Since its
inception, Jordan has been an
aid beneficiary country. Yet aid ebbs and flows —
it is never steady or secure enough to enable forward planning or strategic
thinking. What is more, for several decades now, the government has relegated
funding for capital expenditures (spending on projects that enhance
productivity and invest in the future of the country) to
foreign aid. Some aid
sources seem to be drying up, leaving us to question: Where do we go now?
اضافة اعلان
According to the
World Bank Database, Jordan received $48 billion in foreign aid (grants and
soft loans) during the period 1960-2020. The US alone gave Jordan $20 million
since 1951, and recently increased the aid package from $1.275 billion to $1.45
billion for the next seven years. The UK, Germany, and Japan are also among
Jordan’s main aid benefactors, and
Saudi Arabia gave Jordan $1.175 billion
since 1978, 50 percent of which went to support the budget.
Accumulating
debtsThe vast
majority (over 90 percent) of foreign aid has been directed towards government
budget support. Moreover, during the
2010–2014 period, 70 percent of aid was in the form of grants, while the remainder
comprised soft loans.
Currently, only
half of aid is in the form of
grants, which means that debt servicing is
growing year after year. Hence, the economy (as measured by GDP) needs to grow
at a faster rate than the interest on the debt.
The vast majority (over 90 percent) of foreign aid has been directed towards government budget support.
Last year, debt
servicing in Jordan totaled $2.22 billion, or 20 percent of
domestic revenues (government domestic collections in taxes and fees from the local economy). However,
some of the debt servicing goes out of the country — it is leaked out of the
economy, thus weakening economic growth.
Moreover, if one
were to add spending in the budget on debt servicing, civil service salaries,
military and security apparatus allocations, and pensions, it would result in a
sum greater than domestic revenues, which means that the government has to
borrow to meet some (not even all) of its current expenditures.
Sinking
productivityThis also means
that it has to come up with these sums every month or year to meet its
obligations, and it has no fiscal maneuverability. As a result, scant resources
in the budget are ever dedicated to new projects, ones that enhance
productivity, and when such projects are mentioned, they are subject to
financing from aid.
The productivity in Jordan has been declining over the past 40 years; and the average income of a Jordanian has declined by $1,218
Consequently,
productivity in Jordan has been falling for decades. The highest
per-capitaincome in real terms (with inflation taken out) in the history of Jordan was $5,055,
in 1982. It was $3,837 in 2021.
In other words, the productivity in Jordan has
been declining over the past 40 years; and the average income of a Jordanian
has declined by $1,218. It is no wonder that 70 percent of respondents to a
recent survey stated they do not trust the government and folks are generally
unhappy.
Again, where do
we go now? The short answer is that we
need the type of
government spending that enhances the productivity of
Jordanians to increase their output and income, and thus that of the
government. If interested in a long response, see one of my past articles on
the topic as I have answered this question many times.
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Jordan News
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