(MENAFN - Alghad Newspaper)
Managing Director of the International Monetary Fund (IMF) Christine Lagarde recently warned of an impending hike in debt levels in non-oil producing countries globally. She estimates that debt levels in these countries would exceed 80 per cent of their domestic gross product,
According to her, there are two reasons why this is happening.
First, Lagarde points to the issue of diversified, irresponsible excess spending, and the second is failing to up revenues.
While attending the IMF's meetings in Marrakesh, she said that these countries should seek to lower their current debt levels by attaining higher sustainable growth rates and development, while realising justice and balance.
Naturally, high debt-to-GDP rates constitute a serious threat to fiscal and financial stability in any economy, as is in many non-oil producing third world countries.
Had she not explicitly generalised her statements, one would think she is talking about Jordan.
The diagnosis she provided fits Jordan perfectly, including the increase in debt and the leaps in debt service and costs. For years, our domestic resources have been drained by the increase in debt.
Nearly a million Jordanian dinars go to debt service every year. And it is likely to increase further, considering current fiscal policies and projected hikes on interest rates in the near future.
Overall, further interest hikes lead to further hikes in debt service and liabilities incurred by domestic and foreign debt and credit.
Eventually, and there is no way around this, this will in turn drain whatever income the government makes out of the recent tax hikes, all on the expense of the citizen, of course. All of the sacrifices citizens have made may very well, eventually, just go to covering service costs of debt, not even the debts themselves!
The fear is that the government will not have enough to fund the development it promised to alleviate the pressures of the suffocating economic slowdown.
Expenditure in Jordan has been on the rise for years now, true, as Lagarde points out is the case for almost every non-oil producing country.
However, the fact is that the government has also sought to increase domestic revenues over the past six years, and has somewhat succeeded in doing so, as instructed by the IMF. And here's the irony!
To begin with, the IMF should objectively evaluate the success of the programme it imposes on troubled economies. Because the fact is, they are by contribution responsible for the collapse of so many economies, and subsequently countries, around the world.
Had the IMF focused its programmes on spending controls, it would have played out so much better for so many third world countries. In fact, it is likely that they could have had the chance to avoid collapsing altogether!
As for Jordan, it certainly would not have amplified to this extent, had the Fund's programmes focused on controlling expenditure.
Regardless of the commendations of the IMF for Jordan's 'successes over the years last, the truth is that it is only getting worse.
That said, the state must break the line of typicality to consider seriously its fiscal and financial stability by focusing on solutions beyond the IMF's.
For even today, it is clear that the IMF has all but failed to bring stability to economies and countries in crisis.
For the sixth year in a row, the government abides by the IMF's programmes and the people pay the price for it's meticulous ready-made all-size-fit solutions.
Meanwhile, none of the governments' achievements and solutions ever even come close to solving any of Jordan's fundamental issues so far. Nor will they, because they barely scratch the surface.
The government, let alone the IMF, has not even begun to repair the damage of the disrupted economy, put aside the impending perils of further failure!
This article is an edited translation of the Arabic version, published by AlGhad.