Jordan has got the tools to fix its economy
Jordan’s economy is coming out of the woods because of the continuing efforts of the government. Over the last decade, it had introduced extensive structural reforms that allowed privatisation and liberalisation in various fields. Notably such measures were accompanied by social protection systems, subsidies and tax reforms to create an enabling environment for public-private partnerships in infrastructure.
All these efforts improved the investment climate. Despite slowing growth globally, Jordan’s economy expanded at 2.3 per cent in 2017 and could clock 2.5 per cent in 2018 according to the International Monetary Fund (IMF). The World Bank is slightly more optimistic and expects the growth rate to touch 2.6 per cent.
In line with the recommendations of the IMF, the Jordanian government expanded the tax base this year by increasing the value added tax (VAT), customs duties and corporate taxes in the banking, mining and telecommunications sectors.
The banking and financial sector has strengthened significantly, and today Amman-headquartered Arab Bank is among the largest financial institutions in the Middle East. Besides the financial industry, other sectors such as real state, tourism, import/export etc, too have flourished. The government is also investing in education sector.
In terms of natural resources, Jordan has large deposits of minerals, including phosphate, potash (also known as potassium), and limestone. It is one of the world’s three largest exporters of phosphates. The exploration activities for Uranium showed that the country had good quantities of deposits which the government can at any time use to support nuclear technology.
The country doesn’t have significant oil deposits, but modest reserves of natural gas in the area of Disa Ained and in the Jordanian-Iraqi frontiers. However, it is rich in high-quality cement.
The government is aware of the wealth of resources that remain explored in the country and is calling for companies to invest in various fields.
Water scarcity is another issue.
The arid climate is aggravated by chronic drought, especially in recent years. With a population growth of around 2.2 per cent per year (excluding the 1.4 million refugees), this 92 per cent desert country is one of the 10 poorest countries in terms of water resources in the world. Its annual water deficit amounts to 500 million cubic metres, while it needs 1.2 billion cubic metres.
The influx of the refugees has put a strain on resources further and become a source of economic, social and demographic pressure especially in regards with the water issue. Scarcity of water should be addressed properly through diplomatic channels with Israel and irrigation systems should be improved. According to US-headquartered NGO Mercy Corps, of all the water Jordan pumps, billions of litres fail to reach homes. “Instead it gushes out of broken pipes.”
Nevertheless, on October 15 this year, after three and a half years of closure, the border between Jordan and Syria reopened. The strategic point called “Jabir-Nassib border crossing” is considered one of the most important crossroads in the Middle East. This reopening offers a breath of fresh air.
Before its closure, 7,000 trucks used to pass daily as it provided a link between the Mediterranean and the Arabian Gulf and trade between the two countries.
The president of the Jordanian Truckers’ Union announced that 5,000 trucks were ready to move goods, while pointing out that the sector has recorded losses of more than $1 billion due to the Syrian and Iraqi crises. Jordan could only benefit from the reopening of the border given its strategic importance which can help revive its economy in a rapid way.
The reopening of the Jabir-Nassib crossing coincided with a decision that of the Israeli Army to reopen the Quneitra crossing between the Syrian and Israeli-controlled portions of the Golan Heights.
Jordan is also aware that it can always count on its Gulf allies of help. In 2018, the country received a total of $3.5 billion in aid from the Gulf countries. At a time when a global crisis is threatening many countries, Jordan’s economy is growing slowly but surely.
Jordan is also aware that it can always count on its Gulf allies of help. In 2018, the country received a total of $3.5 billion in aid from the Gulf countries.
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