A few days ago, the IMF concluded its
fifth review under the Stand-By Arrangement with Jordan. The review will bring
the total of IMF disbursements over 2020-24 to around $2 billion, and signal to
donors that Jordan is well on its way to effecting reform, which would
encourage their loans and grants. Still, reading the review elicits skepticism
and questions.
اضافة اعلان
The review starts
with statements like “despite turbulent global economic conditions” (as if
excusing whoever and whatever for the performance of the economy); the
“negative impact of the fuel and food subsidies” (or any type of subsidy that
is of any significance, which anyways is scant these days), which gives a pat
or two on the shoulder of the government for either increasing taxes or
broadening the tax base. It explains away the lackluster performance of the
economy and the persistently low economic growth rate; praises austerity, and
when it comes to monetary policy, the review eloquently stresses that the
monetary policy should be focused on maintaining the stability of the Jordanian
dinar-US dollar peg (never really stating how and by what means, other than
matching the US Federal Reserve’s discount rates).
The age-old modus
operandi that is espoused by the IMF for Jordan (and most likely everywhere
else, since cookie-cutter policies are easier to implement, and have been tried
and defended everywhere else) is to exercise a frugal fiscal policy and cut
spending on subsidies.
Little is said of
the quality of spending and where the loans go (usually to pay government
salaries, pensions and other loan repayments), and even less is underscored
regarding the required capital expenditures to fix the energy, water, public
transport and other sectors that are either dilapidated or becoming
non-existent (nearly true when it comes to public transport and the vanishing
water supply).
… difficulty lies not so much in developing new ideas as in escaping from old ones.
In short, the
conclusion is that the government should do less and the private sector should
do more, which is no more than a convoluted demonstration of a brilliant
statement by (my favorite economist of all time) John Maynard Keynes:
“Capitalism is the astounding belief that the wickedest of men will do the most
wickedest of things for the greatest good of everyone.”
When the IMF
reviews address needs and deficits (other than the budget deficit), one sees
them discarding or pushing away imminent problems such as low economic growth
(usually blamed on some regional or global turbulence), rising unemployment and
poverty rates, and declining trust in the institutions of the state.
Such apathy is
baffling in many respects. The usual remedy is slow, broad-brush-like, and
long-term in nature: “steady progress on structural reforms to boost female and
youth employment; enhance labor market flexibility; promote competition; and
enhance governance and transparency”.
Such recommendations invoke Keynes’ famous statement in response to the
classical economists’ infamous reform (or lack thereof): “In the long run we
are all dead,” which also means that we have no time to wait, we need a
significant positive transformation now.
On the other hand,
public sector economic pundits’ “difficulty lies not so much in developing new
ideas as in escaping from old ones” to paraphrase Keynes.
Given that the
rational thing to do is to motivate greater economic growth through quality
spending that enhances the productivity of the economy rather than the IMF’s
tried and failed economics, will Jordan ever depart from this paradigm and
accept other alternatives? One can only be hopeful.
Yusuf Mansur is CEO of the Envision Consulting Group and
former minister of state for economic affairs.
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