While it appears unenthused about taking the simple steps needed to create a sovereign investment fund, the government has been more than happy to burn through foreign aid and rack up debt with little or nothing to show for it.
By: Khalid W. Wazani
HM King Abdullah recently called for the establishment of a sovereign investment fund to help boost Jordan’s ailing economy. But until now, not a single legislative step has been made to establish such an important economic mechanism. The question is what is so difficult about preparing and issuing such a straightforward law? It would need no more than 10 articles. The first three would be for definition and legal foundation purposes, the second two articles for the administrative structure, including its board of directors and higher management structure and responsibilities. Articles six and seven would outline the fund’s resources and financial book keeping. Article nine would be left to design the overall strategy of the fund uses of money, and should directly refer to the bylaws that the board of directors will issue to articulate the administrative and investment foundations of the fund. Finally, article 10 would be the formal template that says who’s responsible for applying the law.
The exercise of issuing this law, including consultation with stakeholders, and endorsement, shouldn’t take more than a couple of months. I can’t stop thinking of the fact that this government was motivated enough to amend the constitution twice and in record time, but failed to put in place a relatively straightforward piece of legislation that’s greatly needed to help boost living standards for Jordanians.
Given this, we might be right to query what, if any, real economic achievements the government has made of late? As per the recent report by the IMF and other official sources, the table above lays it all out in black and white. The only achievement came on the budget deficit, thanks to citizens’ contribution to subsidies lifting and shouldering heavy taxes.
The culmination of running the country over more than three years shows that a government which received the biggest amount of foreign grants and assistance in the history of Jordan, and borrowed more than what Jordan has ever borrowed between 1921 and 2009, ended up with exacerbating the economic situation, as per the above mentioned figures. How all these resources were used without any substantial achievement on the economic front demands an answer from the government. While on the issue of the sovereign investment fund, the opportunity cost represented by the forgone return on the fund and the job creation is far beyond any acceptable excuse any government or expert can justify. The future should be judged on the legacy and the achievements of any government, including this one.