Jordan’s Power Strain

In early October the Jordanian government issued an initial disclosure of its budget projections for 2016, with the headline figure over JD8bn (around $11.3bn), just up on 2015’s $11.1bn budget. The relative stability was achieved largely by a continued freeze in hiring (exempting health and education).

But deficits by the National Electric Power Company (Nepco), which are considered sovereign debt and have helped push Jordan’s debt-to-GDP ratio back up to 80%, are off-budget.

Nepco has been a major burden for the treasury since 2011, when “Arab Spring” instability brought an end to cheap gas imports from Egypt. On 30 September pan-Arab daily Al-Arabi al-Jadid quoted a Jordanian official as saying Nepco’s cumulative losses over five years are around $7bn, the equivalent of 20% of Jordan’s GNP (Nepco covers the shortfall in what it receives from residents’ utility payments by borrowing, an indirect subsidy). (CONTINUED - 390 WORDS)