Facts We Must Face: An Economic Reality We Cannot Escape

By Fahed Khitan

تم نشره في Tue 13 March / Mar 2018. 01:00 AM
  • Fahed Khitan

The government has made a bundle of decisions that are supposed to encourage foreign expats in Jordan to invest here, including residents with temporary passports and identifications. Also, the decisions tackle revitalising inbound medical tourism and amendments to foreign patients coming to receive treatment in Jordan.

Of course, all of the above is part of the government’s plan to revitalise the economy. A plan that was recently put into motion, after the government tackled the “controversial imbalances” in the General Budget, which stirred a lot of debate.

During the Cabinet session, Prime Minister Hani Mulqi appointed a new director of the Income Tax Department; Hussam Abu Ali, formerly head of the revenues department, at the Ministry of Finance.

Abu Ali was known for his strictness, during his time at the department.

His appointment at the head of the tax department only reaffirms the government’s intention to fight tax evasion, which is already wasting hundreds of millions of dinars worth of income.

Apparently, the government is tackling two frontiers; one is boosting tax collection efficiency, and the second is economic recovery.

Otherwise, the government will never be able to attain its 2018 goals.

Economists and experts, until this very moment, cast a long shadow of doubt on the government’s ability to attain these goals as is. Especially after the recent taxation amendments.

That said, it is most likely that these investment incentives will reflect positively on the real estate and automobile sectors, boosting Treasury income. Meanwhile, rejuvenating medical tourism should revitalise numerous downstream industries.

Clearly, these decisions are long due.

Delay has had an excruciating effect on the economy. All of the benefits of these decisions could have been reaped years ago. Perhaps, even, the economy could have been avoided the very crisis it now faces.

The same goes for the investment citizenship and permanent residency policy the government recently enacted.

However, there are other industries that require the government’s undivided and urgent attention; like agriculture and manufacturing.

The government has to seriously consider overcoming the standing economic model that prioritises fiscal and financial sectors over the real economy.

Reliance on financial and fiscal services has never been as costly as it is today.

Jordan’s economic model is based on merely maintaining high reserves of foreign currency to keep confidence up and qualify for more loans. Naturally, maintaining this model requires continuous cash flow guarantees that we may not be able to keep, given the current political and regional situation.

In fact, this is —in part— exactly what is happening today. This is why we have to up interest rates.

Our excessive reliance on this model has led to our unhealthy consumption pattern, namely our reliance on importation, which drains a lot of foreign currency.

Meanwhile, on the mid-term at least, this model leaves us at the mercy of international fiscal and financial banking corporations, like the International Monetary Fund (IMF), who do not seem to care much any more about Jordan’s domestic situation.

According to the economists, the disadvantages of this model include the growing incapacitation of our economy, not to mention the continuous increase in deficiency. This is aside to the expansion of payables and trade deficits.

Restoring economic momentum to the real economy will alleviate a lot of the strains on fiscal policies to meet the requirements of stability.

The current model is unsustainable.

It is crucial that we tackle the structural and fundamental challenges of our economy head on, before we find ourselves at an impasse, with only two undesirable options.

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