Have GCC countries turned their backs on Jordan?
Despite reform efforts, the Jordanian economy continues to underperform, and foreign assistance to fill in gaps and counter this trend is growing scarce.
For almost a decade now, successive prime ministers have warned Jordanians that their country faced difficult economic conditions and that they should be patient as the government adopted stringent measures — such as lifting subsidies on essential goods, raising utility rates and increasing the cost of public services — in attempts to reform the economy.
Despite more than two decades of submitting to International Monetary Fund (IMF) dictates and numerous economic reform programs, the Jordanian economy continues to underperform, especially in the past five years, forcing the government to rely on local and foreign borrowing and on financial aid packages, primarily from the United States, the Gulf states and European countries. In July 2016, Jordan signed on to a 36-month IMF program providing it access to $700 million in loans.
Despite adopting unpopular economic measures, state budgets continue to produce endemic deficits — $1.2 billion, or 2.8% of gross domestic product (GDP), for 2017 — while the total debt-to-GDP ratio has surpassed the 90% mark, with debt at more than $35 billion. Although on Jan. 23 the parliament's House of Deputies approved the controversial 2017 budget, which seeks to raise $643 million in additional taxes and tariffs, it is unclear how these measures will be received by Jordanians at a time when many economic sectors continue to suffer and unemployment and poverty rates continue to climb. The latest unemployment statistics show an increase in 2016 to 15.8%, from 14% the previous year, while the poverty rate stands at 14%.
While the IMF has cheered Jordan’s adherence to the unpopular reform plan, it has also acknowledged that economic growth has been stagnant, around 3% annually in the past four years, way below the average of 6.5% achieved between 2000 and 2009 and less than the goal of 4.5% projected for 2015-16. Making things worse is the spike in the kingdom’s population, estimated at 9.5 million — of which only 6.6 million are Jordanians — according to the 2015 national census. The increase is mainly due to the influx of 1.2 million Syrian migrants, including 600,000 registered refugees, since 2011. The annual cost of hosting more than 630,000 registered refugees was estimated by the World Bank to be more than $2.5 billion for 2016.
