Please, No More Stop-Gap Governments

If we are about to get another government sworn in, let’s at least have it filled with genuinely reform-minded experts who can tackle the long-ignored challenges facing our economy.

By Khalid W. Wazani

By the time this article sees the light of day, there’s a good chance we’ll have a new government. However, given the poor state of the economy, that’s a direct result of more than three years of neglecting its fundamental problems. I don’t think we have the luxury of appointing a caretaker government that will simply waste the rest of the year focusing on the upcoming parliamentary elections. Of course, holding transparent and fair elections is important. But this doesn’t mean the government should direct all its resources, including its economic team, towards making sure they run smoothly.

For more than three years, we’ve had a government with a single mandate, which is to collect more money and look good in front of the international donor community. Applying reforms solely along the lines of demand management policies has resulted in a real growth rate below 2.5 percent, unemployment of 14.5 percent, and a gross public debt of over 95 percent of GDP. We might actually be the only country in the world that adheres fully to an IMF reform program but ends up worse-off at the end of it.

However, the question is whether the reform program or its poor application is responsible for exacerbating the economic conditions of the country over recent years.

If one looks at the first two objectives of the IMF reform program, and the first two performance indicators, it’s clear they’re directed at how we can get more investments and create more jobs. The rest of the program talks about the demand management policies that have to do with rationalizing spending, lifting subsidies, and dealing with electricity pricing policy.

For a reformist government, the two sides should go together, creating more jobs and managing the demand side. However, for an acting government, the second is much easier. What you need to do is lift subsidies, increase taxes, and reduce spending even if you have a $3.75 billion grant to spend. Jordan needs a reformist economic team which not will only maintain the demand management pillars, especially in reforming taxes and subsidies, but will also give the right push to the supply side through partnership projects, and have an open minded way of doing business. The planned sovereign fund should help in creating mega projects, but we need to remember that SMEs and even micro-projects could help solve a substantial part of our unemployment problem. Let’s hope we make it right this time, and let’s pray we get a genuine specialized economic team with an open minded prime minister who really understands the importance of the private sector in pushing the economy forward.