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Al-Ahram Weekly 27 May - 2 June 1999 Issue No. 431 
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Published in Cairo by AL-AHRAM established in 1875 |
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Al-Ahram Weekly 27 May - 2 June 1999 Issue No. 431
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| Published in Cairo by AL-AHRAM established in 1875 |
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Egypt Region International Economy Opinion Culture Profile Living Features Travel Sports People Time Out Chronicles Cartoons Letters 'Cautiously optimistic' about Jordan's economy
By Lola KeilaniJordan's King Abdullah extended his stay in the US for two extra days so as to meet with investors and provide them with incentives to participate in joint venture projects in Jordan. However, one of the main objectives of the king's visit is a partial write-off of Jordan's debt. A figure of 50 per cent has been mentioned. Abdul-Ra'uf Rawabdeh, the Jordanian prime minister, made blunt remarks in a closed-door meeting to parliament this week in which he called for "cautious optimism" and warned MPs against high "expectations in regard to the amount of debt that can be written-off". He emphasised the need for strict austerity measures so as to comply with the recently concluded agreement with the International Monetary Fund (IMF).
Jordan must also "accept other unpopular conditions put forward by the World Bank if it is to expect any economic improvement", reported a lawmaker quoting the prime minister.
"We have no alternative but to adhere to their conditions," he quoted Rawabdeh as telling a handful of deputies who oppose economic reforms and debt reconstructing on the grounds that such measures hold the country hostage to strict rules and often inflict added hardship on lower income groups. Rawabdeh was unsure how much of the debt could actually be written-off.
The G7 industrial countries will consider King Abdullah's request for a 50 per cent reduction in its foreign debt at their summit next month. The seven Western powers made restructuring of Jordan's economy a prerequisite for debt alleviation when they met last month. Such a programme includes swift privatisation of some public institutions. Under the new deal Jordan will pledge to lower the ceiling on custom tariffs from 40 to 30 per cent by the year 2000 and hike the sales tax to 12 per cent by June 1999. In return it will earn a credit facility of $3 billion over a span of three years.
The 1998-1999 restructuring programme fell short of initial expectations due to sluggish economic performance, a stagnant peace process and the damaging effects of continued sanctions on Iraq, Jordan's main trading partner.
During the king's tour, Britain, Canada and the US promised support for Jordan's stand at the G-7 summit but they made no firm commitment on debt forgiveness. So far only Germany has said it was ready to scrap up to $50 million of Jordan's debt.
The US president has promised to help alleviate Jordan's foreign debt and has even raised the issue of Jordan's $1.2 billion debt to Japan with Japanese officials. Japan's constitution unfortunately bans debt cancellation.
The Jordanian prime minister said during his meeting with lawmakers that the major problem for debt alleviation lies with France which totally rejects any proposal for cancelling Jordan's debt. Recently, United Arab Emirates President Sheikh Zayed Bin Sultan Al-Nahyan, whose country recently signed a multi-billion dollar arms deal with France, sent a letter to French officials recommending a favourable response to Jordan's request. King Abdullah is scheduled to visit France on 2 June to follow up on this attempt at mediation with Paris.
By way of relief to the Jordanians the Paris Club last week agreed to reschedule more than $800 million that Jordan owes to creditor nation members. An additional $200 million in interest and loan installments are expected to be rescheduled by countries from outside the club as a result of the king's tour.
It is an indication of the urgency of the situation that Jordanian festivities marking the 52nd anniversary of independence on Tuesday were marred by the absence of King Abdullah and the news that relief of the debt burden is not yet 100 per cent assured.
