AMMAN — In its Global Economic Prospects report, the World Bank (WB) predicts that
Jordan’s public debt will rise gradually from 115.6 percent of GDP this year to
117.9 percent in 2024.
اضافة اعلان
According to the report, issued on Wednesday, the
public debt to GDP, which reached 113.7 percent last year, may climb to 116.9
percent next year.
The report indicated that the rate of net public
debt to the GDP, excluding social security debt, reached 91.9 percent last
year, and is expected to rise in the current and next year to 92.6 percent, and
then decline to 91.8 percent in 2024.
Moreover, the financial pressure from losses in the
electricity and water sectors will lead to an increase in the total public debt
to 115.8 percent of GDP in the current year (excluding the debt of the Social
Security Investment Fund, it reaches 92.8 percent).
Domestic revenues grew by 10 percent, driven by an
increase in taxes on income and profits levied on companies. The ratio of
public debt to GDP amounted to about 113.7 percent at the end of last year, and
reached JD37.1 billion last May, a 1.5 percent growth.
Economist Jawad Al-Anani said that the World Bank
report is not surprising, for several reasons, “including that Jordan owes
large amounts of money to the World Bank, the existence of regional conflicts,
and the decrease in foreign capital flows to Jordan”.
Anani told
Jordan News that despite the
improvement in Jordanian exports, especially in the fertilizer sector, “the
increase in imports was higher, and this widened the trade deficit, and was
reflected in the decrease in foreign reserves.”
Anani added that the rise of public debt is a
reflection of the Russian-Ukrainian crisis and the repercussions of the
COVID-19 pandemic, “as there was a disruption in the supply chains, which was the
main reason for the rise in prices”.
“As for the Russia-Ukraine crisis, it led to
economic sanctions being imposed on countries, and therefore, gas prices
witnessed a threefold increase,” he added.
Anani stressed that while a good legislative
investment framework is necessary, it, alone, is not sufficient.
According to
Anani, what is required is to reach understandings with investors, including
with Arab investors, and improve the investment environment by, for example,
opening special window at airports and facilitating the investors’ transactions
at government departments.
He also suggested providing advisory services to
investors, in addition to improving the ability to negotiate with investors.
Economist Wajdi Makhamreh said that the rise in
public debt ration to GDP is logical for several reasons, “most notably the
high costs of water and electricity, part of which is still subsidized, and
corruption and theft”.
He added: “The high indebtedness of the water and
electricity sector, which amounts to approximately JD7.5 billion, and increases
the burden of public debt, and the high interest rates globally increased the
interest on government domestic and international debt.”
Political economy specialist Zayan Zawaneh told
Jordan
News that the nature of public debt, with the ensuing increasing costs, the
way it is managed, “represents one of the most important weaknesses of the
government, especially if we add to the World Bank report the diplomatic
disclosures of the International Monetary Fund and the European Bank for
Reconstruction reports”.
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