This report aims to provide options forimmediate fiscal adjustment to the government of Jordan andto set the foundations for longer term consolidation. Tothat effect, an analysis of the dynamics of revenues andexpenditures over the years 2000-2011 is undertaken.Specifically, this report attempts to provide options tostop and reverse the declining trend in revenues observedsince 2007. Indeed, domestic revenues declined by 9.4percentage points of GDP between 2007 and 2011. This steadyand structural decline in revenues increased thevulnerability of Jordan s public finances to any exogenousshock. Hence, the strong fiscal stress at the eve of theArab Awakening, due to the pressures to finance wideningpower sector deficit following the disruption of Egyptiangas supply, and to meet popular demand for additionalspending and subsidies. The report also examines: 1)potential sources of savings from current and capitalspending, 2) scenarios to reduce power sector deficitincluding tariff simulations, 3) options to reduce consumersubsidies and target them more efficiently to the poor, and4) optionsto reduce the financial deficit of the watersector. The report ranks the measures according to a ratingmechanism that takes into account the magnitude of savings,the efficiency improvements in the use of public resources,the distributional impact, previous dynamic of the spendingor revenue item in question, the poverty and social impact,and the growth impact. Finally, the report proposes a matrixof policy objectives and actions that identifies areas ofpolicy reform, policy objectives, actions needed to reachthis objective, and time horizon.
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