Econostrum | Economic News in the Mediterranean

Jordan wants to attract $41 billion in private investment in ten years

Written by Frédéric Dubessy on Tuesday, June 7th 2022 à 15:50 | Read 250 times

Jordan is embarking on a development plan with the main objective of attracting $41 billion of private funds in ten years to double its growth and solve its unemployment problem.

Jordan wants to double its GDP in ten years (photo: F.Dubessy)
Jordan wants to double its GDP in ten years (photo: F.Dubessy)
JORDAN. "We don't have the luxury of not empowering the private sector or putting obstacles in the way of investors." This sentence from Bisher al Khasawneh, Jordan's prime minister, was pronounced on Monday 6 June 2022 at the King Hussein bin Talal convention centre on the shores of the Dead Sea, during a meeting with businessmen, politicians and civil servants, attended by King Abdullah and his son. It marks the beginning of a new era for the country.

After a workshop with some 500 specialists, stakeholders, experts and representatives from the public and private sectors, Jordan launched a development plan called "Vision for the Modernisation of the Economy". Its main objective is to attract $41bn (€38.36bn) of funds over ten years to double the country's growth (2% on average over the past decade) and "achieve comprehensive sustainable growth that enhances employment opportunities, expands the middle class and improves living conditions", as stated in a statement from the Royal Palace.

The majority of this sum is expected to come from the private sector, notably through foreign direct investment (FDI) and public-private partnership (PPP) projects. A round table on the latter topic identified their importance in developing investments in food security, the textile industry, information and communication technologies (ICT) and new industries. She stressed their "impact on job creation and increased exports".

366 initiatives and 8 engines of growth

This vision, a roadmap for the Jordan of the future, includes 366 initiatives in various sectors to "unlock Jordan's full potential". Eight engines of growth have been defined: High Value Industries, Future Services, Destination Jordan, Smart Jordan, Sustainable Jordan, Dynamic Jordan, Green Jordan and Investing in Jordan.

"The vision emphasises innovation and entrepreneurship, which are key to development and enhancing efficiency and productivity, and stresses the importance of strengthening cooperation with Jordan's development partners more effectively in order to direct their expertise and resources to promising areas," the royal statement said. At the end of May 2022, Jordan entered into a tripartite "integral industrial partnership" with the United Arab Emirates and Egypt.

During the next session of Parliament, the government will present a draft law regulating the investment environment.

2 billion from the IMF to help Jordan

This vision will favour the recovery of the country whose economy has been badly affected by the regional turbulence" with the wars in Syria and Iraq (more than 3 million refugees in the country along with the Palestinians), but also by the Covid-19 pandemic. This strategy should enable the country's GDP to rise to 58.1 billion dinars ($81.95 billion - €76.69 billion) by 2033, compared to 30.2 billion (€39.86 billion) today.

This will therefore require reforms to open the Jordanian market to private investors. A real stone in the garden of the traditional conservative establishment of the administrations against which King Abdullah has been fighting for several years to modernise his country. Jordan is committed to a programme of structural reforms supported by the International Monetary Fund (IMF).

At the end of May 2022, the institution welcomed its work in this area, indicating that the reforms were "on the right track" and evaluating economic growth at 2.4% and a GDP of over 3% in the medium term. "A further rebound in tourism receipts and strong exports will reduce Jordan's current account deficit to 6.5% of GDP in 2022 from 8.8% last year," the IMF report said. The International Monetary Fund will extend its aid until 2024. It will increase to a total of $2bn (€1.88bn) from $1.3bn (€1.22bn) in initial loans granted at the end of January 2020.

According to the document, Jordan needs $165 million in additional spending to address current problems.

A public sector reform plan

Jordan also has a heavy workload to deal with urgently. That of unemployment (24%). This is a major challenge as one third of the country's ten million inhabitants are under the age of fourteen. According to the IMF report mentioned above, more than a million young people will enter the labour market in the next decade. "If they don't find solutions, we will have a million Jordanians without jobs in ten years' time," warns Bisher al Khaswaneh.

The Jordanian Prime Minister has announced that he will soon present, before the end of June 2022, a public sector reform plan based on the results of discussions by a committee for the modernisation of the public sector. It will be based on strengthening various sectors such as education, health care, transport and infrastructure.

Bisher al Khaswaneh intends to break with the routine of previous governments, preferring to create public jobs to appease citizens and maintain the country's stability. This policy has a counterpart: a public debt amounting to $40 billion, or 90% of the Gross Domestic Product (GDP).

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