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Jordan nowhere near bankruptcy — Khasawneh

Government still needs to attract foreign investors to revive economy, experts say

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(Photo: Envato Elements)
AMMAN — Prime Minister Bisher Al-Khasawneh told the Lower House on Monday that Jordan is resilient and far from being bankrupt, quoting the World Bank which affirmed that the Kingdom is more immune than many others to the repercussions of the Russian-Ukrainian crisis.اضافة اعلان

While generally agreeing with Khasawneh, economists interviewed by Jordan News said no country in the world is immune to bankruptcy, in light of the current difficult economic conditions, and Jordan may one day become insolvent if the government fails to take radical measures and solutions to revive the economy and raise revenues to be able to repay loans and interest, especially that its indebtedness is clearly rising.

According to economist Hussam Ayesh, a country is declared bankrupt if it is unable to pay debts and interests on the scheduled dates. In view of this, “and according to data, Jordan’s situation is still good”, especially knowing that its “foreign currency balance stands at $17 billion”.

However, Ayesh said, interest that accrued from debt in recent years is greater than aid and grants, “and this requires the government to be able to revive the economy and manage the debt. It also must learn how to ration its expenditures, control corruption and benefit more from capital expenditures”.

Economist Salameh Al-Darawi told Jordan News that talking about a possible bankruptcy is unrealistic, “especially that reaching bankruptcy does not happen overnight, but, rather, in several stages”.

Darawi added that bankruptcy is usually heralded by certain indicators, like a negative trend in the economy.

Jordan, with its hard currency reserves standing a $17 billion, enough to cover the Kingdom’s imports for more than nine months, has “one of the safest monetary ratios in the region”.

According to Darawi, “export trends are another indicator of the economy activity, and preliminary estimates indicate that exports are increasing from year to year, and are expected to grow this year by more than 6 percent, which alone constitutes approximately 30 percent of the Kingdom’s source of hard currency”.

“In addition, there are the expatriates’ remittances, which amount to about $3.8 billion; they are important and have been stable for years, unaffected by recent challenges and events, foremost of which the pandemic and its negative repercussions on the global economy,” he added.

One other important factor is the income from tourism, which is close to $5 billion, he said, adding that “with the exception of the closure period in 2020, tourism flows have maintained their positive growth pace, and are steadily increasing, as the severity of the pandemic declines”.

Darawi emphasized that “Jordan fulfilled all its obligations, even in light of the COVID-19 pandemic, paid all its dues ahead of time, like the entitlement of Eurobonds, worth $1 billion, and fulfilled all its periodic financial requirements without delay, especially with regard to the salaries of workers in the public sector”.

“Most important is Jordan’s relationship with donors and international institutions. The flow of aid to the Kingdom increases from year to year, the latest of which is the US’, which increased its aid to Jordan for the next five years, not to mention that Jordan has strong relations with international institutions, especially the International Monetary Fund”, he said.

Economist Wajdi Makhamreh agrees that Jordan is still able to pay off all its debts and interest, “and that the economic situation is relatively good, especially in light of the presence of a large balance of foreign currency”.

He told Jordan News that “the government must attract foreign investments in order to raise revenues, since any country is vulnerable to bankruptcy if it does not have a clear and long-term plan to pay off debts and revive the economy”.

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