Public debt-to-GDP ratio jumps to 110.6% in first five months of 2022

GDP UP Stock
(File photo: Jordan News)
AMMAN — The public debt-to-GDP ratio in Jordan has reached 110.6 percent in the first five months of this year, according to the Ministry of Finance.اضافة اعلان

On Sunday, the ministry said in a press statement that the total public debt amounted to JD36.319 billion in the first five months of 2022. Jordan’s internal debt reached JD13.8 billion at the end of last May, while its external debt was more than JD15.2 billion.

Political economist Zayyan Zawaneh told Jordan News that over the past five years, the public debt has been rising at an accelerated rate. In 2020, it rose from JD33 billion to JD34 billion and in 2021 it reached JD36 billion. Meanwhile, Zawaneh said, the government owes about JD2 billion to the Jordan Petroleum Refinery, hospitals, municipalities, public universities, contractors, and pharmaceutical distributors, among others, so the actual public debt figure is JD38 billion.

Zawaneh added that the high cost of servicing the public debt as a result of rising interest rates both locally and globally “poses a significant risk to the government’s ability to borrow, especially from abroad, and represents a major obstacle to economic growth due to the leakage of funds outside the Kingdom, which weakens its ability to attract new investments”.

Zawaneh accused the government of being “naïve” in dealing with the public debt dossier when it decided that funds borrowed from the Social Security Investment Fund (SSIF) will not be counted as part of the public debt.

The Ministry of Finance announced last year that it had changed its methodology of calculating its public debt, in agreement with the International Monetary Fund, so that the money it owes to the SSIF, which amounted to some JD7 billion, would be excluded from debts.

It now considers money borrowed from the SSIF, municipalities and independent bodies as debt from government institutions.

Economic and investment advisor Wajdi Makhamreh considers the rise in public debt “as a dangerous indicator” that the government is not looking for additional revenue sources to support the state budget.

He said the government is slow in investing in new resources that have not been exploited and that may constitute a good source of revenues.

Makhamreh added that there was clear mismanagement of the economic file and that the government finds it easier to resort to borrowing because of the chronic budget deficit, but fails to adopt real steps to control expenditures that drain state revenues.

Economist Mohammad Al-Bashir told Jordan News that the latest figures show that the government cannot control spending and that it is insisting on the same political and economic approaches. They also mean that the economy does not pump much-needed money into the Treasury, he added.

Bashir said that political reform is needed more than ever now to address financial and economic policies.

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