Last month’s cabinet reshuffle seems to finally acknowledge that tackling Jordan’s big economic challenges will require focused and unified strategizing.
By Khalid W. Wazani
One of the most important changes to occur in the latest cabinet reshuffle was the appointment of Jaffar Hassan to the post of deputy prime minister and minister of state for economic affairs.
The former planning minister will lead a team charged with overseeing a tough three-year, IMF-backed structural reform program designed to cut public debt to 77 percent of GDP by 2021 from 94 percent now.
With his long experience of dealing with Jordan’s bureaucratic system and international donors, Hassan certainly has the credentials on paper to achieve most of his team’s economic goals. Many see his appointment as an effort to amalgamate all major strategic economic decision-making. Do we honestly need the Bureau of Economic Analysis, the Council of Economic advisers, and the National Economic Council to tell us what’s wrong with our economy?
Away from the main challenging economic indicators of growth, unemployment, poverty and the debt ratio, it’s critical that Hassan’s team move forward with achieving sustainable economic expansion. Growth of over 6 percent is needed so that we can start seeing some real improvement in our poor macroeconomic indicators.
Reducing unemployment and cutting the aggregate public debt balance is required. The growth that is needed to achieve this can only come from an increase in consumption and a boost in investment or fixed capital formation. The latter calls for an injection of cash in genuine investment opportunities that comprise new production in the economic sectors or expand current production. This should include all aspects of the economy such as the industrial, agricultural, and real estate sectors.
In all cases, Hassan’s team knows they need to boost the buying power and living standards of everyday Jordanians, as well as enhance investment opportunities in the country. However, efforts to stimulate consumption must not be stifled by the imposition of new taxes or fees. Sometimes a government needs to actually reverse these to see some ad hoc improvement in consumption. The recent experience of the United States is a good example of this policy in action. Figures for the first two months of the year show that easing taxes has led to a consumption-led growth.
Jordan also needs to start creating new investment opportunities and pumping fresh cash into domestic fixed capital formation projects. This requires the creation of our own investment funds, or at least revitalizing the Jordan National Sovereign Fund (JNSF). Whether through JNSF or through a different mechanism, such as long-term development bonds, the government needs to raise around JD1 billion and inject it into multi-sector, multi-regional projects all over the Kingdom. This should be able to create around 20,000 direct and indirect jobs in the economy, assuming each injection of a million in the economy creates only 10 direct jobs and another 10 indirect jobs.
To this end, one can be sure that having a new economic team under one umbrella is needed in Jordan. Only this will accelerate the decision-making process in the Kingdom.
Last month’s cabinet reshuffle seems to finally acknowledge that tackling Jordan’s big economic challenges will require focused and unified strategizing.
One of the most important changes to occur in the latest cabinet reshuffle was the appointment of Jaffar Hassan to the post of deputy prime minister and minister of state for economic affairs.
The former planning minister will lead a team charged with overseeing a tough three-year, IMF-backed structural reform program designed to cut public debt to 77 percent of GDP by 2021 from 94 percent now.
With his long experience of dealing with Jordan’s bureaucratic system and international donors, Hassan certainly has the credentials on paper to achieve most of his team’s economic goals. Many see his appointment as an effort to amalgamate all major strategic economic decision-making. Do we honestly need the Bureau of Economic Analysis, the Council of Economic advisers, and the National Economic Council to tell us what’s wrong with our economy?
Away from the main challenging economic indicators of growth, unemployment, poverty and the debt ratio, it’s critical that Hassan’s team move forward with achieving sustainable economic expansion. Growth of over 6 percent is needed so that we can start seeing some real improvement in our poor macroeconomic indicators.
Reducing unemployment and cutting the aggregate public debt balance is required. The growth that is needed to achieve this can only come from an increase in consumption and a boost in investment or fixed capital formation. The latter calls for an injection of cash in genuine investment opportunities that comprise new production in the economic sectors or expand current productivity or production within those sectors. This should include all aspects of the economy such as the industrial, agricultural, and real estate sectors.
In all cases, Hassan’s team knows for sure they need to boost the buying power and living standards of everyday Jordanians, as well as enhancing investment opportunities in the country. However, efforts to stimulate consumption must not be stifled by the imposition of new taxes or fees. Sometimes a government needs to actually reverse these to see some ad hoc improvement in consumption. The recent experience of the United States is a good example of this policy in action. Figures for the first two months of the year show that easing taxes has led to a consumption-led growth.
Jordan also needs to start creating new investment opportunities and pumping fresh cash into domestic fixed capital formation projects. This requires the creation of our own investment funds, or at least revitalizing the Jordan National Sovereign Fund (JNSF). Whether through JNSF or through a different mechanism, such as long-term development bonds, the government needs to raise around JD1 billion that it should inject into multi-sector, multi-regional projects all over the Kingdom. This should be able to create around 20,000 direct and indirect jobs in the economy, assuming each injection of a million in the economy creates only 10 direct jobs and another 10 indirect jobs.
To this end, one can be sure that having a new economic team under one umbrella is needed in Jordan. Only this will accelerate the decision-making process in the Kingdom.
