By Fares Braizat, Aug 28, 2022

Despite the belief of some observers that Jordan’s is a rentier or semi-rentier economy, empirical data suggests that Jordan no longer fits either of the two definitions. 

Let us start with the obvious. Since the 1950s, foreign aid has declined significantly as a percentage of the domestic revenue and public expenditure. In the 1950s and 1960s, foreign aid reached around 60 percent of the domestic revenue. In the last two decades, it decreased as low as 6 and as high as 29 percent of domestic revenue, averaging 13 percent (2000–2022), depending on whether there is a crisis in the region. 

Since the 1950s, the trend has been very clear: in every crisis year, foreign aid to Jordan will spike, then subside to its “normal” levels, keeping the trend of systematic and linear decline. 

For example, in 1968, after the 1967 war, external grants were 60 percent of the domestic revenue, in 1975, after the 1973 war, it was 55 percent, in 1979, after the Camp David accords between Israel and Egypt and the ensuing retaliatory Baghdad summit, it was 53 percent. In 1989 after the protest action, it was 31 percent, then declined to an average of 12 percent between 1991–2002, and jumped to 29 percent in 2003 after the invasion of Iraq.

Similar modest spikes took place in 2011, in response to regional protest movements, to 22 percent, and in 2014 to 17 percent as a result of war or terrorism in Syria and Iraq. In the 2022 budget, the percentage of external grants to domestic revenue was 10 percent.

This set of empirical evidence challenges the often-cited assertion that Jordan’s economy is rentier or semi-rentier. 

The second set of evidence comes from the data published on the official website of the Government Investments Management Company (GIMC). The total government-owned capital in the government-owned companies under GIMC is nearly JD1.05 billion, which makes 49 percent of the total capital of the 35 companies under GIMC, around 3 percent of the GDP, and nearly 13 percent of the domestic revenue. 

The data presented here suggests that it is erroneous to call Jordan a rentier economy. Jordanians are funding 90 percent of the public budget. 

Today, with the new economic vision 2033, we need to make sure that tax burden is equitably distributed, with an eye on fast and sustainable economic growth. 

It is perplexing to see the economies of Saudi Arabia, Egypt, and Israel growing by substantial percentages while we are stagnating, our employment is on the rise and a majority of our youth is eager to leave the country. 

A more assertive government action on facilitating and easing investment tracks for Jordanian capital is long overdue. It is about time we move beyond business as usual in these times of “compete or vanish”.

The writer is the Chairman of NAMA Strategic Intelligence Solutions, H.E. Dr. Fares Braizat. 

This article was originally published in Jordan News on August 28, 2022. For the original article source, click here