Dependence on grants will not stop soon, experts say

(Photo: Jordan News)
AMMAN — According to data from the Central Bank of Jordan, Jordan’s external grants decreased by JD128.3 million, or 18 percent, in the first 11 months of 2021, to reach JD583.9 million.اضافة اعلان

“External grants were originally intended to assist the state in reaching the stage of sufficiency and avoiding the need for grants in the future, but in light of the non-existent political reform, it does not look like it could help Jordan avoid grants and foreign aid,” economic expert Mohammad Al-Basheer told Jordan News.

Officials should use these grants to help the economy grow and solve the country’s structural problems, he said, adding that the larger issue is that the industrial, agricultural, and tourism sectors account for a small portion of GDP. More than 70 percent of GDP is accounted for by banks and other service professions.

According to Basheer, other countries’ success could be often attributed to the industrial and agricultural sectors, which account for at least 60 percent of their GDPs. The reason is that these industries create jobs, which helps close the trade deficit and boost exports, and that is what Jordan needs,” he said.

Economist Wajdi Makhamreh told Jordan News that “Jordan cannot dispense of external grants in the near future”, adding that the general budget is heavily reliant on it.

Grants were much larger a few years ago, when a Gulf grant totaled more than $4 billion in one year, said Makhamreh, adding that the government’s mistake is to continue to rely on donations, and fail to use them correctly.

“These grants were frequently used to pay a budget deficit or establish projects that added little value to the Jordanian economy,” he said, stressing that the decrease in grants will have a significant impact on Jordan, “primarily because the government would have to rely on other sources of funding, such as loans. As a result, the debt will grow, or the government may raise taxes on citizens”.

While the government is increasingly reliant on domestic revenues, foreign aid will continue to be required, said Makhamreh who stressed that grants should be used to “establish worthwhile projects that directly reduce unemployment rates and thus reduce indebtedness, bridge the budget deficit, and support exports as the best solution to this economic deficit”.

Minister of Planning and International Cooperation Nasser Al-Shraideh was quoted by Al-Ghad News as saying that Jordan received JD712 million in external grants in 2020. In 2021, Jordan received $2.5 billion in grants and external aid, including $1.2 billion in grants and $1.3 billion in soft loans.

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