Khaberni - Finance Minister Abdelhakeem Shibli responded to a question from MP Dima Tahboub regarding the accumulation of debt and its increase to approximately 46 billion dinars.
Minister Shibli detailed in his response to Tahboub's question the history of debt in Jordan, where the government obtained its first loan in the late fifties of the last century, amounting to about one million dollars from Britain.
He explained that the governments resorted to borrowing to finance the deficit in the general budget and the deficit of the national electric company and the water authority, to face crises most of which are external, as well as to finance major projects within the national initiatives and strategies adopted by the government to achieve sustainable development goals and to position Jordan among the developed and prosperous countries in terms of education, health, tourism, transportation, telecommunications, housing, water, energy, and other vital sectors that are evident in their development and praised by all international institutions.
Shibli clarified that the government started borrowing in the late fifth decade of the last century when it obtained a loan of about one million dinars from the British government, and the British government remained the sole lender until the beginning of 1960. Given the geopolitical circumstances, especially since the regional location of the kingdom has been fraught with conflicts and wars since 1948, as well as the consequences of the 1967 war and the Israeli occupation of the West Bank and the Palestinian refugee crisis in Jordan, this reflected an increased need to borrow to finance infrastructure and establish projects from hospitals, schools, camps, and institutions needed for security to accommodate massive flows of refugees beyond the country's capacity to host them.
According to the minister, during the period 1970 - 1987, the region experienced political instability, including the war of 1973 and the Iran-Iraq war of 1980 and falling oil prices, which affected the reduction in aids to Jordan and increased borrowing to cover the budget deficit and fund projects due to governmental measures taken to face the returning migration of Jordanian labor in Iraq and neighboring countries, which required creating job opportunities and expanding infrastructure to accommodate the increase in numbers in the country.
He mentioned that in 1989, the Jordanian economy faced a financial crisis due to a decline in foreign currency reserves and the collapse of one of the country's major banks and the dues of foreign loans that were not covered by foreign reserves. One of the reasons was that all governmental entities, whether ministries, institutions, or the military, were borrowing from abroad in the name of the government, as the Public Debt Law no. 1 of 1971 only regulated domestic debt, leading the government to resort to the International Monetary Fund to implement economic reform programs. From 1989 to 2004/6/30, Jordan underwent six economic reform programs that successive governments adopted targeting economic growth, building foreign currency reserves, stabilizing the exchange rate of the dinar, creating job opportunities, attracting foreign investments, and rescheduling external debts with the Paris Club countries. Among these reforms in the field of governance was the issuance of the Public Debt Management Law no. 26 in 2001 to regulate the borrowing process.
According to the minister's response, therefore, in pursuit of implementing the development and economic plan and facing external crises without governments wanting to make decisions that significantly affect the citizens' lives amidst economic and structural reforms, the governments took several reform measures and national programs for the sustainability of public finance and public debt. In 2008, the total debt decreased after purchasing part of the debts from the Paris Club but then rose again due to the aggravation of crises including the global financial crisis in 2008 and the Arab Spring crisis in 2011, which resulted in Jordan hosting large numbers of Syrian refugees and others, in addition to the energy sector crisis and the disruption of Egyptian gas, causing significant losses for the national electric company and increasing its debt counted as part of the public debt contributing to the increase in Jordan's public debt.
Shibli continued that in 2020, the national economy faced the COVID-19 pandemic that cast its shadow over all countries worldwide, with the government taking measures to support economic and financial stability by increasing spending on social protection and healthcare and supporting the private sector to continue production and work and exempting it from amounts due to the government, leading to an increase in the debt balance like all countries around the world.
Shibli pointed out that in 2021, the national economy entered a recovery phase and it was necessary to take measures to promote the economy and return to positive economic growth rates, with the government continuing to take measures that contribute to reducing the financial burdens on citizens and spending on acquiring vaccines and improving healthcare, in addition to creating job opportunities and controlling the rise in unemployment rates. As the government was able to achieve the targeted local revenue estimates in the Public Budget Law in 2021 as a reflection of the recovery state in the economy.
According to the minister's answer, as economic and financial indicators began to gradually return to stability in light of the reforms taken by the government, the countries were surprised by the Russian-Ukrainian war at the beginning of 2022, which had negative effects on the global economy due to disruptions in gas supplies and wheat supply chains, in addition to the rise in prices of basic goods and oil derivatives and the high inflation rates in most countries, leading to high interest rates to record levels in the years 2022 and 2023, thereby increasing the public debt burdens on the government, prompting the government to take several measures that contributed to maintaining inflation at safe levels, preserving a secure stock of basic goods, and not reflecting globally rising derivative prices on local prices. The Gaza aggression also had a negative impact on economic indicators during the year 2024 and the accumulation of public debt.
In conclusion of his response, Shibli detailed the debt figures at the end of each government's term over the last 25 years.
