AMMAN —
Private sector companies are complaining that
the government is failing to meet its financial obligations, which is creating
cash flow problems for most of them and driving others to the brink of bankruptcy,
according to Al-Ghad’s Salameh Al-Darawi.
اضافة اعلان
Business
columnist Darawi said that the government is accumulating millions of dinars in
debts owed to the private sector. According to him, the government of former
premier Hani Mulki had adopted a three-year plan to settle debts owed to the
private sector, starting with a JD124 million down payment.
The process
continued during the
Omar Razzaz government, financed through internal
borrowing, but was suspended when the Kingdom adopted austerity measures to tackle
the COVID-19 pandemic.
As things stand
today, Darawi said, the Jordan Petroleum Refinery Company is the largest
private sector creditor to the government, with claims exceeding JD395 million.
The debt is expected to exceed JD400 million by the end of the year as the
company is about to launch one of the largest investment projects in the
Kingdom, which is the fourth expansion project of the refinery, with a price
tag of about $2.6 billion.
“These arrears
have resulted in a negative financial position of the company vis-à-vis
financing agencies, and gives an unrealistic and incorrect picture of the
company’s financial situation,” Darawi said.
“Financers need
to know every detail about the company’s situation and this matter requires a
clear position from the Ministry of Finance, which should clarify the truth
about these claims and set a timetable for settling such debts,” he added.
Pharmaceutical
companies that supply public sector hospitals are calling on the government to
settle more than JD370 million it owes them. Some of these debts are long
overdue, and have stopped some companies from entering government drug bids,
while demanding payment of previous dues.
“The
government’s delay in reimbursing the pharmaceutical companies puts these
companies under great financial distress and limits their ability to supply the
local market with essential medicines, which explains the shortages of
medicines in some health centers and hospitals affiliated with the Ministry of
Health,” Darawi said.
He added that some
of these companies have incurred great losses by doing business with the
government, that their financial situation is very worrying, and that this puts
in doubt their ability to survive as the government continues to turn a blind
eye to their claims.
Another
institution that is under financial stress is the
King Hussein Cancer Center (KHCC), Darawi said.
“This is another
institution whose financial claims the government has failed to settle; the
dues result from exemptions the government grants Jordanian patients,” he said.
According to
him, government debts to the KHCC now exceed JD220 million, which puts the
center in a very difficult financial situation and affects its ability to
provide services.
“The University
of Jordan Hospital is also calling on the government to settle a JD100 million
debt,” he said, adding that the same applies to dozens of companies doing
business with the government, including those in the contracting, media,
industrial, and land development sectors. He estimates money owed to these
companies to be in the hundreds of millions of dinars.
These arrears
are weakening these companies, or limit their ability to grow and invest,
Darawi said.
Some find
themselves in “a dark financial tunnel” as a result of accumulated losses and a
lack of liquidity, which may push them to restructure their businesses and lay
off workers, or cancel expansion plans, he added.
The government’s
delay in paying private sector companies means that the budget deficit figures
are not accurate, because these claims are not included in its estimates; if
they were, then the deficit would be bigger, Darawi said, asking the Finance
Ministry to include these arrears in the 2023 budget bill’s financial
allocations, to reflect clearly the figures.
According to
Darawi, the government needs to intervene to address these imbalances.
“After the fifth
review by the
International Monetary Fund and the improvement of the Kingdom’s
credit rating, the government’s ability to borrow is much better than before,
and here lies the solution to settle these arrears once and for all,” he
said.
Doing so will reflect
positively on the private sector, which will also help the economy, benefit the
Treasury, create jobs and boost exports, he said.
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