What next?

Not so many years ago, during the easy money era (2004-2008), Jordan enjoyed a period of unprecedented growth: in real terms the GDP grew by an average of 8 per cent, a superb rate.

However, a great opportunity was  missed, it was the time then to reform the economy, instead, more waste was created and the seeds for mounting debt were sowed as well as for the economic malaise that followed and continues today.

It was an era where money flowed into Jordan from everywhere, but particularly: Iraqi refugees, who pumped hundreds of millions if not billions of dinars into the economy; development organisations and donors, who wanted to alleviate the stress on the infrastructure and ease Jordan’s burdens (sounds familiar?); Jordanians, who in a frenzy of rising and ever growing optimism could not be stopped from investing in everything; and a government that increased spending like there was no tomorrow.

Tomorrow came, it is today. What could the government have done? 

It could have reduced the size of the public sector as people would have gladly gone to work in the private sector where money was plenty; instead, it gave its employees raises and expanded its size. 

It could have further pushed the economy into greater competitiveness by supporting exports as South Korea or Malaysia did, or provided real incentives to investments by multinational corporations. 

But it did not: it decided to relegate development spending to foreign donors (still does) and spend on establishing more independent organisations (in 2008, the budget for independent organisations doubled from under JD1 billion to almost JD2 billion).

It could have used the privatisation proceeds to ignite a virtuous investment cycle that could have ushered: a modern, cohesive and comprehensive public transport system; a great modernised set of universities and hospitals; energy alternatives; and even a creative industry hub (had governors been into the more esoteric side of business) that would have been unparallelled in the region.  

Instead, the privatisation money was squandered buying back a debt at a discount that never materialised. The interest that the funds were earning in Jordanian banks was twice the rate of interest on the paid debt, and within months the government decided to borrow more internally at thrice the interest rate of the debt paid (any logic here???).

It is true that the best reform strategies are usually homegrown yet benchmarking international best practice to avoid pitfalls and basically the mistakes the others made. Reform is not something that can be grafted from one to the next. And it should be obvious that Jordan should have had a vision then to guide these home-grown strategies, which it didn’t (and still does not today).

What next? I ask. Neither this nor past governments have heeded advice; hence one asks only for the privilege of knowing, that’s all.

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