IMF approach is key to success in navigating uncertainty, says Ississ

IMF building
(Photo: Jordan News)
AMMAN — Minister of Finance Mohamad Al-Ississ met IMF Director of the Middle East and Central Asia Department Jihad Azour at the 2022 Spring Meetings of the World Bank Group, held in Washington, DC on April 18–24, to discuss the Jordanian government’s financial and economic reform and the Kingdom’s relationship with the fund.اضافة اعلان

“In navigating uncertainty, it is key to talk first to our people and talk to the fund. The fund has been an advisor for Jordan. The fund did not play around or force Jordan to implement policies that Jordan did not believe in, and this is a key to success in navigating uncertainty.” 

Economic analyst Mazen Irshaid told Jordan News that Jordan “has full independence in making economic decisions, but there is no denying that IMF does provide consultation, advice and recommendations to the government, to help turn the wheels of the Jordanian economy”.

Talking about the growing foreign debt in the past few years, Irshaid said that according to a report published at the beginning of April by the Arab Investment and Export Credit Guarantee Corporation, Jordan’s foreign debt is expected to reach $39.3 billion by the end of this year, compared to $37.6 billion in 2021, $34.3 billion in 2020, $30.3 billion in 2019 and $29.2 billion in 2018.

One way of approaching this matter, he said, is for the government to “consider internal loans more, as they are more tolerant” and almost with no conditions attached, and with internal debt, repayment is done in Jordanian dinars, not in foreign currency.

IMF loans, he said, are given to Jordan at low interest rates and long term, “but Jordan needs to implement more serious, out-of-the-box solutions to help the economy, and not just depend on foreign grants and loans”, he added.

While IMF-backed reforms require the country to have a fiscal plan that focuses on revenue collection by broadening the tax base, Ississ said that the government increased revenues last year without raising taxes through a campaign to combat tax evasion and by restructuring the tax and customs administration that ended tax exemptions.

Raad Al Tal, economist and professor at the University of Jordan, agrees that this is this government’s approach. It “decreased some fees, like customs duty, on some products and worked on collecting taxes from either tax avoiders or tax evaders, which led to the increase in total tax revenue, as shown in the general budget of the past few years”.

According to Tal, Jordan “is in serious need of a comprehensive economic plan that depends on entrepreneur economic sectors and sectors with high employment rate”.

“We have grown in the past few years, but sadly, the growth was not in high employment rate sectors, such as the construction sector, which depends mostly on foreign labor,” he said.

The economic workshops that the Royal Court is hosting, which include discussions among government and private sector officials, experts and academics, are discussing real, and applicable, solutions for the Jordanian economy, Tal said, adding that the conclusions of these workshops will be published by the end of May this year.

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