A corrected government action

When the International Monetary Fund-sponsored adjustment programme showed the high socio-economic and fiduciary costs of increasing government revenues, many politicians acknowledged the fact. Neither the government’s financial situation is reassuring, nor is the promise of growth evident or even eminent.

His Majesty King Abdullah has shifted the focus to the “growth” approach. In statements preceding the successful trip to India, the King made it abundantly clear that he wants investments, and he wants to leverage whatever investable funds available in Jordan with foreign investment. To these statements, which are growth-centred, we all must cheer hurrah.

Prime Minister Hani Mulki also made a similar statement after announcing a Cabinet reshuffle. Incoming Deputy Prime Minister and Minister of State for Economic Affairs Jafar Hassan and Minister of Industry, Trade and Supply Yarub Qudah made statements loaded with growth terminology, which is also laudable. 

In a lecture sponsored by Al Quds Centre for Political Studies on moving Jordan from dependency to self-reliance, Minister of Planning and International Cooperation Imad Fakhoury focused on a five-year programme to implement the projects and introduce the necessary policies and legislation.

However, if the government succumbs to the IMF pressure to collect more taxes or to decrease its expenditure to shrink the unyielding tyrannical rates of public debt to GDP, then we puff all these promises of growth away.

People are worried that maintaining tight financial and monetary policies will crowd the private sector out of the finance market, create more money traps and decrease monetary velocity. The Jordanian dinar in the local market will appreciate as a scarce means of payments, and it may depreciate in external markets. If this redline is crossed, it would fuel hot arbitrage and speculative movements on the dinar.

On the fiscal front, I have argued more than once in this column that the only way left for meaningful reduction in the budgetary deficit is to reduce the item of wages and salaries. This is only tenable if a reduction in the over-inflated public employment takes place. Such an alternative can be implemented only in small doses. For it to succeed, a campaign for job creation in the private sector should be mounted in a big-push manner.

Thus, for the IMF-sponsored adjustment process, a growth-focused approach is needed. It is not sufficient just to doubt it, or make sporadic unstructured attempts at it. We need the five-year plan that was developed by the government upon His Majesty’s impetus and the detailed execution blue-print done at the Planning Ministry be put into an immediate action. A steering independent committee should submit quarterly reports monitoring the implementation process and proposing amendments therein.

Serious pro-development participatory effort is the trick. People need to see and believe that whatever money the government is charging them, they are getting something of value in return. Thus for, and over the last six years, they have received much less than what they have paid.