Jordan Finance Ministry

Interview with H.E. Dr. Mohammad Abu Hammour, Minister of Finance of Kingdom of Jordan

What is your assessment of the Jordanian economy and how hard has it been affected by the economic downturn and what is the outlook for 2010-11?

Jordan has been affected by the economic crisis. In the last year the growth rate was 2.8% but we heard that this year it would not be less than 4%. “What I am doing is cutting total expenditures,  by doing that we will cut budget deficit from 9% last year to 6%.”

I have a plan to cut it gradually one point a year to have it 8% in 2013, which is within acceptable levels which is 3% of GDP

What is your strategy towards accomplishing this?

Cutting spending, and adopting new methodologies to prepare the budget by having deficit-oriented budgeting and ranking priorities according to new methodology, to leave all these things to the cabinet. These things need to be negotiated bi-laterally with the ministers.

Also in Jordan I drafted 13 laws, and replaced 2 laws: income tax law and general sales tax law, to simplify things for the tax administration. It is significantly not less than 15%, just to attract more foreign direct investment.

Is it comparable to cutting taxes?

“We are cutting expenditures and taxes but we are actually working to establish many projects under private parties, so that’s why we will amend the law.”

In Jordan we have the main sectors are education, health and tourism. But we have big projects, mega-projects, nuclear, water and railways. For example, we have a railway project in Jordan covering about 1000km of the Kingdom and will cost us 3 billion dollars.

We also have the Al Qaisi Water Project, which will cost us 1 billion, and the Red-Dead Project, more than 3 billion dollars. We are working on many companies, such as the Intercon and British Petroleum, as well as Shell Oil. This will enhance the economic growth rate.

In your opinion, what has Jordan learned from the crisis?

Everyone was affected by the financial crisis, but in Jordan and developing countries, we strengthened our fiscal policy because we know what’s going on in Greece as well. Also, the auditing and how to improve the process of auditing was a result of that. We also want to have an early-warning system to learn about any crisis in advance, even though no one could anticipate the global financial crisis.

What is the outlook of the global economic crisis?

Many economists say that after the crisis the world will stop talking as much about the US if and Europe economically and will start talking more about India, China and the Middle East.