Phenix Center for Economic & Informatics Studies Phenix Center for Economic & Informatics Studies
Over the past three and a half decades, Jordan has entered into nine different agreements with the International Monetary Fund (IMF). With the recent government announcement that it is beginning negotiations for a new program, fundamental questions arise, namely: Has Jordan truly benefited from these repeated agreements with the IMF? Does Jordan really need another IMF agreement and program?
Of the past 35 years, Jordan has been under the direct economic supervision of the IMF for 25 years. Yet, the IMF’s primary objectives since its inception, such as reducing public debt and decreasing the general budget deficit, remain elusive. For instance, the budget deficit, excluding grants and aid, reached approximately 7% of the GDP in 2022, representing around 23% of the total public expenditures for that year—a very alarming figure. Moreover, public debt escalated to nearly 39 billion Jordanian Dinars, amounting to 114% of the GDP. The steady and annual growth of this debt is concerning, especially given that debt service alone consumes about 16% of the total public revenues.
Jordan’s economic policies, largely driven by the austerity measures imposed by the IMF as part of its consecutive agreements, have had tangible effects on the living standards of citizens. This includes low wage levels, a decline in public sector employment, leading to workforce shortages in vital sectors such as health and education. Consequently, the quality of services in these essential sectors has also deteriorated.
This economic environment has negatively influenced the broader social landscape. Poverty rates have risen to alarming levels, reaching 24% according to official figures, and 35% as per the World Bank estimations. Furthermore, unemployment rates climbed to 22.8% in 2022. Despite the IMF’s statements about supporting social protection and job creation, it seems its policies in Jordan contradict these objectives, exacerbating social disparities.
The implications are not limited to heightened poverty and unemployment levels but extend to the imposition of an unjust tax system, as admitted by the government themselves. Indirect taxes constitute 75% of Jordan’s total tax revenues, placing significant pressure on the middle and poor classes, weakening their purchasing power and consequently stunting economic growth.
It seems that the primary goal behind Jordan’s new agreement with the IMF is to secure facilities for the government to access more loans. The issue is not just about borrowing from the IMF, but also from other lenders such as governments, international financing institutions, and financial markets to meet the government’s incessant loan requirements.
Undeniably, signing a new agreement with the IMF would grant Jordan some immediate financial relief. However, it is crucial to question the risks of exacerbating the public debt problem in the future.
As Jordan once again turns to the IMF in the hope of achieving financial stability, it is essential to examine the long-term consequences of such a decision. Jordan must critically assess its economic path, seeking a balance between immediate financial solutions and sustainable economic resolutions without continually increasing public debt. It is imperative to consider whether entering another agreement with the IMF is genuinely the right way to emerge from our economic crisis or not.
