Daily Times

Nothing in the government’s plans for 2016 or in economic reform programme agreed upon with the IMF said that Jordan’s public debt, in absolute figures, must be reduced in 2016. As a matter of fact, the programme is dealing with debt not in absolute figures, but as a percentage of the GDP. All what is required by the programme is for public debt not to rise as a percentage of GDP in current prices. In other words, debt is allowed to rise in absolute figures to finance the budget deficit, but will decline as a percentage of GDP expressed in current prices.

In the first year of the economic reform programme (2016), the Kingdom was not required to reduce debt, not in absolute figures and not as a percentage of GDP. All that was needed was for debt not to be allowed to grow faster than the economic growth plus deflator. This objective may not be that easy, but it is by no means impossible. It is practical and could have been achieved in 2016 had it not been for the unexpected negative inflation and low economic growth rate.

The ratio of debt/GDP during the first eleven months of 2016 rose by a very small percentage, a discrepancy which hopefully will disappear when we are given the final financial figures for the whole year. Some so-called economic experts claimed that the government cannot reduce public debt in absolute figures or as a percentage of GDP. In fact it can, but may fail to do so. The programme would not recommend or demand targets that are impossible to achieve. The government accepted this target and made a commitment to achieve it.

For the sake of argument, let us assume that those experts are right, and that the government cannot possibly reduce debt in absolute figures and as a percentage of GDP.

What is then their solution?: They do not realise that they offered an excuse for the government’s failure to achieve this basic objective of the economic reform programme agreed upon with the IMF. These so-called experts simply ask the government to search for a practical solution to reduce debt. In this case, the experts are expecting the government to achieve what they already decided is impossible. It seems, at the same time, that they have high expectations that the government will be able to find answers to a problem that the experts cannot find.