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Who pays the government?

Feb 10,2021 - Last updated at Feb 10,2021

The government is projected to have revenue of JD7.88 billion. An estimated JD7.30 billion of that revenue is generated domestically, while the remainder comes in the form of foreign aid and assistance (Mainly from The United States). This means that Jordanians are expected to pay 92.6 per cent of the total budget revenues.

The budget deficit is expected to increase in 2021 by JD2.05 billion. This will be financed primarily through loans from domestic and foreign sources. In other words, the Jordanian public will have to service and cover these debts in the years to follow.

The Jordanian state’s expenditures are projected to be JD9.39 billion, 65 per cent of which will go to salaries for various jobs in government, and result in a grand total of JD6.10 billion. Coupled with the JD940 million in other expenses that the government accrues, the actual amount that government is paying for its own employment is closer to JD6.95 billion. This means that capital expenditure does not exceed JD 1.3 billion, which will not be all spent.

In addition, the private sector in Jordan pays the government in two other forms. First, the government is paid through dividends for its investments in addition to voluntary contributions to certain causes. Second, there are the government's unpaid bills, which are estimated to be at least JD350 million. The 2021 budget indicates that the government plans to pay about JD74 million of that debt.

In a nutshell, the private sector's payments to the government are more than sufficient to cover the government’s expenditures, minus debt service payments, of course.

This technical, and statistical outlay is meant to challenge the fact that Jordan depend on foreign aid in executing its budgetary duties, but that it generates most of its cost from Jordanians in the form of taxes, duties, fees, fines, dividends and through withholding payment on overdue loans.

The crux of the matter is that the role of the private sector is marginalised, and that the government takes the entire private sector for granted. The government stifles the private sector’s boom, it also marginalises the latter’s importance, and it takes liberties in over-monitoring and penalising private institutions and individuals. These defects have all reached intolerable levels, yet the reactions on social media and on official media are pervasive in their antagonism of the private sector.

The current economic climate is not making this dynamic any easier: The cost of energy is very high, the social security monthly salaries are being chipped away at, there are unreasonably high tariff and sales tax rates, and not to mention the very high interest rates, all of which, are amalgamating in a manner that defeats the purpose of economic recovery.

According to the Central Bank’s data, there are too many bank accounts in difficulty, and who have outstanding debts that amount to JD2.5 billion. If this modus operandi continues for a few months more, S&P Global Ratings ominously warns that the economic problems in Jordan will become very serious.

The current structure of the Cabinet is heavily skewed against the private sector. This does not match the messaging the government tries to put out when they say that there should be an active partnership between the two wings of our economy.

His Majesty King Abdullah sent the nation a clear message a few days ago, wherein he called  for political, administrative, economic and social reform. The election law should be seriously revamped. His Majesty’s call was echoed by Upper House Speaker Faisal Al Fayez. In the coming days, we need to stretch our resilience as wide as we possibly can, in order to avoid a crucial tear in the fabric of our society and economy.

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