Malhas and the challenges ahead

تم نشره في Tue 10 November / Nov 2015. 11:27 AM

By Jumana Ghunaimat

The only good news that came out with the announcement of the state budget for next year is that the government will not increase the price of electricity; the decision indicates an appreciation for the difficult conditions of the people.

Within that, there is another positive note, which is that the government, represented by the Ministry of Energy in particular, has done its duty, and prepared a study that confirms the possibility not to raise electricity tariffs as long as the oil prices remain low globally.

According to the —unfortunately limited— information available, the government has set the prices for electricity scenarios depending on developments in oil prices. But no details of these scenarios are available.

On the other hand, public spending for the next fiscal year reach record numbers, up to 10.3 billion dinars, compared to 9.6 billion dinars for the current year, including the treasury spending in the general budget of the central government and the budget of independent institutions, at an increase of more than 7%.

In detail; the spending on the central government increased by 400 million dinars, bringing the year's budget in 2016 to about 8.5 billion dinars, while during the current year it had amounted to about 8 billion dinars.

How to read these numbers?

Interpretation and analysis are leading to two conclusions. Firstly, adjust the public expenditure policy failure, or at least maintain the same level of spending without an increase, just as happened in 2014 and 2015; it looks as if the control on expenditures announced by the government was not in place.

Some traded information by officials in the context of justifying the increase in spending, related to deferred bills and outstanding debts that will be repaid at the request of the International Monetary Fund. That spending includes the debt of the Petroleum Refinery, which sources at the "refinery" puts to exceed 250 million dinars. This is in addition to bills overdue medical treatments bills.

Public debt is other misfortune that is not expected to recede in the next year; it will certainly increase, enshrining the idea of ​​borrowing to cover current expenditures and repayment of debt. This is a financial predicament that action is needed to mitigate, particularly that the debt will increase to 24 billion dinars.

Overall, next year's budget data does not tell us that we are going in the right direction. Previous and other dilemmas are waiting for the new finance minister Omar Malhas, who receives a ready budget. Although coming from the private sector, where he worked in a strong and well-established banking institution, but he needs, from this moment, to get used to the habitual headache of numbers and suffocating financial crisis.

What is waiting for the new minister is a lot, especially since he is carrying the heaviest file, and he starts his work with hot topics as the IMF mission is present in Amman today. How will he deal with this file and all its issues? Let us wait and see.


This article is an edited translation from the Arabic edition