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Exit strategy for the future

Mar 12,2024 - Last updated at Mar 12,2024

We face difficult regional political, economic and financial challenges. Public debt has reached unprecedented levels; debt interest is steadily increasing and is consuming a large portion of the budget. Funding sources through external borrowing are scarce, and its decisions are politicised and paid for, or at least conditional.

As for the sources of financing through internal borrowing, the most prominent is the Social Security Fund, which may not have more money than its obligations.

Over time — if left unaddressed — it will approach a point where pensions exceed contributions collected, accompanied by the government’s inability to repay the Social Security Fund’s debts.

The published public finance data of the state indicate a very difficult financial situation, as the value of the public debt has greatly increased, reaching approximately JD43 billion, and the annual debt interest for the year 2024 exceeds JD2 billion, and the annual deficit for the year 2024 is approximately JD3 billion, of which JD2 billion and JD70 million are a deficit in the general budget and JD880 million are a deficit in the budgets of government units. It is certain that the Social Security Fund’s debts, which approached JD9 billion and may have exceeded, are due to be repaid.

There is no doubt that the financial situation of any country governs its policies. There are policies for periods of prosperity and policies for periods of distress.

These serious challenges must be addressed and should never be overlooked.

Is there any benefit or necessity in allocating more than a third of a billion Jordanian dinars in the general budget for the economic modernisation plan? If we take what was allocated to it in the general budget for the year 2024, amounting to JD349 million, what was allocated to it in the budgets of government units, amounting to JD135 million, and what was allocated to it from external grants, amounting to JD250 million, the total amount allocated to it will reach JD734 million.

That is, more than three quarters of a billion.

The question is: Does the state’s financial conditions allow such an allocation? What will these huge sums of money be spent on in light of such financial hardship? What are the expected results? Do they have specific indicators with pre-announced target levels? What is the expected added value to the economy? Meaning, the improvement in the economy must exceed several times this number, otherwise these expenses will be considered a useless cost.

If taxes and fees were reduced by a quarter of this value, would the result be better? Does the private sector need a stimulating business environment that enables it to achieve in light of intense competition, or does it need ready-made templates and recipes to work within?

In light of this stifling crisis, it is absolutely not right to ignore the problem and not confront it, and it is not right to continue with the policy of phased and periodic annual treatments.

It is not correct to move forward and continue with the policy of providing financing for spending by increasing taxes and fees, which undoubtedly kill the economy or providing financing for the deficit annually through more borrowing.

In the face of this difficult situation, there must be radical treatments aimed at improving the economy and controlling spending, not continuing with solutions whose mentality starts from the budget deficit figure — as a given — where the work revolves only around how to finance it through more taxes, fees and borrowing, not going back and searching for the reasons.

It is necessary to reduce the deficit and reach deficit-free budgets gradually and accelerated.

We need to adopt policies that restore confidence in institutions and those in charge of them.

We need fair, effective policies that make everyone mobilise their energies and abilities to make them successful, for the benefit and benefit of everyone.

I fully realise that those in charge of state institutions are trying to the best of their knowledge, experience, and ability to confront the challenges and serve the nation.

Therefore, this proposal is not considered a disparagement of previous or current efforts, but rather constitutes a qualitatively different starting point towards the future and a departure from reality with new constants and tools that bring about a shift in the approach and ways of dealing with challenges in a way that restores balance to the general scene, laying the foundation stone for the future and entrenching the culture of self-reliance.

Otherwise, in my opinion, we are in a vicious circle of temporary painkillers, which in themselves creates great challenges, and we remain in dire need of foreign support and aid.

This coincides with maximising defensive military capabilities, purchasing weapons from various sources, and most importantly, launching military industrialisation, supporting creativity and innovation in this field, allocating the necessary allocations, and enhancing professionalism and strategic approaches.

Let us all realise that confronting challenges on our own is our only way to achieve the future we want and deserve.

 

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