AMMAN – The Jordanian government has announced its ongoing negotiations
with the International Monetary Fund (IMF) for a new national economic reform
program, backed by the Fund. The aim is to bolster the national economy, meet
financial requirements, and stimulate growth.
اضافة اعلان
Prime Minister Bisher Al-Khasawneh
has instructed his ministerial team to continue collaborating with the IMF
within the framework of the existing program, which was developed by relevant
Jordanian ministries and institutions and is set to conclude in March next
year.
As per data from the Jordanian
Ministry of Finance, Jordan's total public debt reached JD39.695 billion by the
end of last June, equivalent to 114.1 percent of the gross domestic product
(GDP). The government borrowed JD1.206 billion from the beginning of the year
until the end of June.
The government's debt to the
Jordanian Social Security Investment Fund stood at approximately JD8.446
billion as of June 2023.
Raised questions about its
potential renewal
Economic expert Jawad Al-Anani has
highlighted that the original program end date in 2024 has raised questions
about its potential renewal. He told
Jordan News that current
indications suggest that the government is leaning towards seeking a renewal of
IMF funding, recognizing it as a necessary preemptive step in addressing
escalating financial challenges.
Regarding the economic reform
project, Anani stressed the importance of aligning it with its core objectives.
He emphasized the need for a cautious and prudent approach from the government
in light of the current economic challenges.
He also underlined the necessity
of reconsidering the energy sector through comprehensive restructuring and
diversification of energy sources to reduce reliance on external providers.
Resolving energy issues could positively impact water scarcity and enhance food
security.
High unemployment rates and rising
cost of living
Acknowledging citizens' concerns,
Anani emphasized the importance of the government implementing policies to
alleviate burdens during these challenging times, given high unemployment rates
and the rising cost of living.
Thereby increasing debt
Meanwhile, economic expert, Yusuf
Mansur highlighted the pressing issue of Jordan's growing public debt, which
exceeds the GDP significantly. He told
Jordan News that the interest
payments on this debt outstrip the government's current financial capacity. To
address this challenge, the government has essentially two options: achieving
an extraordinary 15 percent economic growth rate (a challenging feat) or resorting
to new borrowing to cover mounting interest expenses, thereby increasing debt.
The crucial step lies in
redirecting investments toward production enhancement and income
diversification to improve citizens' earnings and reduce public debt as a
percentage of GDP.
Furthermore, economic expert
Mohamed Al-Basheer emphasized that Jordan's immediate necessity is turning to
the IMF due to challenging economic conditions, including economic contraction
and sluggish growth. He told
Jordan News renewing borrowing from the IMF
becomes the primary option to meet treasury needs and address current
expenditures and salaries.
Basheer noted that this economic
downturn is a result of misguided fiscal policies. There's also a notable
increase in Jordanians' bank deposits, indicating profit accumulation while
evading tax obligations.
Worries to economic decline
Addressing widespread concerns
among the Jordanian population, he attributed these worries to the economic
decline, which has led to emigration of youth and talent seeking better job
prospects abroad.
Basheer highlighted the root
causes, including fiscal policy implementation, inadequate tax management, and
widespread corruption within current expenditures. He also suggested the
government explore options for loan repayment period facilitation and potentially
negotiate a reduction in interest rates.
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