Between the Lines of An Apparent Reform: An Appraisal of Government’s Cut-Back Decision

By Jumana Ghunaimat

تم نشره في Wed 7 June / Jun 2017. 12:00 AM
  • Jumana Ghunaimat

Dr Hani Mulqi’s government submitted an important bill recently, to cut down expenses.

Between the lines of this reformist bill, on the government’s part, much remains unsaid about the government’s long-due decision.

In details, the Cabinet had decided to control and reduce government spending by reducing ministerial and departmental allocations by JOD204 million.

That said, the overall expenditure of the 2017 central and independent government units budget will go down 2 per cent, from JOD10.506 billion to JOD10.302 billion.

Furthermore, the bill cuts down total current expenditures by JOD100 million, and reduces allocations for capital expenditures by JOD74.1 million.

As a result, the total current expenditures will stand at JOD7.42 billion, around half a billion dinars higher than JOD6.9 billion.

In regards to the 2017 independent government bodies budget, total expenditures were reduced by JOD29.9 million. This includes reducing the current expenditures section by JOD13.5 million, and capital expenditures JOD16.4 million.

Fact is that this is both late and ineffective.

The government, instead of heeding the risks of an overinflated spending, they expanded expenditures, and then decided to shrink it.

The government never considered the pressing necessity of reducing expenditures in the first place, before they ratified the 2017 budget bill.

This is why, despite the reduction, the total expenditures section is still higher than last years, when it should be lower.

More so, the government did not explain that the government’s decision came as a result of failure to meet the targets of the agreement with International Monetary Fund (IMF).

Revenues estimated in the budget bill were not attained, despite all of the harsh decisions taken this year.

The deficit did not go down.

However, most importantly, the government this time, did not resort to more taxation and other decisions of the sort.

Perhaps this isn’t because they are convinced that Jordanians have not the ability to pay more taxes.

Alternatively, this is because decision makers know; for a fact, that relying on taxation to raise revenues is futile. The government must find other ways to resolve its financial issues and fund its operations.

This is why the decision came in to cut expenses instead of raising taxes, for instance.

Rightly, the idea is that reforming the financial situation requires the reduction of expenditure.

This should be common knowledge and a general direction.

Jordan cannot move forward, financially, without making this a general rule; expenditure goes down, not up.

Moreover, the government has to realise that the citizen’s wallet is not the right way out of its financial problems, as easy as it may seem.

Morally, it costs far more than it gains the Treasury.

The Cabinet must resort no more to taxation. Societally and economically, Jordan cannot bear its outcomes.

In the meantime, raising revenues without raising taxes requires extensive efforts, to innovate solutions accordingly, in order to meet the criteria of the IMF.

That said, we must find a new way to increasing public revenues.

First, corruption must be addressed. Particularly petty corruption, which costs the treasury an outstanding amount of revenue every year.

Second, distortions in the business and investment environment must be fixed, as soon as possible, in order to stop attract business, instead of driving it away.

All that requires political determination and resolve, pillared by the undisputed rule of low.

So far, none of these reforms have been clearly, practically addressed.

Regardless of everything we do not know, truth be told, it is a good decision. But this most rare, and undoubtedly phenomenal occurrence just won’t do; it just isn’t enough.

Especially if the government goes back to uncontrollably expanding expenditures, the way it has been doing for years.

This article is an edited translation of the Arabic version, published by AlGhad.

Comment