The Jordanian Scene: A Year full of Challenges and Risks
The emerging crisis of the coronavirus did not leave an opportunity to ask the government of Dr. Bisher Al-Khasawneh, which was formed on October 12, what it intends to do to contain the catastrophic repercussions of the economic crisis that afflicted the country and exacerbated its chronic problems.
The new government inherited a heavy legacy of high infections and increasing deaths due to COVID-19, accompanied by confusion in plans and field treatments related to the crisis in its economic and social dimensions.
The urgent tasks of Khasawneh’s government were to deal with the outbreak of the corona-virus on a large scale, and fortify the health sector and provide it with the elements of resilience and continuity. in Addition, the government needed to fulfill the constitutional obligation of holding the parliamentary elections on time.
Until then, what solutions and ideas does the government have to stop the economic decline and save social conditions from deteriorating?
What will the government present in the 2021 budget to address the challenges of growth, debt, deficit and unemployment?
Are there any guarantees that the new year will not be an extension of the previous one from an epidemiological point of view, or rather a year in which we pay the account of the previous year with all its costs, in which the bleeding will continue?
The long lockdown measures adopted by the government of Omar Al-Razzaz exacerbated the crisis in the economic sectors and placed additional burdens on the treasury and the Social Security Corporation to contain the negative effects on hundreds of thousands of workers, employees and small and medium-sized companies.
Because the crisis is of a global nature, its impact was severe on the societies of developing countries and small economies, so the government was forced to borrow excessively and rely on the Central Bank of Jordan to help save companies from collapsing.
The latest report of the Jordanian Economic Monitor at the World Bank indicates that the budget deficit this year will double, registering 8.2% of GDP. It is also expected that private consumption will shrink by more than 5% due to low demand in the markets, while government consumption continues to rise, to 5%.
In its report, the bank expects the total public debt to rise over the next three years to reach about 115% of GDP.
The report indicates that the already high unemployment rate increased to 23% in the first quarter of this year.
The report concludes with a disturbing conclusion that “this pandemic will have a serious impact on the Jordanian economy and its prospects, as it will for Jordan’s trading partners and the entire Middle East and North Africa region.”
However, most local and international reports are speculating that the situation will improve with the gradual recovery of economic activity.
The next few months represent a critical test of the ability of state institutions to contain the pandemic, restore the momentum of economic activity, and advance practical and viable programs that address the costly effects of the COVID-19 crisis.
In the letter of assignment to Khasawneh’s government, an explicit and strict royal directive was given to deal with the crisis and address it as soon as possible devoting itself to its economic and social repercussions. While the government is waging this battle, it must work at the same time to prepare the draft general budget law for the new year and prepare for its long discussions under the dome of Parliament.
The first parliamentary session of the 19th parliament will be held at the beginning of next December, After the fulfillment of the constitutional obligation represented by the discussion of confidence in the government and the formation of council committees, it is expected that with the beginning of the new year, there will be a direct reading of the articles of the budget bill, which the Council will not be able to complete before the beginning of next March.
We do not yet know what the epidemiological curve will be in the first months of 2021, and will the government succeed in containing the state of the community outbreak without resorting to more stringent measures that include closures and comprehensive bans for longer periods?
The government is trying to avoid this scenario as much as possible because of the high economic costs that it entails. But no one can predict the emerging conditions in the coming months, and in any case, the COVID-19 crisis will continue to cast a heavy shadow on our countries until global laboratories are able to develop effective vaccines for the pandemic.
In view of these facts, the next year is expected to witness further deterioration in economic and social conditions. The government will not be able to control the public debt in light of the growing budget deficit, or the unemployment rates unless we witness a real revolution in the local and foreign investment sectors. Experts also expect that more social groups will slip down the class ladder with the increasing difficulties of living life, and the stagnation that afflicts many productive and service sectors such as tourism, which constitutes an important economic source for the treasury and supports tens of thousands of citizens.
With the continuous return of Jordanian expatriates from the Gulf countries, the feeling of economic deprivation and the absence of opportunities will grow in a market filled with the unemployed.
There are no indications yet of a social protest movement due to the economic situation, but with the return of parliamentary life and the deepening of the economic crisis in the coming months, the possibility that new forms of movements will return to the street cannot be ruled out, especially with a clear trend among private sector institutions toward eliminating employee and worker services. and the inability of the public treasury to improve the salaries of public sector workers.
The economic team of Khasawneh’s government has not yet revealed its intentions. The budget and the action plan that the government will submit to His Majesty the King in three months will give an idea of how the government will deal with a crucial year in Jordan’s trajectory.
In the short term, the government should avoid any long closure of markets and economic facilities, and take into account the protection of the economic cycle from the effects of the COVID-19 crisis, regardless of the number of infections in the coming weeks. It must design prevention and containment plan to achieve public health goals without compromising economic activity in key sectors.
The government should also think about opening the door for winter tourism to compensate the tourism sector in the city of Aqaba and in Petra for the heavy losses it incurred, and the same applies to the aviation sector, and Royal Jordanian in particular, which suffers from a crisis that threatens to bankrupt it. The current plan is to provide urgent financial support amounting to fifty million dinars to the airline, to ensure the sustainability of its work.
Continuing the strict policy regarding tax and customs evasion will have positive repercussions on the Kingdom’s treasury. The latest reports indicate an increase in income from tobacco taxes by 300 million dinars during the previous nine months compared to the same period last year. In the same vein, the government must continue to review tax exemptions and limit them to feasible investment sectors to maximize the treasury’s gains.
Defense orders, specifically Defense Order No 6, contributed to controlling layoffs, and in the event that the Defense Law is suspended, it is expected that we will witness a massive wave of layoffs in commercial and service sectors as a result of the COVID-19 crisis, so it is appropriate to wait in this matter and continue working with defense orders until the government determines the ability of the private sector to meet work requirements and not resort to collective dismissal.
In the midst of discussions of the general budget law, and in the medium term, the government should provide more resources for social protection programs and vocational rehabilitation to provide the requirements of a decent life for thousands of families that will be included in the lists of the National Aid Fund, and it should launch an active and effective policy to support small projects and productive initiatives for individuals.
In this regard, it is appropriate for the government to start reviewing the science service project approved by the previous government and its feasibility in reducing unemployment and rehabilitating the unemployed, in conjunction with bold steps to reconsider university admission policies to align the requirements of the labor market.
The decisive element in moving the national economy forward is the launching of major economic projects in the fields of infrastructure, industry, and agriculture. In this respect, the government must set in motion the plans for the forthcoming projects financed by Arab and Gulf funds because of their positive effects on the national economy and their role in alleviating the problem of unemployment.
Many projects have been hampered by the bureaucracy of the government apparatus, the lack of initiative, and the ability to make decisions, and it is time to overcome these obstacles and immediately embark on implementation plans.
The election of a new parliament represents an important step on the road to building a national partnership to meet the challenges of a difficult stage, but at the general national level, it is necessary to think about launching a national policy forum in which all actors in the Jordanian political and economic scene are involved, presenting the ideas and perceptions necessary to move the national economy forward, and conduct a dialogue that is serious about existing policies and ways to develop them in various fields, and to provide decision institutions with creative solutions that will contribute to overcoming the general crisis. The occasion of the bicentenary of the Jordanian state is a great opportunity to launch such a forum that could bear its name and embrace its dreams and ambitions.