unit for major investment projects, and obliging ministries to publish monthly achievement reports to enhance transparency and investor confidence.

Finally, no reform will succeed without a rigorous government performance evaluation system based on results rather than effort. Establishing a national monitoring dashboard linked to the Prime Minister’s Office with mandatory national priority indicators, and tying rewards and penalties directly to achievement levels, will help institutionalize financial and administrative discipline so that reforms move from vision on paper to measurable reality that rebuilds trust in the state’s capacity to lead sustainable development.

Adopting these steps will not only enable the budget to manage the fiscal year but will also empower it to manage the future. With this transformation, the budget will shift from an annual burden where problems recur to a national platform that opens new pathways for economic growth, reinforces citizen trust in the state, and supports political and social stability.

In essence, the budget is not merely numbers recorded on paper; it is the expression of a state’s vision and a society’s ambition. By redefining it, Jordan can move from crisis management to opportunity creation, from reacting to pressures to shaping a more stable economic future capable of meeting emerging challenges.