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‘Reforms become doubtful with wider basic needs’

By Petra - May 09,2015 - Last updated at May 09,2015

AMMAN — A wider range of daily basic needs deny Jordanians the feel of financial reform,  Finance Minister Umayah Toukan said Saturday.

According to Toukan, the variety, extent and broad scope of requirements in terms of food, transportation and communication make it difficult for citizens to feel reforms that improve living standards.

He said the conditions differ from one person to another, depending on  income and nature of daily consumption. 

Within this context, Toukan added that the Cabinet had approved the Ministry of Finance's 2014-17 national executive programme for financial reform which includes six aspects, none of which stipulates extra financial burdens on citizens. 

Noting that the six aspects aim at enhancing local revenues, he listed them as rationalising public expenditures; controlling the deficit and debt; decision on  capital expenditure in economic growth; enhancing financial monitoring; and transparency and financial announcement, the minister said.

The minister stressed the importance of such reforms to reflect on citizens' living standards, expecting the real growth rate to reach 3.8 per cent this year and to continue rising during the coming years.

Toukan said the most important goal of the financial and economic reform programme is to limit the big rise in public debt, describing it as  a main concern for  all Jordanians, who have the right to expect the debt to go down, even gradually.

The growth of debt is slowing , Toukan added, noting that in 2014 it went up by less than 1 per cent, while the debt increase, starting from 2015, is expected to rise at a rate that is less than the growth of the gross domestic product (GDP).

He noted that the debt increase in the first quarter of 2015 was around JD200 million which constitute the loans of the National Electric Power Company (NEPCO) and the Water Authority.

The net public debt by the end of the 2015's first quarter stood at JD20.8 billion or 76.8 per cent of the GDP, JD12.9 billion of which was local public debt and JD7.9 billion was foreign debt, Toukan indicated.

He pointed out that the net public debt includes JD4.8 billion as NEPCO loans, constituting 17.3 per cent of the GDP, which means that NEPCO losses increased the public debt from 59.5 to 76.8 per cent.

Regarding the financial reform programme and the relation with the International Monetary Fund (IMF), Toukan said that the IMF's executive council decision came after the sixth revision which approved the disbursing of $200 million.

He also expected the IMF mission to visit the Kingdom in June to make the last revision, noting that Standard and Poor's has recently classified Jordan's economy as stable after raising the rating  from the minus level to stable last year.

He added that such procedures show that international institutions trust the government's financial and economic reform programmes. 

The minister explained that the impact of reforms  on the living standard of citizens cannot be immediate, but rather be felt gradually, noting that the increase in income is not limited to salaries, but also includes better services, such as the improvements the Kingdom witnessed in the education and health sectors.

Toukan described some discrepancies in data issued by the ministry as normal because figures depend on the reference given by different parties, emphasing that the ministry counts on real figures and international institutions' reports.

He added that initial financial data for the 2015 first quarter show a better performance for public finance, where it achieved a surplus of JD79 million, compared to a deficit of 292 million in the same period of 2014.

He also stressed that ministry and international institutions data expect the real growth for the national economy to reach 3.8 per cent in 2015, and to exceed 4 per cent in 2016.

Current foreign currency reserves stand at $13 billion and the commercial deficit dropped to 7.6 per cent of the GDP, the minister added.

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