Before preparing the budget for 2026, we must fix the traditional way of drafting budgets. This old approach no longer works. It does not solve problems or improve realities. The general budget is not just numbers on paper. It is a main tool to manage the economy. It decides spending priorities and shows the government’s vision for development and financial sustainability.

 

I reviewed an important study by Ahmad Al-Majali. The study analyzed government spending and suggested ways to improve it. One key result was that the ideal size of government spending is around 28 per cent of GDP. Spending below this supports growth. Spending above it starts to hurt the economy. The study also showed waste of about 1.5 per cent to 2 per cent of GDP—equal to 540 to 720 million dinars every year.

 

The main problem is the dominance of current spending. More than 80 per cent of the budget goes to salaries, pensions, subsidies, and daily services. Capital investment is very low. This creates a cycle of consumption, not production. It means the state is managed by spending on routine costs instead of building future growth.

 

Another issue is money allocated but not spent. Funds are approved for projects, but many are delayed or carried forward to the next year. This is not only slow administration—it is hidden waste. It does not appear in the deficit, but it harms finances in the long term. The problem starts at the planning stage. Budgets often copy past allocations without careful review of real needs. Many items grow year after year without justification, while performance indicators are missing.

 

Government salaries consume almost half of current spending, yet productivity and service quality remain low. There is no system to link pay to performance. At the same time, debt service costs more than 20 per cent of current expenditure. This means money is used to pay past commitments instead of investing in the future. Capital spending has dropped to less than 13 per cent in some years, compared to 17.3 per cent in 2015.

 

Investment projects also face weak planning. Some start without real feasibility studies, some face long delays, and others fail to meet goals. Many “capital” items are actually operating costs, not real investments in infrastructure. Operating expenses in government institutions are also rising, especially in energy and utilities. Bills for electricity, fuel, and office needs grow every year, with no serious plans for saving.

 

The lack of performance-based budgeting creates a gap between money spent and actual results. Indicators are often formal, not linked to service quality or citizen satisfaction. Programs continue even if they lose value. Spending expands without real outcomes. In short, spending is done for its own sake, not for change.

 

Reform is needed. The budget must move from being an accounting document to a performance document. This means linking funding to measurable results, rationalizing spending, reviewing contracts and jobs, and expanding financial systems to cover all units and municipalities. It also means reducing operating costs, adopting pay-for-performance models, and checking the real need for each expense. Regular indicators of efficiency should be published to guide fair and effective resource allocation.

 

In conclusion, preparing the budget requires more than repeating old methods. It requires scientific observations and tested economic principles. Economic theories are not abstract—they are tools that, when applied, help us reach accurate and realistic solutions. Reality is the standard, and knowledge must serve the real challenges we face.

 

Raad Mahmoud Al-Tal is head of Economics Department / The University of Jordan