‘There have been no real economic reforms over the past years’

AMMAN — Economists agreed that it might have been too late for the government to come up with “out-of-the-box” solutions to economic woes and had to accept the International Monetary Fund’s (IMF) conditions that added to the burdens of average citizens.

This means there are more hard times ahead for Jordanians, they expected, agreeing that the set targets by the government seem too difficult to achieve within the framework and the time schedule agreed on with the IMF.  

The Cabinet has recently taken measures to raise revenues and slash expenses through raising fees or cutting exemptions on several services.

The economists differed on  whether the government had a choice in doing that, especially as it is challenged to address a swelling public debt that was nearly JD24.9 billion or 93 per cent of the gross domestic product (GDP) at the end of 2015, and the stubborn problems of poverty and unemployment. 

To former finance minister, Mohammad Abu Hammour, the failure to work out creative solutions is blamed on the absence of genuine reforms in the past years. 

"There have been no real economic reforms over the past years in Jordan. Reforms should have been incremental, because they cannot be done overnight,” he said over the phone Thursday.

The situation is already gloomy, he noted, noting that in 2015, the country's exports dropped by around 10 per cent, foreign direct investments declined by 35 per cent and unemployment rose to the unprecedented 14.2 per cent mark.

Last year's economic growth was around 2.3 per cent. “We need a minimum growth rate of 7 per cent so Jordanians can maintain the same living standards” in the face of rising pressures as a result of the large number of Syrian refugees hosted by Jordan, said the former minister.

On the deal with the IMF, he said the government of Hani Mulki only signed a deal that had been already agreed on.

The economist added that the incumbent government should focus on cutting spending, attracting investments and grants and engaging in genuine and serious partnerships with the private sector to revive the economy and address the challenges.

Economist Zayyan Zawaneh agreed that loopholes in economic policies have been there for a while.

“The difficult economic conditions that we ended up with are merely due to lack of consistent, structural and far-sighted visions to address them,” the pundit said, adding the new deal with the fund might lead nowhere.

“The previous IMF deal with Jordan did not help address any of the problems of poverty, unemployment or the rising debt, so why would this one make a difference,” he said in a phone interview with The Jordan Times.

He said it is “merely wishful thinking” to believe that reducing public debt ratio to GDP to 77 per cent by 2021 is doable. 

If there were one right way forward, it would be focusing on mega solar and wind projects to generate power and stop relying on imported oil, which is the main reason for economic challenges. Jordan’s energy bill in 2014 was JD4.5 billion and accounted for 18 per cent of the GDP.

“We need major structural reforms in the fields of energy and transport. These are some of the alternatives the government has to and can work on,” Zawaneh said.

“The government is resorting to the easiest solution and that is the pockets of citizens,” he added.

Economist Hosam Ayesh warned that resorting to citizens’ pockets to resolve financial issues might not be the optimal solution.

“Increasing prices of water and electricity as of next year will push up the prices of many commodities. Citizens are always asked to tighten the belt, but shortly, there will be no belt to tighten,” said Ayesh.

He added that the government needs to set an example when it comes to cutting spending.

“There is waste in spending at public agencies. For example, why should the public sector fleet exceed 22,000 vehicles?” asked Ayesh.

“Authorities should focus on getting grants as that will alleviate the burden on Jordan and reduce our reliance on borrowing,” said Ayesh, stressing on the need to work hand-in-hand with the private sector to address the challenges.

Economist Mazen Ersheid said there was not many choices left for the government to increase revenues.

“The deal with  the IMF is  connected with the outcome of the London donor conference as Jordan seeks to secure more grants and aid to deal with the pressure of Syrian refugees…The government did not increase the prices of 90 commodities as conditioned by the IMF this year. However, prices of all commodities will go up when electricity and water prices are increased as of next year,” said Ersheid.

“The government was left with no alternatives due to a series of wrong and unstudied decisions over the years, where it reached a situation that it is forced to increase taxes to generate more revenues,” said the economist.