Crisis situation needs attention

We in Jordan have been confident that despite the chaos spreading all around us and the many challenges at home, mostly related to regional troubles, we managed to remain a relatively prosperous oasis of safety and stability.

To a certain extent that is true, but there are alarming signs that some economic challenges are pressing hard on us, to the point that we need to re-examine our optimistic assumptions.

Foreign aid, which has been essential to supporting Jordan’s budget, is on the decrease, well before our economic planners were able to come up with means to replace it with new income.

Lower fuel prices, still decreasing, came as a blessing for Jordan, and many cash-strapped households, at a time when the country’s energy bill contributed substantially to foreign debt.

The cost of generating electricity and the accumulated deficit of the electricity company pushed the national debt to unprecedented levels.

In the last four years, the Jordanian energy situation was further aggravated by the interruption of Egyptian gas.

But if cheaper oil is a helpful factor locally, it is causing disastrous consequences to the economies of oil-producing countries in the Gulf, whose oil and gas revenues are the major financial resource.

The risk of the Gulf states experiencing an economic slowdown as a result of diminishing energy revenues will doubly impact the Jordanian situation.

It could lead to lay-offs among the tens of thousands of Jordanian expatriates working in the Gulf, who send home billions of dollars in remittances annually.

And when government budgets in the Gulf are under pressure as a result of low oil prices and regional wars, the chances of aid to Jordan are likely to diminish too.

The government tried in recent years to spur economic growth and create jobs for youth entering the labour force by hundreds of thousands annually.

But these efforts have largely been frustrated, mainly by the impact of the Syrian crisis and the continued instability in Iraq, which resulted in grave disruptions to exports, imports and transit trade with both countries and with Europe.

There is also the flow of hundreds of thousands of Syrian refugees into the country, on top of large numbers of those from Iraq, Yemen and even Sudan.

There are also reports that many foreign investment projects are planning to liquidate their businesses and leave amid complaints of higher taxes and rising operating costs.

This suggests that recent government endeavours to reform and stimulate the investment climate, through new investments and tax legislation, have not borne fruit.

Our tax strategies may have indeed been short-sighted, in the sense that they sought higher short-term revenues, without giving a thought to the fact that taxes that push prices and costs too high end up discouraging buyers.

They may also lead to retailers’ losses and more labour layoffs.

Wiser tax policies should be designed to stimulate, rather than punish, thriving businesses and investments that create jobs and enhance the economy.

The situation needs urgent attention. It needs a fresh look at our investment laws and regulations. It requires courageous approaches to tax laws and other elements of the cost of doing business, including the myriad bureaucratic procedures and requirements for permits, etc.

We should not be shy to learn lessons from other countries that focus on minimising barriers to business.

At the same time, we should ensure that people’s needs and rights as workers and consumers are prioritised and met.

There are other areas that need immediate attention, such as medical, religious and leisure tourism.

There is evidence of malpractice in many such areas, leading to fast erosion of credibility and trust, and hence doing enormous damage to the country’s image as a whole.

Even if one allows that the government has made substantial efforts over the years to avert many crises in very dire times, maximum effort is needed now to address shortcomings and seize opportunities.