Government will be forced to borrow for new city, economists say

(File photo: Ameer Khalifeh/Jordan News)
AMMAN Economists unanimously agreed that establishing a new city would entail serious borrowing by the government, to be able to complete the project. اضافة اعلان

Those interviewed by Jordan News, said that such a project is “absolutely undesirable”, especially in view of the country’s high indebtedness, budget deficit, and the need to revive the economy and increase the citizens’ purchasing power.

During its Wednesday session, the Cabinet, chaired by Prime Minister Bisher Al-Khasawneh, was briefed by the consulting company Dar Al-Handaseh on the project to establish a new city with the aim of accommodating the steady population increase, especially in the capital, Amman, and the city of Zarqa.

The new city would be built within the boundaries of the Greater Amman Municipality on lands owned by the state Treasury. It would be approximately 40km from the center of Amman, 33km from Queen Alia International Airport, and 26km from Zarqa.

The site of the project is considered part of the badia it would have access to two international roads, linking Jordan Saudi Arabia and of Iraq, and its total estimated area is projected at 277,000 dunums, Al-Mamlaka reported.

According to the presented study, the project would be implemented in several phases; the first would start in 2025 and end in 2033, while the last would end in 2050. The aim is to establish a modern, environment-friendly city with economic and social investment potential, at a cost of over JD8 billion.

The Cabinet referred the study on the new city to the Economic Development Committee, which will give a detailed report to the Council of Ministers within a month, for it to study it and take a decision.

Economist Mufleh Aqel said that the new city will “increase the burden of debt” on the country.

He, however, admitted that it may be a positive thing in the long run, “such as relieving pressure on the capital, since the government will cover the cost of financing from land sales after developing the infrastructure”.

“Therefore, the government must move toward funding this project, and stay away from borrowing,” he pointed out.

The areas where the city will be built may witness positive effects, raising land and real estate prices, “but at the expense of land and real estate in the capital”.

Economist Zayyan Zawaneh said he hoped that the government would forget this project because “it is unproductive and would not stimulate the economy”.

According to him, “we tried to build hospitals, but we have been unable to operate them to provide better health services.”

Zawaneh stressed that the government does not have the financial capacity to build the project, which would force it to borrow to implement it, “and this is what we must fear”.

Implementing this project, he said, would be similar to the act of “a citizen who borrows from a bank in order build himself a large house, then becomes unable to pay his obligations and loans, and as a result sells the house in a public auction”.

Economist Mazen Irsheid said that “it is necessary to establish such projects, so that government institutions, embassies, hospitals, and schools are transferred to neighboring areas in order to relieve pressure”, stressing that the infrastructure in Amman “will not last more than few years, and the city will face major problems, most notably great overcrowding”.

Irsheid likened this idea of a new city to the “government’s tendency to establish Jordanian universities in the suburbs of the capital, to relieve pressure”, and praised the “security and economic aspects of this project”.  He also said that the JD8 billion “will not be allocated directly from the government, but will be contracted with the private sector”.

Former mayor of Amman Mamdouh Al-Abbadi told Jordan News that establishing a new city “is not easy at all, as the construction of infrastructure is very expensive, and we have to determine whether the government is able to borrow this amount so that it can hire contractors and attract investors”.

Abbadi said that the government should think of projects that are less risky and attract investments, especially in the tourism sector.

Amman Mayor Yousef Al-Shawarbeh could not be contacted for a comment on the matter.

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