A government plan for us to catch our breath

Fahed Khitan (Photo: JNews)
Last week, the government adopted a financial plan, valued at JD448 million, with the aim of stimulating the economy and mitigating the burdens of impacted social segments and sectors.اضافة اعلان

The six-pillared plan is essentially an attempt to catch our breath following vicious COVID-19 wave that aggravated economic and social crises.

Weeks after its formation, Prime Minister Bisher Khasawneh’s government offered a stimulus package, in a continuation of the approach followed by the previous government to mitigate the impacts of the pandemic.

Everyone was hopeful that we were entering a stage of economic recovery that would spare the Treasury further support payments and diminished revenue, but the country was hit with a second, more vicious wave, forcing the government to impose strict health measures at the expense of economic priorities, which, in turn, led to the decline of economic and service sectors, and increased burdens on vulnerable segments of the society.

Under the second plan, the government will pump some JD240 million into the market, consisting of arrears for some sectors, tax refunds, and expropriation compensations. On top of this, JD208 million will be provided as direct financial assistance programs for impacted segments, and approximately 15,000 across several sectors, to alleviate the impact of increasing unemployment among the youth.

The government pledged that these expenses would not increase public debt, which has reached 109 percent of GDP. This does not necessarily mean that the government will not resort to additional loans to cover the budget deficit and support the health emergency budget.

The latest World Bank projections on the situation in Jordan remain, to an extent, cautiously optimistic, despite the dangers of the rising debt. The World Bank predicted that Jordan would achieve 1.4 percent growth in the current year, after last year’s downturn, estimated at 1.8 percent.

However, everything hinges on the situation of the pandemic weeks from now. The government is hoping to contain the current wave by early summer, coinciding with a wide-scale vaccination campaign, allowing the opening of all sectors and the return of the usual economic activity.

If achieved, this optimistic scenario would contribute to putting an end to a series of losses in the second half of 2021, turning the economic wheel to compensate for losses in service sectors such as tourism and hotels, create new jobs, and, most importantly, increase the Treasury’s tax returns.

This does not necessarily mean the end of the crisis, rather a new chapter of economic challenges and their social repercussions.

For example, social protection programs will remain an urgent need in light of the deteriorating economic situation of vulnerable segments, and unemployment will top the national agenda.

Due to their risks for social stability, these ramifications require the consideration of deeper and more comprehensive economic programs for next year, as well as policies that exceed emergency programs and ensure stable economic returns on government spending, so that debts would not become unbearable in the future.

A few weeks ago, the government promised to launch an economic plan for the upcoming stage, which is no doubt a difficult task, but it is a challenge that must be faced in cooperation with the private sector and experts, including politicians, economists, think tanks, and research centers, to come up with a thorough understanding of the post-COVID phase, which gains consensus.