Economy
From The Report: Jordan 2018
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Macroeconomic growth hit a 25-year low in 2016 as ongoing regional volatility continued to constrain trade, exports and investment. The Syrian refugee crisis has exacerbated existing pressures on fiscal stability and social infrastructure, while public debt has been on an upward trend as the government attempts to cover the costs associated with hosting over 500,000 refugees. However, 2016 may have also marked a turning point for the economy, with authorities making significant progress in implementing an IMF-backed reform agenda, which enabled Jordan to reduce its budget deficit from 3.5% of GDP in 2015 to 2.6% in 2017, and reduce or eliminate costly fuel, electricity and tax subsidies. The government is now turning its attention to green and digital expansion as it moves forward on a new mid-term economic development agenda, with the aim of improving the business climate and attracting new investment to support targeted double-digit growth in the manufacturing, electricity, water, transport, ICT and construction sectors. This chapter contains interviews with Omar Malhas, Minister of Finance; Muhannad Shehadeh, Minister of State for Investment Affairs; and Abdulwahab Al Bader, Director-General, Kuwait Fund for Arab Economic Development.

Articles from this Chapter

Overview

Turning a corner: Combined with ongoing reforms, a new national strategy is poised to reinvigorate growth
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Macroeconomic growth hit a 25-year low in 2016 as ongoing regional volatility continued to constrain trade, exports and investment. The Syrian refugee crisis has exacerbated existing pressures on fiscal stability and social infrastructure, while public debt has been on an upward trend as the government attempts to cover the costs associated with hosting over 657,000 refugees. However, 2016 may have also marked a turning point, with authorities making significant progress in implementing an IMF-backed…

Interview

The road ahead: Omar Malhas, Minister of Finance, on economic, financial and fiscal developments
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Interview:Omar Malhas How have the regional issues of recent years affected the economy of Jordan? OMAR MALHAS: Regional instability has posed – and continues to pose – severe challenges to economic growth and employment creation. First of all, the closure of borders has resulted in a reduced amount of transit trade, and less trade has the consequence of lower growth rates. For example, Iraq used to absorb around 20% of Jordanian exports, but this has now stopped. Syria was also a major…

Analysis

Moving on up: Improving rankings on international indices seen as key to unlocking private investment
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Private investment is an increasingly important part of the government’s development plans as public spending in some areas is reined in amid challenging internal and external conditions. To facilitate this, Jordan is undertaking measures to make its business environment more attractive to private sector players, and is therefore keeping a keen eye on its ranking in the World Bank’s “Doing Business” report as a useful indicator of its progress. There are promising signs that the government’s…

Interview

Mapping potential: Muhannad Shehadeh, Minister of State for Investment Affairs, on establishing a regional hub for investments
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Interview:Muhannad Shehadeh What would you identify as the main priorities in attracting investment in the year to come? MUHANNAD SHEHADEH: Attracting high value-added investments that create jobs and enhance local communities’ development across the kingdom is a central priority and a main concern for me personally. We want to establish Jordan as a regional hub for investments as well as a platform that can provide access to 1bn consumers through its trade agreements. To do so, the first…

Analysis

Getting the green light: State strategies look to foster renewable energy development
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In the June 2017 Jordan Economic Monitor report co-sponsored by the Ministry of Planning and International Cooperation, the World Bank reported that the country’s green energy segment holds considerable potential to reduce fiscal, economic and environmental vulnerabilities. In addition to the adoption of climate-friendly fiscal policies and greater mobilisation of climate finance, were recommendations for public policies that emphasise private sector engagement to support growth that uses natural…

Analysis

Tackling the deficit: Budget balance given a boost by higher tax revenues
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Jordan has significantly reduced its fiscal deficit since it spiked to 10.3% of GDP in 2014. According to the IMF, the deficit fell to 5.3% of GDP in 2015 and to 3.2% in 2016, exceeding earlier predicted targets of 3.8%. The near-term outlook is even more positive, with the IMF forecasting that the figure would drop to 2.5% of GDP in 2017 and 0.4% in 2018. Debt instruments have played an important role in these improvements, with the IMF reporting that the government issued JD5.5bn ($7.7bn) of Treasury…

Interview

A strategic partner: Abdulwahab Al Bader, Director-General, Kuwait Fund for Arab Economic Development (KFAED), on regional financial support
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Interview: Abdulwahab Al Bader Which sectors of Jordan’s economy have the most development potential? ABDULWAHAB AL BADER: It is the KFAED’s policy to respect the development priorities of its emerging economy partners. In this way, the KFAED finances projects across various sectors, including transportation, energy, water and sewage, agriculture, industry, education, health, telecommunications and development banks. The fund is committed to financing projects after being thoroughly appraised…