Jordan Times
Saturday, June 27, 1998
Senators, economists raise doubts about Jordan's economic health
By a staff reporter
AMMAN — Contrary to the assessments of some optimists and despite
the government's reassurances that the economy is basically in good shape, some senators
and economists painted a gloomy picture of the country's state of affairs.
While acknowledging that the economy is facing a slowdown, the government has asserted
that overall macroeconomic indicators were showing positive readings and it still expects
positive growth this year. Officials point to the fact that reserves are high and
inflation is under control.
But others say the picture is not so bright.
“I venture to warn the government that economic growth in 1998 is going to be
negative,” wrote prominent economist Fahed Fanek in a recent column. “It is no
longer useful or even possible to deny the difficulties currently facing the Jordanian
economy...this is a bitter fact.”
According to Dr. Fanek, the declining standard of living, level of employment, share
prices and inflation rates are clear indications of the bleak economic situation.
He said that denying the difficulties facing the country's economy, “will only
postpone necessary measures and relieve the government from its basic
responsibilities.”
Dr. Fanek cast doubt on the government's growth rate figures for the previous three years.
The government had said growth for 1997 reached 5.3 per cent.
“The actual studies conducted by the Department of Statistics confirmed our worst
fears,” he wrote. “Growth rates may still be positive but nowhere near the rates
previously suggested.”
Members of the Upper House of Parliament's Financial and Economic Committee on Wednesday
also expressed concern over the decline in the country's economic growth levels as well as
the increase in the budget deficit in the last two years.
Senator Kamal Sha'er, committee speaker, said the state budget deficit for the years 1996
and 1997 exceeded seven per cent, while this year's figure is expected to reach six per
cent — considerably higher than the aspired 3.2 per cent.
“The committee realises that there are objective reasons for this regression,”
Dr. Sha'er said following a meeting last week with the government's economic team.
“Two of the main reasons for the decline are the strained political climate resulting
from the stalled peace process, and the economic and structural reform programme.”
Deputy Prime Minister Jawad Anani in a recent news report attributed the decline in
economic growth in 1997 to the recession in the construction sector which attracts most
local investments.
Dr. Anani said the substantial increase in Jordan's imports, coupled with low-level
domestic production, had also contributed to the drop in growth levels.
Dr. Sha'er said price indicators for the first four months of this year compared to those
of last year show an inflation rate level that exceeds five per cent. The official annual
inflation rate is three per cent.
Dr. Anani attributed the increase in the price index in the early months of this year to
the floating of prices of various basic commodities, the one-time increase in salaries of
military personnel and the hike in water prices.
After its discussions with the government, the Senate committee recommended that the
government reduce bureaucracy, implement administrative reform measures and proceed with
the country's privatisation plan and the other structural and sectoral adjustments.
The government has recently announced that it plans to take specific steps to revitalise
various sectors of the economy.