You are here

Fiscal reforms caused economic downturn, economists argue

By Khetam Malkawi - Aug 03,2016 - Last updated at Aug 03,2016

AMMAN — Fiscal reforms implemented 10 years ago were the main cause of the downturn in Jordan’s economy, and similar policies are still being implemented, economists said on Tuesday.

Nael Husami, a prominent economist, said the main reason for Jordan’s  economic crisis was not the global financial crisis, but the fiscal reforms implemented in Jordan in 2006 and 2007.

Speaking at a workshop organised by the German Friedrich-Ebert Stiftung (FES), Husami argued that free trade agreements had also contributed to this downturn.

The Kingdom’s exports over the past 10 years have dropped due to  agreements that benefited other countries but not Jordan, he said.

Agreements should be mutually beneficial, like Jordan’s free trade deal with the US, rather than one-way deals like Jordan’s agreement with Turkey, the economist said.  

According to Husami, some 30 to 35 per cent of an individual’s income in Jordan is paid in taxes and 70 per cent of the general budget revenue comes from taxes. “There should be other exceptional measures apart from austerity measures.”

In addition, he blamed the International Monetary Fund’s recent policies for contributing to increasing taxes.

But for Fadi Daoud, a researcher at the Ministry of Finance, the current political crisis in the region has had an impact on the country’s economy. 

He said the only way to improve Jordan’s economy is through public-private partnership over the next five years, which will help create more job opportunities.

He pointed to the airport project as an example of a partnership between the government and a private company, noting that the revenue generated by the project reaches JD250 million annually. 

Meanwhile, participants discussed the importance of developing alternative fiscal policies to achieve social justice, stressing that high-quality, accessible education and healthcare are needed in Arab countries to ensure social justice. 

Economic policies should not be adopted in isolation from social justice, but  in the Arab world social aspects are not considered when discussing the economy, said Talal Abu Ghazaleh, the founder and chairman of the Talal Abu-Ghazaleh Organisation. 

Abu Ghazaleh stressed the need for Jordan to transform into a social economy, and said there was some awareness of this, pointing to the Kingdom’s Economic and Social Council and several initiatives related to this issue. 

Transparency is related to social justice, he said, adding that addressing the rights to education and medical treatment would help in achieving social justice.

Naser Abdelkarim, a professor of finance and economics at the Arab American University in Palestine, also said that economic justice was the first step towards achieving social justice.

He also underscored the need for innovative and high-quality education, and medical treatment. 

Subsidies, Abdelkarim said, are another important component towards achieving social justice, but should be directed to vulnerable people and not the general public or foreign guests.

The workshop is part of the FES’ regional project: “For Socially Just Development – Economic Policies for Social Justice in the MENA Region”, launched in January.


According to FES, the project aims to debunk the concept that neo-liberal economic policies simultaneously provide economic growth, social justice and political stability. 

58 users have voted.


Get top stories and blog posts emailed to you each day.