The IMF’s First Testimony

By Jumana Ghunaimat

تم نشره في Sat 24 September / Sep 2016. 12:00 AM
  • Jumana Ghunaimat

The first testimony by Martin Cerisola, the head of the International Monetary Fund (IMF) mission to Jordan, on the recently signed agreement with the Fund in August, is promising, to a huge extend.

The IMF head of delegation confirms that Jordan has achieved the required indices in accordance with the fundamental criteria for the programme by the International institution.

The most important thing in the evaluation is that the Jordan Dinar exchange is comforting, stable, and so is the fiscal policy. Above all, the situation in Jordan is unlike it is Egypt and other countries, to the point that it is incomparable. More so, the report outlines that the domestic economic crisis is in core caused by the regional turmoil that stirred out of conflict in neighbouring states; primarily in Iraq and Syria.

The IMF has already begun implementation of the programme, and indeed the Fund’s administration has decided to loan Jordan USD732 million for the whole duration of the programme. In fact, part of this loan has been allocated over the past duration.

Cerisola, an Argentinian who took over after German former head of the mission, Kristina Kostial, stated in his testimony to “Al Ghad” that he is comfortable with the achievements attained by Jordan over the duration of months, even though it isn’t enough to ensure the programme’s success in enabling the enhancement of economic indices, and even though he seems well informed on the domestic economic scene and has the ability to identify problems with precision.

The major issues Mr Martin followed up on during his last visit to Jordan, which concluded last Thursday, has a lot to do with the government’s inclinations to review the sales tax policy and lowering some of its terms, which may be beneficial. On one hand, it would reduce the taxation weight incurred on consumers, but on the other, it carries the threat of lowering revenue, which may reflect negatively on the public budget, and subsequently indebtedness.

The international expert seems confident that the steps devised by Fund’s technical committee, which resided in Jordan for a month, were actually thoroughly reviewed, even though studies and reports in these regards show that lowering taxation below 16% may hurt expected revenue.

In details; sales tax tables include 6 thousand reviewable terms, in which accordance taxation may be reduced for some and increased for others, to secure a multitude of simultaneous goals; the first is relieving the economy of the incurring weight of slowdown while stimulating it through the enhancement of consumer purchase power. Meanwhile, if correctly addressed, these tweaks could maintain the expected revenue level.

All in all, stubbornness and resistance to reviewing taxation is wrong, and was never right; it hurts economic stimuli, and if reviewed thoroughly and positively, middle-grounds can be founded, in all possibility, always.

The mission also reviewed next year’s budget, its figures, and their feedback was positive. However, they did not tell us whether or not it coincides with targets assigned, how accurately it estimates realistic figures, the extent of distortion addressed by the architects of the 2017 budget, who happen to be the IMF, or whether there is a real solid grip in expenditure!

This is a new beginning with the IMF, and we hope the Fund this time stands a few folds closer to our reality and that of our economy. More so, we hope their testimony conveys reality; facts, so that we may not be taken by surprise with our problems culminating and festering further whilst we curl up in the IMF’s lap.