A programme for economic reform

In the absence of Parliament, Prime Minister Hani Mulki’s government submitted its policy statement in the form of a programme to His Majesty the King and the Jordanian people to earn the Royal and popular confidence.

Like the King’s Letter of Designation, the programme covered all aspects of political, economic and social life. It was composed in a way to reflect the existing general consensus on the objectives that need to be achieved under the present circumstances.

People, however, may differ on the ways and means to get there.

The programme, as presented to the public through the media, is good enough to get the government a pass.

The government earned the right to be supported in its endeavour to abide by the programme and honour its commitments, which are not easy.

The government could not have found it difficult to prepare its economic programme, whether for the short run (four months) or the longer run (four years).

It is a programme that was agreed upon with the International Monetary Fund (IMF) after several months of negotiations.

The major part of the programme represents the government’s ideas, which were accepted by the IMF. Thus, one can claim that the economic reform programme is mainly a Jordanian product.

The government undertook to prevent the debt/GDP ratio from rising at the end of this year over what it was at its beginning, meaning that debt is allowed to grow only at the same rate as the GDP, as calculated in current prices.

This job is difficult due to three reasons: foreign grants are on the decline against exportations; the GDP growth rate is very low, if any; the inflation rate, in this case deflator, is on the low side, meaning that GDP in current prices may not grow in a substantial manner, which means that debt should not grow except on a limited scale.

The results of the first four months of this year did not indicate that things were going in the desired direction.

Public debt rose by JD510 million or 2.2 per cent of GDP. If this trend continues, debt will rise this year by 6.6 per cent.

This will be acceptable only if the GDP grows at the same rate, which is not likely to happen, as the most optimistic projections put real growth in 2016 at 2.8 per cent and inflation at 1.2 per cent, a total of 4 per cent.

It is natural that the government would avoid controversial subjects such as dealing with subsidies. However, the government accepted the principle of cost recovery by the National Electricity Power Company. Ditto for the Water Authority, but implementation is postponed to the beginning of 2017.

Finally, one should note that the IMF’s programme is not the government’s programme, it is only part of it.

The government’s programme is much wider; it goes beyond objectives, to actual steps that should be taken.