Economists call on government to benefit from capital expenditure

The minister of Finance, Mohamad Al-Ississ (left), and the state minister for Media Affairs, Faisal Shboul, share the 2022 general budget at a press conference On Sunday, November 28, 2021. (Photo: Ameer Khalifeh/Jordan News)
The 2022 general budget, announced by the government on Sunday, has been met with mixed reactions, and is seen as “redundant” by some experts and analysts, who say that it would not give a window for the private sector to launch new projects, and thus will not contribute to decreasing unemployment and poverty.اضافة اعلان

The former general manager of the Association of Banks in Jordan, Adli Qandah, told Jordan News that it was not clear if the increase in capital expenditure would be in the interest of the Kingdom, and its citizens. “We need to learn what this expenditure is used for,” he said, indicating that new projects must be developed in different sectors, using the allocated expenditure, to achieve a drop in unemployment and poverty rates.

He said that the government needs to strengthen its partnership with the private sector to develop new projects and create incentives to revive the economic cycle. “The government cannot afford to continue to provide them with material support; it should ease their financial burdens by reducing the taxes and fees imposed on mega-projects.”

Qandah pointed out that the sales tax generally shows absence of fairness, where the same percentage is imposed equally on all segments of society, urging a review of the sales tax to stimulate the economy.

He shed doubt on the possibility that new mega-projects will emerge in the near future, and called on the government to focus more on developing sustainable developmental projects, and to promote investment.

Hussam Ayesh, an economic analyst, told Jordan News that the government has to focus on attracting investments in light of several sectors being hit by stagnation. However, Ayesh said that the government’s plan to strengthen self-reliance through revenue from 74 percent in 2021 to 88.5 percent in 2022 is a good indication of progress, “although in some years it stood at 100%.”

Economic expert Mazen Irshaid expressed satisfaction with the 2022 budget despite the extraordinary circumstances resulting from COVID-19, particularly with the increase in tax revenue, which he said “underpins the government’s seriousness in tax collection, rather than imposing new taxes on citizens.”
He also stressed the need for ventures that reduce poverty and unemployment, which has reached record levels in Jordan’s history.

A source at the Ministry of Finance, who spoke on condition of anonymity, told Jordan News that “the annual budget is promising. However, citizens’ commitment is required during the current circumstances to help jump-start the economy.”

The 2022 general budget was announced at a joint news conference by minister of State for Media Affairs and official spokesman for the government, Faisal Shboul, and minister of Finance, Mohamad al-Ississ, who acknowledged its complexity amid extraordinary circumstances due to the pandemic.

While 2021 has witnessed a real economic growth of 2 percent, the 2022 budget foresees an increase in growth to 2.7 percent. Foreign aid saw a slight rise, up to JD848 million in 2022 from JD840 million in 2021, while public sector wages continue to make up a large portion of the budget (66 percent), with an allocation of JD1.029 billion.

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