Dr. Shehab Al-Makahleh
After few days, we will welcome a new year and bid farewell to another. We have nothing but to be optimistic to get out of the economic difficulties caused by regional, international and domestic circumstances that raised the debt to US$41 billion, which constitutes 117% of the gross domestic product.
The real problem is not in indebtedness, but in the mechanism of dealing with the available liquidity (velocity) with banks and financial institutions. For further clarification, cash circulation in Jordan is at the slowest pace mode as there are more than US$14 billion deposited with banks, which are not spent or used to finance development and production projects. Therefore, the wheel of the economy must be moved quickly to absorb the coming economic Tsunami as a result of the global recession and high energy prices.
The year 2023 brings with it many global and regional calamities that will impact financial and economic performance because the US Federal Reserve will continue to raise interest rates to reduce inflation rates. Since many of the world’s economies are pegged to the US dollar, American financial and economic policies will have a direct impact on those economies including Jordan.
It is true that Jordan has been affected by regional turmoil and the fluctuation of global energy prices, which have impact on shipping costs and other logistical matters. However, motivating the Jordanian economy is in the hands of Jordanian banks as their deposits can boost production and employment opportunities by moving the economy forward.
In order to find out about the economic reform mechanism that was followed by several governments in Jordan, one must ponder and contemplate for a while at the external threats to Jordan’s social and political stability. Jordan’s economy depends on exports and re-exports. This has affected the kingdom’s economic standing because of the Iraqi and Syrian crises. Confronting the economic and social reality today has become an urgent matter in light of the severity of unemployment, poverty, and public debt, amid frustration pushing for a better mechanism for dealing with these challenges.
His Majesty King Abdullah II Bin Al-Hussein has a vision for political and economic reform, but government’s capacity to implement reform plans remains limited, rather constrained by a very small margin of maneuver due to lack of clear frameworks for economic reform, and reform’s failure to keep pace with social and economic problems.
Jordan’s dependence on foreign aid for long periods contributed to providing liquidity that helped the government finance immediate programs that did not keep pace with future developments. That is, we did not make good use of these financial resources and often did not invest them correctly. For Jordan to reach positive economic results, it is necessary to change the administrative structure which is based mostly on a bureaucratic edifice that impedes quick and constructive decision-making that serves the country and the citizens.
In conclusion, the economic dimension is an important factor in the Jordanian national security system. It is rather a basic building block for the progress and elevation of the country and the reform of its social, economic, political and educational scheme. Thus, it is necessary to address the roots and factors of the problem, not the results , and move the economy by accelerating the circulation of cash by stimulating banks to play a greater role in the economy.