Suggested programme for economic reform

An economic reform programme covering several years to come and sponsored by an international institution such as the International Monetary Fund (IMF) is supposed to be ambitious.

It is expected to set high targets, even if only part of them will be actually achieved. 

However, the economic reform programme that was recommended, or approved, by the IMF recently, was so humble that, even achieving all its objectives will not be considered a big deal.

According to the programme, the economic growth rate will remain below 4 per cent during the coming four years.

It starts with a GDP growth rate this year of 2.8 per cent. Even this low percentage is doubtful.

The best estimates put the growth rate this year at 2.3 per cent.

Low economic growth rates coupled with very low inflation rate, sometimes a negative rate, make the GDP growth rate in current prices very low indeed, and this does not help achieve the desired reduction of debt/GDP ratio each year, starting with the present rate of 93.2 per cent to reach 77.2 per cent after five years.

The programme is calling for an accelerated reduction of the budget deficit, from JD918 million this year to only JD170 million in 2019.

It is not known if the above figure is related to the central government budget only or to the consolidated budget, which includes the budgets of all the independent governmental units.

The government would be well advised to treat and look at the list of the IMF programme projections and targets as being a worst-case scenario.

The government has to build its own best-case scenario through policies and measures over and above the official programme requirements.

In order for the government to aim at a growth rate higher than what the IMF envisaged, it needs to focus on the elements and sources of economic growth.

High among them are: exports, industrial output, foreign grants, expatriates’ remittances, tourism receipts, flow of Arab and foreign investments, and enhanced productivity.

In its endeavour to achieve higher economic growth, the government should not be deterred by taboos and claimed red lines.

At times, it may find it appropriate to interfere in certain activities such as Jordanians’ investments abroad, extensive travel of Jordanians abroad, the low inflation rate and the fixed exchange rate, in place for the last 20 years.

Economic growth deserves top priority. It is a prerequisite for solving challenges like poverty and unemployment; such issues cannot be dealt with through isolated measures.

We should have the kind of economic growth that generates income and job opportunities.