Jordan: An Unproductive Rentier Economy

Eng. Saleem Al Batayneh
The economic crisis in Jordan has reached a critical point, and it is high time we acknowledge the flaws in the country’s economic management. Jordan has become an unproductive rentier economy, heavily reliant on debt and sustained by loans and aid just to stay afloat. This model has left the country trapped in a cycle of poverty, with the ruling elite growing richer while the majority of the population suffers.
Renowned economist Michel Chossudovsky has warned that loans and programs from international financial institutions like the International Monetary Fund (IMF) and the World Bank often leave borrowing countries worse off, burdened with greater debt. A quick look at the state of Jordan’s streets, environment, educational system, healthcare, and public transportation confirms this unfortunate reality.
The economic stagnation in Jordan has persisted for years, with little progress beyond the regular distribution of salaries. The services provided are lackluster at best. Successive governments have presented economic plans and reforms that have failed to move beyond mere rhetoric. The overreliance on borrowing has resulted in imbalances within the economic structure and an overall economic disparity. How can we expect economic growth when we are drowning in mounting debt?
To accurately describe the Jordanian economy, it is nothing more than a decaying rentier system. It thrives on granting privileges, with the state acting as a rentier, controlling resources that it can distribute as gifts to maintain political and security control. This rentier model has incentivized investments with high and rapid returns, such as real estate and financial speculation, instead of focusing on productive investments that generate job opportunities. Banks have transformed into mere loan providers and salary distributors, further exacerbating the economic situation.
For more than two decades, successive governments have resorted to the worst possible model: using loans to fill budget deficits and pay off previous debts. The costs of servicing these debts have exceeded the GDP rate, plunging the country into a state of economic chaos. Poverty and unemployment rates have soared, the debt burden has become unsustainable, the gross domestic product has declined, and numerous medium-sized factories have shut down.
While everyone in Jordan acknowledges the severity of the crisis, there is a divergence of opinions regarding its risks and future repercussions. The programs implemented by the IMF and the World Bank have only widened the economic gap, deepened social fragility, and failed to improve people’s lives or meet their basic needs. Investments in education, healthcare, and social protection have been limited. Jordan has become a hostage to overwhelming debt.
We must face the reality that Jordan’s economic management is abysmal, relying solely on debt and surviving on a constant influx of loans and aid. The fact that the arrival of an IMF delegation is celebrated by the official media is indicative of the dire state of the country. Foreign currency reserves held by the Central Bank are not the key to sustainable growth; rather, it is the state’s ability to produce goods and services using local resources that holds the key. The equation for economic growth is clear: if the growth rate exceeds the interest rate and the general state budget is somewhat balanced, the public debt ratio decreases. Furthermore, productive investments that generate employment have a direct impact on GDP.
It is evident that the Jordanian political mindset has failed to address the debt crisis and capitalize on local resources. The continuation of this rentier policy reflects a glaring flaw and a lack of vision for the future. With nearly a million unemployed individuals in Jordan, we urgently need to inject over $8 billion into productive projects that generate job opportunities.
Many countries around the world have demonstrated the power of harnessing local resources to generate economic wealth. Take the Netherlands, for example, with an area of only 42,000 square kilometers and a population of around 17 million. Despite being situated below sea level, the country’s GDP has reached a staggering trillion dollars. This exemplifies the potential for Jordan to break free from its debt trap and build a prosperous future.
It is high time for Jordan to shift its economic strategy, reduce dependency on loans and aid, and focus on harnessing its own resources. Without a fundamental change in economic management, the social explosion we fear will become an inevitable reality. The time to act is now, for the sake of Jordan’s future and the well-being of its people.

Al Batayneh was a member of the Jordanian Parliament