Hassan’s hands-on approach

In the regular Cabinet meeting held last Saturday, December 14, Dr Jafer Hassan addressed the ministers, allowing TV cameras to record his introductory remarks. He made it abundantly clear that the private sector should be extended robust support and that efficiency should be prioritised to facilitate investment, all within the framework of Jordan’s laws. If any laws prove to be detrimental, they must be amended in accordance with the agreed legal frameworks and procedures.

He emphasised that the government will not be unfair to public employees, but it will not hesitate to take necessary action against any employee who deliberately delays investment decisions at the expense of the national economy.

Each minister is expected to fulfill their ministry’s role in collective Cabinet decisions. This must be accomplished within the appropriate budget and time allocations, regardless of the details the respective minister must address, and with the cooperation of every employee, irrespective of rank.

Jordan has always been supportive of the private sector, but this support has often been mired beneath layers of inspections, haphazard obstacles, and contradictions among a plethora of unscreened laws. Investors may enjoy a relatively smooth licensing process, but when implementation begins, such licensed projects often face a via dolorosa (street of suffering).

I appreciated the PM’s succinct and no-nonsense message. Theoretically and practically, such an approach is prompted by several factors.

Jordan’s draft budget law, currently being debated by representatives in the lower house, reflects the stark reality that Jordan’s fiscal budget is overburdened by deficits and mounting debt, now around 120 percent of GDP. Allocations of almost JD 1.48 billion will not be fully spent due to a lack of resources, and a good portion of the money spent will go towards salaries rather than projects. In such a situation, where public financial resources are lacking or inadequate, one must look for resources wherever they can find them.

Another reason the government cannot ignore the recent World Bank report, which stated that the implementation of the “Reinforcement of Administrative Reform Project” was satisfactory, though only 75 per cent has been completed. The project will be extended for three years with a modest budget of $7.5 million. However, I am sure that Dr Hassan, having previously served as minister of Planning and the director of H.M. ‘s Office, will not be happy with such a report. He is trying to give a fillip to administrative reforms.

Moreover, the latest IMF report indicated that the projected growth rates for 2024 and 2025 are 2.3 per cent and 2.5 per cent, respectively. While these figures are lower than the global average, they are not bad for a country like Jordan, which has faced significant challenges impacting its growth aspirations. However, such growth rates will neither create sufficient jobs nor alleviate poverty.

Given these factors and others looming on the horizon, what last resort does Jordan have? It is the private sector.

We need to embrace the theory that the famous economist John M. Keynes called “The Double Bluff”. This theory posits that the government acknowledges wages are low but keeps them low because any increases would primarily go toward consumption. At the same time, fiscal policies allow profits to grow, on the condition that the extra profits are recycled into job-creating investments.

The Double Bluff worked for capitalism in the 19th and 20th centuries. Many economists have analysed and reviewed this approach, and a significant number agree that it is a viable solution for developing economies.

Both Turgut Özal (of Turkey) and Dr Mahathir Mohamad (of Malaysia) applied a similar scheme in line with this theory through the Harrod-Domar model of development, achieving stellar success.

At home, Dr Hassan himself needs to show greater zeal in implementing new ideas that could lead to better financial engineering and economic modernisation. I would remind him that the creation of a development bank with a bold vision should be a priority. I have already had the opportunity to suggest this idea to Minister Muhannad Shehada, hoping that something concrete will emerge from our discussion.