ammonnews.net

Ammon News - AMMONNEWS - With no end in sight to the crises in its neighborhood, Jordan’s case remains a very tough sell to foreign investors.

The country’s resources and infrastructure are strained to their limits by the influx of refugees and trade with traditional partners such as Syria and Iraq has almost come to a standstill. The country’s military, meanwhile, is involved in the anti-Islamic State coalition and also in Yemen.

Yet Jordan continues to withstand these pressures as its economic prospects have gradually improved with growth expected at about 4% this year.

The government has even won some plaudits from abroad, notably from the International Monetary Fund, about the way it has managed its economy against a challenging backdrop.

In an interview with The Wall Street Journal on the sidelines of the Middle East & North Africa World Economic Forum in Jordan last weekend, Jordan’s Prime Minister Abdullah Ensour presented his country as a relatively stable prospect in a tough region beset by rising extremism and violence on its borders. He pledged further reforms to enhance the business environment and offered a counterintuitive view of Jordan’s investment potential.

WSJ: Given the turmoil in the region, what is your message to foreign investors?

Ensour: This is the best time to invest in Jordan. Jordan is secure, Jordan is safe, Jordan is democratic, and has an open economic system and free media. As much as there are challenges around us, we see opportunities that could arise. We have the rule of law and stability that is basically needed in the region and we believe that this will continue. As far as the refugees are concerned, it is something we are dealing with carefully, though for any country there are limits.

WSJ: You are not immune to the spillover from neighboring countries. What is your government’s response?

Ensour: Despite the great disruptions and having lost the main roads of trade, Jordan has been committed to a standby arrangement with the International Monetary Fund and we introduced policies. Normally you introduce these policies vis-à-vis restructurings at a time when the political environment is right for this. We’ve done that consistently, we haven’t been distracted.

WSJ: What do lower oil prices mean for Jordan’s economy?

Ensour: It has two sides. We have to a great extent our proximity to the Gulf economies. Our people go and work there and they repatriate their incomes. Also, our exports to these markets might be affected.

On the other side, our energy bill is huge. It was almost 4.2 billion Jordanian dinars ($5.9 billion) in 2014—that is equivalent to 18.5% of our GDP. So when there is a in oil prices, it will definitely reflect on our balance of payments and the cost of production and even our budget deficit because we have been subsidizing…electricity.

You should probably expect the remittances of Jordanians in the Gulf will because of the fact their revenues might drop. It has yet to be realized. In the first quarter of this year, they haven’t dropped, as a matter of fact they increased slightly but we expect that this trend will not continue.

WSJ: What are your growth predictions for Jordan’s economy?

Ensour: Under the present circumstances—even with the situation in Syria and Iraq—we expect growth at 4%. Probably next year 4.2%, maybe. The message is—apart from ISIS [Islamic state], violence, extremism—there is a success story that is evolving and that needs to be supported.

WSJ: Jordan is part of the anti-Islamic State coalition – are those efforts paying off?

Ensour: For us this is war of necessity, which must be fought. It is affecting our economic indicators as well as the instability and this is reflected on indicators like foreign direct investments as well as tourism and transportation. It is very difficult to have a clear measure of success.

What we are saying is that the military front is working, probably slowly, but the situation has put Daesh [Islamic State] on the defense. Though in some months or weeks they might be gaining, the overall trend is that they are on the defense, they are losing this battle on the field, and eventually they will be degraded and defeated.

*Wall Street Journal