Early indicators of economic reform progress

Most recent data by the Ministry of Finance indicates that Jordan’s gross domestic debt has risen during the first quarter of this year by JD76 million only.

The government has withdrawn JD100.4 million from its deposits with banks, which raised net public debt to JD176.4 million.

Data shows also that foreign debt rose during the first quarter of this year by the equivalent of JD282.9 million.

The gross debt, domestic and foreign, has risen in three months by JD358.9 million, or 1.4 per cent.

The IMF programme does not measure debt in absolute figures; it measures debt as a percentage of the GDP.

Official figures for this year are not ready yet, but it is not very difficult to make an educated guess that will not be far from the truth: real economic growth in 2017 as a whole is expected to reach at least 2.4 per cent, while inflation rate will range around 3.6 per cent.

These estimates suggest that GDP has risen in the first quarter of 2017 by 1.5 per cent, of which 0.6 per cent is due to real growth and 0.9 per cent due to inflation.

The above estimates are on the conservative side. Yet it is more likely that GDP in current prices by the end of the first quarter will be at least 1.5 per cent higher than at the end of last year.

GDP in current prices at the end of 2016 was JD27.45 billion; it is expected to reach JD27.9 billion by the end of the first quarter of 2017.

In that case, the ratio of gross debt to GDP at the end of the first quarter of this year will be 94.9 per cent, compared to 95.1 per cent at the end of last year, a net reduction of one fifth of a percentage point.

This is obviously a very small percentage, but it reveals the new trend, which is that Jordan has succeeded in putting an end to rising debt and that the time of gradual debt decrease has started.

Most likely, the IMF mission will be happy about this development. It may even congratulate the government and itself.

Things being so, one can claim hat Jordan’s economic reform programme, supervised by the IMF, began to achieve one of its most important objectives in a way that can be measured accurately, not only on yearly basis but on quarterly and monthly basis as well.

This is one of the most important features of a practical programme aimed at achieving tangible and specific objectives, according to an agreed timetable, instead of using nice words and slogans that publicity machines care about but not economists.