Key MP slams gov’t borrowing plan for 2016

AMMAN – Head of the House Financial Committee MP Yousef Qorneh on Monday criticised the government’s borrowing plan as it intends to borrow nearly JD7 billion in 2016 to repay financial obligations coming due next year and to fill the state budget deficit. 

In a phone interview with The Jordan Times, Qorneh used the expression “robbing Peter to pay Paul” to describe the borrowing approach of the government, which he said has been using the same strategy for years by borrowing from one bank to repay another.  

The lawmaker said the 2016 state budget draft law, presented to Parliament Sunday, indicates that the government plans to borrow JD6.974 billion to cover the JD906 million projected deficit in the spending bill, pay installments of foreign loans worth JD647 million due next year, repay JD80 million in due bonds issued by the Central Bank of Jordan, repay local bonds issued in US dollars worth JD816 million and cover local debts valued at JD4.524 billion. 

Qorneh said the government plans to borrow JD5.5 billion from local banks and JD1.468 billion from international lenders. 

The MP suggested that instead of borrowing around JD5 billion every year, the government can approach international financial institutions and bond investors to secure long-term loans of up to 20 years with grace periods to ease financial stress on the budget and the Treasury. 

“There are many international financial institutions that would be interested in extending long-term financing to the Kingdom,” he said, adding that global organisations such as the International Monetary Fund and the World Bank are confident in Jordan’s economy despite regional unrest. 

The international solidarity with Jordan because of its political and humanitarian role in regional events as well as its efforts in combating terrorism should enable the country to access international financial markets. 

“Seeking loans from foreign lenders would enable the government to spend more on capital expenditure and carry out development projects that would stimulate the economy,” he added. 

According to Finance Ministry figures, the public debt reached JD22.3 billion by the end of September, with around JD9.5 billion owed to external lenders and JD12.7 billion to local banks.