Reform programme — national or international?

Prime Minister Hani Mulki says that the economic reform programme agreed upon with the International Monetary Fund is completely homemade.

Jordan is not alone in trying to portray the programme as national. All countries who call on the IMF for help do the same.

In a way this is true, but only in form. As far as the contents of the programmes are concerned, the IMF plays the role of a doctor who decides what should be done.

Of course, the government may accept what the IMF is offering if it needs the programme badly, or rejects it if it can afford the negative attitude of donors and lenders.

Even after the completion of negotiations on all subjects, the IMF would not formally take responsibility for the programme and its possible outcome.

The fund requests a letter of intent signed by the government, which in fact is a letter of commitment to abide by the agreed action, according to a time table.

Governments, of course, have to be flexible and accept certain conditions, otherwise there is no programme. 

The IMF may withdraw and present the reasons, which would further damage the financial position of the country concerned.

Reform programmes are needed by governments not by the IMF. The former need to convince donors and lenders.

Concessions by the IMF are confined to the timing of actions.

The letter of intent is an undertaking by the government to implement all reforms agreed upon as if it is a government decision to do so.

In this respect, both parties agree to try to project the impression that the programme is a national product, not imposed by the IMF.

Such impression is acceptable to both the government and the IMF. Moreover, the IMF mission writes the draft of the letter of intent that the government will give the IMF. It remains for the government to type and sign the letter.

What is important is for the Jordanian economy to undergo a serious reform that can lead to higher growth rates, lower budget deficit and public debt under control.

After all, it is good to benefit from the IMF experience and the credibility it lends when it announces positive results.