Did the economic reform programme fail?

During the first six months of this year, the government debt rose by JD995 million. If debt continues growing at this speed, the debt for the whole year will approach JD2 billion, a growth rate of 10.5 per cent.

On the other hand, the gross domestic product is expected to grow this year by 3.3 per cent in real terms, or 6.5 per cent in current prices, an indication that public debt is growing faster than the GDP expressed in current prices.

Thus, the debt/GDP ratio will rise this year, just like it has been doing over the past 10 years, from 75.5 per cent of the GDP at the end of 2013 to 83 per cent at the end of this year.

This negative, if not dangerous trajectory is taking place at a time when Jordan is implementing an economic reform programme sponsored by the International Monetary Fund, aiming, among other things, at controlling public debt by reducing budget deficit.

The question is why are things going in the wrong direction with the IMF blessing.

The previous economic adjustment programme, that Jordan implemented during 1990-2004, managed to reduce Jordan’s public debt as a percentage of GDP from 180 per cent in 1989 to less than 60 per cent in 2004, when Jordan graduated from the programme with flying colours.

The present economic reform programme, however, has failed, as debt continues to rise, only faster than it was before the adoption of the IMF programme.

The difference is not in the nature of the programme, nor in the IMF policies; it is in the actual implementation and the way the national economy has been managed in recent years.

It is time for some stock taking to identify the reasons for the present failure and look for ways and means to solve the problem.

The Jordanian officials who are running the economy and the economic reform now do not lack knowledge, experience or competence, yet I wish that Basel Jardaneh, who was minister of finance in the early 1990s and successfully supervised the implementation of the previous IMF programme would step forward and comment on the situation.

He may offer a different point of view in evaluating the current fiscal performance and may try to diagnose the problems and offer his recommendations on how to deal with it in order for the present programme to succeed like the previous programme.

Economic reform, budget deficit and public debt are gaining a special importance at this time when Jordan is about to prepare a plan for the future of the economy for the coming ten years.

One wonders if this expected plan will be business as usual or intending to effect purposeful changes and set ambitious yet practical objectives whose progress is periodically measured.