Dubai, Asharq Al-Awsat- Poverty and unemployment are still the two main challenges to the Jordanian Government despite the tangible growth in the Jordanian economy, which exceeded 7 percent in 2005. This is what Suhair al-Ali, Jordanian minister of planning and international cooperation, told Asharq al-Awsat during a short visit to Dubai.
Al-Ali spoke about the impact of the decline in the oil grant offered by the Gulf states to her country, which coincided with an increase in oil prices, forcing the government to raise fuel prices. This has dealt a severe blow to the poor. Al-Ali outlined the main features of Jordan’s plans to maintain high growth rates, which would create more job opportunities. This is the main solution to the problems of poverty and unemployment in the Kingdom.
Interviewed by Asharq al-Awsat in Dubai, the minister of planning and international cooperation spoke about foreign investments in her country in 2005, which exceeded $1.5 billion. Kuwaiti investments came in first place in terms of volume. Al-Ali downplayed the shares of Iraqi and Syrian investors (of foreign investments), given their rumored immigration to Jordan due to the political conditions.
Al-Ali reminded investors of the numerous and important investment opportunities in Jordan and urged them to invest in it, especially in the water and energy sectors. This is meant to achieve better growth rates to improve the standard of living of Jordanians. Al-Ali started the interview by speaking about the policy of her country over the past period. She referred to the policies of economic openness and liberalization pursued by Jordan over the past years, including joining the World Trade Organization and signing many agreements with the European Union and the United States. Jordanian exports to European and American markets have increased.
Al-Ali said that privatizing a number of vital sectors in Jordan has reflected positively on the productivity of these sectors and has contributed toward attracting more investments. This increased the growth rate to more than 7 percent of GDP over the past two years. Despite all these positive indicators, she said, Jordan is still facing two challenges, which are the high rates of poverty and unemployment. She said: It is true that economic growth has contributed to reducing these rates. However, 14 percent of the Jordanian population is still living below the poverty line (the annual per capita income is less than $552). As for the rate of unemployment, it is close to 14 percent, according to statistics of the first and second months of this year. These are high rates and pose a real challenge to Jordan.
Al-Ali referred to other difficulties that faced her country in 2005. She spoke about the decline in oil grants offered by the Gulf states, which constituted another challenge to be added to the previous challenges, especially in light of the increase in oil prices. This has dealt a severe blow to the Jordanian economy. Faced with this situation, the Jordanian Government had no choice but to raise fuel prices twice within a year. The increase in prices has reached around 25 percent, which was a hard blow to the poor and unemployed in Jordan.
Al-Ali added: It is true that this was accompanied by a social safety package, which is what the government managed to do. It is no secret that we will not be able to compensate all those who have been harmed. However, we have adjusted the effects of raising prices. She said: The government will take similar steps later to free prices and stop its subsidy completely by 2007. There is a new mechanism and plan to compensate the poor and destitute. This plan depends on the income of the family. The Ministry of Finance announced the mechanism of this compensation, and it will later explain it to the people.
According to Minister Al-Ali, the decline in oil grants to Jordan and the rise in prices in 2005 have affected the budget. The deficit has reached 11 percent of GDP. Despite the continuing assistance by other parties, such as the European Union, Japan, and the United States, the deficit is still higher than 6 percent. There was a big deficit in the current account of the balance of payments, which was close to 18 percent, because the oil bill rose dramatically and accounted for 22 percent of the imports of the Kingdom. With the continuing increase in oil prices this year, we expect these rates to remain unchanged.
The Jordanian minister said: In order to tackle poverty and unemployment, we have to maintain high growth rates. This is the main and structural solution to remedy the problems of poverty and unemployment. This means creating job opportunities, which turn aid recipients into productive and effective individuals in the economy. Depending on the current realities, we might not be able to maintain a growth rate that is similar to the one of last year, but the rate should remain reasonable.
In this context, the Jordanian minister of planning and international cooperation expected the economic growth rate this year to reach 5 percent. We should not forget that the population growth rate in Jordan is still high at 2.6 percent. Therefore, even if we manage to achieve a growth rate of 5 percent, the average per capita income will remain basically the same.
Al-Ali spoke about some plans that her country intends to focus on, chief among which is maintaining the policy of openness and attracting investment. She said that the social aid funds have been unified to avoid dual aid when delivering aid to the people who deserve it. The country will also focus more on microfinance. The Jordanian Government has a strategic plan for the coming years to support microfinance so that the government will completely stop direct subsidy and replace this with direct loans. The role of the government is to monitor and regulate this sector and stimulate it to finance a larger number of people. She said that this is in line with the government plans to create microcredit institutions that operate according to commercial and sustainable principles. This means offering loans and getting them back later. She said that there are many success stories in Jordan concerning small enterprises that achieved significant returns. Loan repayment for women has reached 98 percent.