With the approved budget expanding by leaps and bounds this year, the deficit is on the rise. The lifting subsidies may end up helping the government save a decent amount of money (close to $1.5 billion according to officials) but then the likely question becomes: what good is all that money if it’s outmatched by expenditure? It’s like a pocket with a hole in it. Government expenditure is considered way too high for a country like Jordan, with the Heritage Foundation’s 2008 Index of Economic Freedom placing government expenditure at nearly 40% of the GDP. Sometimes more spending can be healthy for an economy, as long as its on the right things: education for example. Instead, we have a huge JD301 million “social safety net”, which is primarily a way to avoid any type of criticism, particularly from the poorest people in the country, by issuing handouts. More expenditure on the wrong things.
The idea is also dependent on basic arithmetic. The hope that the lifting of fuel subsidies will save amount “X”, and after subtracting the insignificant amount “Y” that is the social safety net, amount “Z” will be a surplus. It’s an interesting experiment that comes at the cost of the average Jordanian’s pockets. My argument is based on the government’s inability to historically save money, or pinch piasters when and where it counts. In other words, more money will translate to more wasteful spending.
One of the main reasons Jordanians are really feeling the pinch has been due to this over-dependency on subsidies, chiefly fuel subsidies and certain staple commodities. You really can’t help but wonder what the government was doing for well over a decade when it enjoyed cheap oil from Iraq.
Corruption, mismanagement, wasteful spending and inefficiencies of the public sector have put that hole in the pocket and not much will change until that system is repaired. With so many people working in and for the government why are so many ministers, officials, MP’s, Royal Court directors and diplomats still allowed to fill up their gas for free with those absurd coupon books they’re given? Why are people still allowed to spend on what we don’t have? There seems to be way too much wasteful spending for such a small country to handle. Even on the ground realities are very obvious to everyone. Here’s another example.
There is an old joke about the farmer who charges a guy $50 to pull his car out of a muddy hole, telling him it’s the tenth time he’s had to do it today. So the driver says “Wow, when do you have time to plow your land, at night!?”. And the farmer says: “Oh no, nighttime is when I fill the hole with water”.
Every time there’s bad weather in Jordan – and I’ve been told there’s a whole season called “winter” – there seems to be so much damage to infrastructure. Thousands of potholes destroy the roads across the country, especially in Amman. The GAM doesn’t seem to invest enough in their upkeep, because after almost every major storm the exact same potholes show up. They then spend the next few weeks repairing them only to have them come back again. We are literally filling the same holes several times a year, and I’m guessing someone is making some money off it somewhere.
If that’s not a metaphor for wasteful spending, I don’t know what is.