The government said it could not do this because a price drop would drain millions of dinars from the treasury, which it needs to pay salaries and control a growing budget deficit.
The crisis lingered but was partially resolved when tribal leaders accepted government promises to cut fuel prices while increasing freight rates in early January.
The recent crisis has underlined the seriousness of the socio-economic situation in Jordan. With an unemployment rate of 24 percent; Public dissatisfaction with short-term government action has reached nearly 50 percent among youth. Public spending was constrained, creating cash flow problems for the private sector.
Meanwhile, public debt has risen at an alarming rate, approaching 100 percent of GDP. Prime Minister Hitherto Khasawneh said the state budget will continue to suffer from a deficit of $2.8 billion over the next three years, which it will have to borrow to cover. For millions of Jordanians, there is no light at the end of the tunnel.
Ironically, the kingdom has been working with the International Monetary Fund (IMF) since 2004 to reform the national economy. Despite deteriorating living conditions and alarming economic indicators, IMF praises country’s performance; resulting in more credit being given to the government.
Meanwhile, the elephant in the room has yet to be addressed, and that is the size of the public sector, which consumes more than 70 percent of the annual state budget, mostly in the form of salaries, with very little left for investment in new projects and the public lets works.
The downsizing of the public sector is more of a political issue than an economic one. A major restructuring of the public sector means thousands of government employees would lose their jobs. No government is willing to take that risk.
The only possible way is to incentivize the private sector to create new employment opportunities. With more than 100,000 Jordanians entering the labor market annually, this remains a major challenge.
So far, the government has revised the investment law with the aim of attracting more foreign investment. Under royal patronage, it launched a 10-year, $40 billion economic program that hopes to create at least a million new jobs.
But there are many caveats standing in the way of achieving such goals. Jordan is already among the leaders in receiving foreign aid and soft loans, but a global recession looms and 2023 will be a difficult year for most developing countries as wealthy economies grapple with inflation and energy shortages, among other things.
The government blames the pandemic, the war in Ukraine and other geopolitical issues for hampering Jordan’s economy. Such factors have certainly compounded the challenges.
Going forward, Jordan’s private sector needs to be freed up to play a more robust role in providing jobs while relieving the government. The time for bold decisions has come.
Osama Al Sharif is an Amman-based journalist and political commentator.
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