AMMAN — Economists
believe that the government is unable to combat inflation using its traditional
tools in the backdrop of rising prices of commodities and in light of global
events. Despite having used three traditional tools; fixing the prices of fuel
derivatives, placing a ceiling on the prices of basic commodities and
maintaining subsidy on some, the government will continue to face challenges,
namely a growing budget deficit.
اضافة اعلان
Economic writer
Salameh Al-Darawi told
Jordan News that the government does not possess any
tools to confront the increase in commodity prices “as the factors behind the
hike are external, and not local”.
“Fixed fuel
prices, although one solution, will cost the budget in excess of JD25 million
each month, so in total the cost would amount to JD100 million over three to
four months,” said Darawi.
However, Darawi
suggested a few other measures, although intricate, for the government’s use;
to increase wages, which is a difficult option in light of budget deficiency,
high debt, slow economic growth, and the decline in revenues, “also bearing in
mind that the general budget was drafted without the provision of a salary increase.”
Darawi said that
the only realistic solution the government could come up is to offer citizens a
one-time financial aid package to assist people in addressing inflation rates.
“This one is the best of the worst options that governments have; favorable for
the people but risky for the government’s budget.”
Economic and
investment specialist Wajdi Makhamreh doubts the government’s ability to
confront inflation with its traditional tools because Jordan depends on
“imported inflation”.
Makhamreh told
Jordan
News that some of the government’s tools would provide solutions in the short
run, but in the end, there will be a huge rise in inflation rates, “which we
started to witness now due to the Russia-Ukraine war.”
Makhamreh
recommends a free-market competition based on supply and demand as a way to
determine prices. He also advocates that consumers alter their shopping habits
and culture, through opting for cheaper substitutes since it is “difficult to
increase people’s salaries because the government is broke.”
Political economy
specialist Zayyan Zawaneh told
Jordan News that the government could take
several actions to contain the hike in prices, suggesting prolonged fixed fuel
prices; further elaboration to citizens on the new electric tariff to help them
avoid heightened bills; strict control over the market to combat any
unjustified price hikes and monitoring wholesalers’ stockpiles to prevent
monopolies and greed.
Zawaneh also
suggested that the government reinforce the role of the Civil Service Consumer
Corporation and the Military Consumer Establishment to make available a bigger
variety of inexpensive and affordable commodities.
Additionally,
Zawaneh proposed “work from home”, as well as imposing a traffic system of odd
and even car license numbers on alternating days, and car-pooling as some of
the solutions that would cut down on fuel consumption and save people money.
“I expect that the
government will be facing a budget deficit of JD200–250 if it did not take any
step to implement any of these contingency measures,” Zawaneh said.
According to Ammon, replacing cars with even or
odd numbers on the road was first applied in 1991 due to the First Gulf War and
in 2020 due to the COVID-19 pandem
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