IMF programme will not remove subsidies, affirms Finance minister

AMMAN — There are no plans to remove subsidies as part of the International Monetary Fund (IMF) programme, Minister of Finance Mohamad Al-Ississ said during a dialogue session organised by the Columbia Centre for Global Studies on Wednesday.

During the discussion, titled “Navigating the Political Economy of Reform: Safeguarding Macrostability,"Al-Issis emphasised Jordan's resilience in the face of three major global economic challenges: the COVID-19 pandemic, the Russian-Ukrainian crisis and global “stagflation”, or stagnation and inflation.

“We have successfully maintained our macroeconomic stability throughout these global challenges,” Al-Ississ said. 

The minister highlighted the distinction between preserving macrostability, which ensures the preservation of the Jordanian Dinar’s value, and fulfilling economic aspirations.

While acknowledging the Kingdom’s achievements in maintaining macroeconomic stability, Al-Ississ also recognised the remaining issues that the government needs to address. 

“High unemployment rates and the disappointing level of women's economic participation, despite having one of the highest rates of female literacy, are some of the major challenges we have to address and overcome,” he added. 

Al-Ississ emphasised his responsibility as the Minister of Finance to provide a solid foundation and safety for the private sector and individuals in terms of macro stability. 

“Sixty-three per cent of the country’s general budget is spent on salaries, including those of existing workers, former workers, pensions and social security,” he added.

Additionally, 16 per cent of the government's operational expenses are dedicated to interest rates, leaving limited funds for crucial sectors such as education, infrastructure and healthcare.

To overcome these challenges, the minister explained that he has shifted focus towards revenue generation. 

While the government has not increased taxes since 2019, alternative measures are being explored to combat tax evasion, he said. 

“Widening the tax base and leveraging technology are significant strategies the ministry employed to increase tax revenues without putting more financial burden on the middle class,” Al-Ississ added. 

The minister affirmed his commitment to avoid placing a financial burden on the middle class, and to ensuring that “everyone contributes their ‘fair share’ of taxes”. 

“Fighting tax evasion, along with exploring technological solutions, emerged as crucial approaches to increase domestic revenue,” he said.

Additionally, Al-Ississ highlighted that there will be no subsidy elimination in the IMF programme. 

“Nothing in the International Monetary Fund (IMF) programme has to do with removing subsidies,” he noted.