Debt grows, economy does not

The national debt rose by almost JD5 billion in the last two years, in spite of extremely generous support from donors and developing agencies.

Consequently, the size of Jordan’s public debt just exceeded JD22 billion.

Not even the development grants of JD2 billion from the Gulf was being spent, in an economy that has been practically in recession since 2010.

The only reform really conducted by this Cabinet was to increase prices of fuel and energy, thus contributing to inflation while unemployment is high.

Moreover, poverty is rising and per capita growth is negative when accounting for the increase in population due to the refugees.

If one were to look at government growth in terms of employees for the period 2002-2012, one could see that the government workforce has been growing at a rate of 6.3 per cent annually, which meant a 56 per cent increase in government size.

Not only did the government increase its workforce, it has been hiring at a rate that is three times the rate of population growth.

Government spending has been rising at a rate of 19 per cent for the period 2002-2013, a rate higher than that of the GDP (even when accounting for inflation), which was 13 per cent.

This increase in spending occurred after the government privatised many of its holdings, which also means that the government grew by more than the averages demonstrate.

It is not surprising, therefore, that the government debt has been growing at 15.3 per cent annually since 2008, the year Jordan decided to buy back its debt from the Paris Club.

Even though the debt currently stands at 82 per cent of the GDP, which is not a cause of alarm since the national debt reached 102 per cent in 2000, there is the issue of JD5 billion in debt that is due this year.

The share of each Jordanian of the national debt is JD3,400, which means that future generations of Jordanians, and even this generation of workers, will have to suffer increased taxation to pay back this debt plus the interest.

Maybe it is time to really discuss the “whys”, “hows” and “wheres” of the debt.

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