The financial committee of the lower house of Parliament is still discussing the three year public budget (2008-2010). In a report published in Arabic language Jordanian newspapers on Tuesday, the Committee is said to have asked to government to reduce public expenditures by 15% to combat deficit. This is a reasonable action, provided that the reduction should be in running expenditures (salaries, transportation, furnitures, travels and accomodation). However, the "enlightened" committee wants the reduction to be done on capital expenditure which is usually allocated for public services (health, education, energy, transport, housing, etc...). I cannot resist the temptation to think that such recommendation is based on the deputies' eagerness to maintain the running costs for further enrolling of their relatives and voters in the public sector.
Although every 3 in four Jordanians may think that this is a neo-liberal government with a sinister policy to breakdown the Jordanian state through reduction of subsidies, an analytical look at the budget composition will reveal the contrary.
According to a robust critical analysis by economist Dr.Yousuf Monsur published in the Jordan Times and in this month's "Venture" magazine, the budget of the central government will reach JD5.225 billion, or 42 per cent of the expected GDP. THis does not take into consideration the budgets of many "independent" public institutions where the percentage may reach more than 50% of the GDP.
This percentage, ladies and gentlemen is an indicator of a socialist budget and not a liberal one. Let us take the analysis further to break down the type of public expenditures. According to the same analysis by Dr. Mansur, over 70 per cent of the budget goes to pay salaries for the 30 per cent of the labour force it employs, 10 per cent for government retirees, and 11 per cent to pay back the debt. A quick arithmetic would demonstrate that the government is left with less than 10 per cent to spend on physical and human infrastructure (education, housing initiatives, IT readiness, education, health, etc.), all services that are due for an overhaul.
So our government is in fact not "retreating" from the economy but it has about 70% of its budget allocated for salaries, and leftv with only 10% to manage the services to be provided to citizens. The same 10% is currently under the lens of the financial committee in the Parliamnet where it wants to reduce it by 15%.
I got very intrigued and wanted to know more comparative examples about the sizes of public sector in the world. The first example I though of was the most extreme.
I looked for Cuba, the only communist country in the world which ranks high in the UNDP Human Development Report (51st compared to Jordan at 86) and found that the size of the public sector in relation to GDP is 59% and has a staggering share of labor force of 84% compared to Jordan's 30% employed in the public sector. Contrary to Jordan, Cuba uses 55% of its budget for services and that is the wise use resulting in a better ranking in Human Development Index.
Let us take a look at some emerging economies and how much does the public sector comprise of their GDP through publc spending. This World Bank document focuses on Albania which is an emerging economy moving from communism to social market with a public spending of only 28% of GDP. Other countries of note whose statistics are used in the paper are Ireland (34.3%), Korea (20.8%), Malaysia (28.8%), Chile (21.1%), Romania (30.7%), Spain (39.6%), Slovenia (43.1%), Czech (41.9%), Poland (44.2%) and Bulgaria (40.0%).
The public sector in Jordan need to spend less on running expenditures and more on capital expenditures since development services are created, maintained and enhanced by capital expenditures and with 10% of the budget and only 4.5% of the GDP the public provision of services is very much unable to cope with the increasing demand. Savings should be done in running expenditures but that means no nepotism and social networking benefits for the deputies and influential Jordanains so do not expect such a revolutionary approach.
Our budget is not a neoliberal one, but a mismanaged "communist style" budget focusing on employment more than services.
said:
from United Kingdom
Dear Batir
its not a communist budget, because with all the disadvantages of the communist experience, communism transfered the ex communist countries from rural and a peasant community to an industrial one!
Our governmental economy is a social welfare economy that focuses that people don't get too hungry to fight the system !!
it is very smart by the way, i guess that jordan will always will be like this as long the international powers are the same because jordan's stability and security is one of a regional importance!!