AMMAN -- Economists on Tuesday said the new government should focus on coordination between fiscal and monetary policies to boost the competitiveness of the Kingdom's economy.
Economist Jawad Anani said the most pressing challenge the government must address is finding an exit strategy from the economic slowdown, noting this can be achieved through a combined strategy of fiscal and monetary policy.
"There is a high liquidity level in the Kingdom and this liquidity should be used to motivate the economy," he said, adding that sectors that give added value to the economy should be given priority instead of using the "blanket approach".
Economist Yusuf Mansur believes the government's main challenge in 2010 is an expected rise in international oil prices and a decline in the US dollar, which will be associated with a rise in the prices of basic commodities as the Jordanian dinar is pegged to the dollar.
However, Mansur said the new government's economic team should be harmonised and focus on coordination between fiscal and monetary policy.
"The deficit in the budget can be tackled through economic growth, which can only be maintained if monetary policy is activated," he elaborated, indicating that the government should urge local banks to ease their restrictions on credit facilities to the private sector to execute development projects.
"Government spending, however, should be on development projects that can create employment opportunities," Mansur added.
Anani agreed, adding that a long-term human resources strategy should be put in place in order to create new jobs and enhance the capabilities of the labour force in Jordan.
"We have to create more jobs and increase the productivity of the community as well as the government," he stated, noting that this stage requires an efficient and productive government that can focus on qualitative changes.
Economist Fahed Fanek, however, expressed concern over public expenditures, saying that the biggest challenge for the government is the increasing budget deficit and public debt, in addition to the slowdown in economic growth.
"The government is talking about stimulating the economy and this should be reached through legislative and administrative issues and not through increasing public expenditures," he explained.
The government should encourage the private sector to carry out mega-projects by facilitating more incentives because such projects should be implemented by private companies, Fanek added.
The new government should also find a mechanism to implement and secure funding for mega-projects, Anani said, describing the establishment of a new portfolio for such projects as a step in the right direction.
However, the economist, who has held several ministerial posts, warned that the tasks of the new ministry should not intervene with the responsibilities of other ministries concerned with securing funding and implementing projects.
Regarding government debts, Anani said the government should consider borrowing from external creditors because such loans are associated with the implementation of development projects in addition to lower interest rates and longer maturity periods, noting that loans should be directed to specific projects and not to the state budget.
Mansur agreed with Anani, pointing out that the government should not compete with the private sector and individuals in securing loans from internal creditors.
© Jordan Times 2009
