Mission impossible? IMF says Jordan needs 7 percent growth to fight poverty and unemployment
An International Monetary Fund (IMF) delegation held meetings in Jordan on Tuesday with the financial and economic committees at the Jordanian parliament to discuss the current economic situation in the Hashemite Kingdom.
Head of the IMF Middle East Mission Christina Kostyal said in a statement to the press following the meeting that Jordan needed a growth rate of no less than 7 percent annually to help fight poverty and unemployment. She added the country could achieve that growth rate by improving its business infrastructure, especially through reforms to investment and income tax laws currently being discussed by Jordanian lawmakers.
She said Jordan’s debt and budget deficit had both grown over the last two years, due in part to the Syrian crisis and the disruption of Egyptian gas supplies.
Jordan’s public debt rose to 25 billion US dollars at the end of 2013, accounting for roughly 80 percent of GDP.
The Jordanian economy, previously averaging 6.5 percent per annum growth in the decade leading up to 2008—with growth rates peaking at above 10 percent in 2007—is now virtually stagnant. Growth rates in recent years have hovered around the 3 percent mark, according to figures from the World Bank. However, the both the World Bank and the IMF have forecast an uptick in growth this year to 3.5 percent, the highest since January 2010.
According to the country’s energy minister, the large amounts of fuel Jordan imports is contributing to its economic problems, costing an average of 3.5 million US dollars a day.
Natural gas from Egypt, Jordan’s main supplier, has been interrupted several times since Mubarak’s ouster in 2011 due to the pipeline being sabotaged by jihadist militants in the Sinai.
Kostyal said that the IMF had called on the world to support Jordan through grants and aid, not through loans, and that “the IMF aims to support Jordan because it is unable to solve its financial crisis without help.”
She added that the task of the IMF was limited to designing economic reform programs—not imposing them, merely providing advice—and that it was the Jordanian government that was responsible for implementing these programs “because it was aware of all the requirements.”
“Governments come to the IMF only when they have financial problems,” she said, adding that the governments in question were “more capable than the IMF of identifying the problems [in their countries].”
Kostyal also noted that the Jordanian government was in competition with the private sector for banks’ lending capital, and called on the government to create viable development projects instead of increasing domestic borrowing.
Kostyal also said she visited the Zaatari camp in northern Jordan on Saturday, currently home to over 140,000 refugees from Syria.
The second-smallest country in the Arab world after Bahrain, Jordan is currently buckling under the strain of 1.2 million Syrian refugees who have poured in since the start of the crisis. Jordan, whose total population is 6.3 million, is already home to another 28,560 refugees, mostly from Palestine and Iraq.
- State of the Arab World Economy report 2016: diversify, tax, slash subsidies
- Arab investors won't dump the Trump despite anti-Muslim remarks
- UAE economy minister projects high growth despite oil prices
- UAE can set the pace for innovation in the Middle East: IBM vice president
- Business community welcomes UAE's deficit-free budget