Jordan's budget for 2026 offers a historic opportunity to move from the traditional framework of "fiscal prudence" towards the engineering of an "economic transformation budget," a transition that has become a necessity in the context of growth slowdown, surging debt bills, and the reduced capacity of public finances to respond to shocks. After decades of managing spending according to a model of controlling deficits and debt, it has become clear that controlling the figures without changing the structure of the economy can no longer create growth, expand the production base, or generate employment opportunities. This imbalance has been clearly evident in the Jordanian equation over the past years, where the average real growth remained close to only 2%, against unemployment exceeding 21%, and public debt nearing 114% of GDP, indicating that fiscal discipline alone is no longer able to propel the economy toward more dynamic levels.
The core of the challenge lies not in the budget size or spending level, but in the quality of spending and its alignment with the economic transformation path. Data shows that more than 85% of current expenditures are allocated to salaries, debt interests, and subsidies, while capital projects account for only about 12–14% of total expenditures, a percentage insufficient to change the economic structure or stimulate investment. This imbalance results in the continuation of what can be called the "financial dependency loop," where the budget becomes a short-term daily management tool instead of being a strategic catalyst for the economy.
The transformation towards an "economic budget" requires several fundamental changes starting with restructuring public spending priorities. Instead of focusing on reducing the deficit by cutting current expenditures, part of these expenditures should be redirected towards investing in productive sectors, technology, the green economy, and infrastructure with a multiplier effect on growth. World Bank and IMF studies suggest that every dinar invested in high-value capital investments could increase growth by 0.3 to 0.5 percentage points, while reducing current expenditures creates no economic impact except on the financial books.
This transformation also requires a radical update in public financial management tools, through adopting a performance and results-based budgeting, not just based on expenditure items. Countries that have achieved economic leaps in the past two decades—such as Estonia, Singapore, and Rwanda—adopted financial systems that link financing to results, set clear productivity indicators, and restructure spending according to its return, not its volume. In the Jordanian case, this approach requires a full digital transformation of government institutions and enhancing the digital maturity of accounting, which improves the quality of financial data and increases the accuracy of decision-making. Evidence shows that higher digital maturity in institutions reduces waste by 10–20% and increases the effectiveness of public resource management by up to 30%.
To achieve an economic budget, integration of productive transformation policies with public finance policies is also essential, so that the budget serves growth priorities rather than operating in isolation. This includes enhancing partnerships with the private sector in sectors like renewable energy, technology, pharmaceuticals, and food industries, as well as stimulating investment by simplifying procedures and reducing operational costs, which are among the highest in the region. Every 1% increase in private investment raises economic growth by 0.2% according to recent data, reflecting the importance of redrafting the investment incentive system and linking it to the sectors most capable of creating value.
The transformation is not complete without rebuilding trust between the government, citizens, and the private sector, by enhancing budget transparency and providing accurate and easily accessible financial data. International transparency reports have shown that countries with transparent budgets experience higher economic participation and direct investment by about 15 to 30% compared to those with limited disclosure. This brings us back to the essence of the relationship between digital accounting maturity andquality of financial information, as higher quality data directly reflects on the effectiveness of financial policies and their ability to stimulate transformation.
Jordan's 2026 budget must be the starting point towards a new financial model that redefines the economic role of the state from operator and spender to enabler and stimulator of transformation. This requires bold decisions that address the roots of imbalance, reorder priorities, and transform the budget into a tool for production, not just management. The current path, despite its numeric discipline, is unable to produce a strong or competitive economy. The necessary transformation will make the budget a driver of growth, an attractor for investment, an enabler of innovation, and a founder of a more flexible and resilient economic infrastructure.
As the region as a whole moves towards new economic models based on technology, green economy, and integration into global value chains, Jordan cannot afford to wait. Transformation is not an option, but a mandatory path to address challenges of unemployment, debt, and low productivity. If the 2026 budget can clearly reflect this transformation, it will be a first step towards a more dynamic economy and a state capable of turning fiscal discipline into economic strength rather than a burden on growth.
