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Jordan PM caught between angry public, international lenders

AMMAN, Jordan — Jordan’s new prime minister won’t have much time to deliver on promises to rescind a proposed tax increase and implement economic reforms with more consideration for the country’s struggling poor and middle class.

Union leaders who toppled the previous prime minister last week through widespread protests say they will go back to the streets if his successor, Omar Razzaz, does not deliver.

Razzaz, a former senior World Bank official, faces a tough task: He must defuse public anger at economic policies seen by many as unfair, while introducing reforms that can reduce Jordan’s debt-to-GDP ratio to a level acceptable to international lenders.

He has promised a more inclusive path, but has also tried to lower expectations in recent days in meetings with representatives of unions, political parties and legislators.

“There is no magic stick. There is no painkiller. This is a long path, a difficult path,” he said earlier this week. “But God willing, the target is clear and the leadership is united with the people in achieving it.”

In any reform efforts, Jordan can count on some good will from allies such as the United States, the European Union and Gulf states. Considered as “too strategic to fail,” Jordan has received generous economic and military aid to ensure its relative stability in a turbulent region.

Earlier this year, the U.S. pledged a total of nearly $6.4 billion for Jordan through 2022. Several days ago, three Gulf states promised $2.5 billion in aid over five years. On Wednesday, Qatar’s foreign minister pledged $500 million in infrastructure investments in Jordan and said his would offer 10,000 jobs to Jordanians.

On the other side of the balance sheet, the fallout from conflicts triggered by the 2011 Arab Spring uprisings has led to a potentially destabilizing economic downturn in Jordan.

The violence disrupted trade with Iraq and Syria, as well as the flow of cheap natural gas from Egypt. At the same time, the influx of hundreds of thousands of Syrian refugees burdened water- and energy-poor Jordan and its weak infrastructure.

Jordan’s debt-to-GDP ratio now stands at about 96 per cent, while unemployment hit 18.4 per cent, the highest in 25 years, according to the Department of Statistics.

In 2016, the International Monetary Fund agreed to pay $723 million to Jordan over six years, linking disbursement to subsidy cuts, tax increases and other fiscal reforms. Adherence to such prescriptions was to reduce Jordan’s debt-to-GDP ratio to 77 per cent in 2021.

Instead, Jordan’s rollout of the reforms has brought its citizens to the streets.

Jordanians have protested regularly in recent months, as prices of bread and electricity shot up. Demonstrations intensified when the government announced its planned tax increases.

Starting earlier this month, thousands of Jordanians demonstrated outside the prime minister’s office every evening, chanting “maanash,” (“We don’t have.”) A federation of 17 unions, including pharmacists, doctors, engineers, and shop owners, staged two one-day warning strikes during this period.

“We arrived at a point where we have nothing left,” said Khaled Hilmi, a pharmacist in Wehdat, a Palestinian refugee camp in the Jordanian capital …read more

Source:: Nationalpost


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