Yusuf Mansur

Public debt usually attracts the attention of economists and ministries of finance far more than that of ordinary citizens. Yet the way public debt is managed may be one of the most important determinants of economic growth, job creation, investment, the quality of public services, and ultimately sustainable development—the process of improving people's quality of life while strengthening the productive capacity of the economy and society.

Against this backdrop, the government's recent success in slowing the rapid growth of debt-servicing costs deserves attention, not merely as a financial achievement, but as an important evolution in the philosophy of public financial management.

The positive development lies in the government's tangible progress in managing public debt and strengthening its ability to contain debt-servicing costs. This enhances fiscal sustainability and creates greater room for directing public resources toward development priorities. While public debt will always require prudent management, the improvement in the trajectory of debt costs—particularly given that external debt represents roughly 30 per cent of Jordan's total public debt—marks an important step toward a stronger and more stable fiscal position.

The real achievement is not that the stock of debt has declined, nor that total interest payments have fallen. Rather, it is the government's success in slowing the rapid growth of interest expenditures through debt restructuring, refinancing on more favorable terms, and improving the management of the public debt portfolio. These measures may appear technical, but their economic and developmental implications extend far beyond the government budget.

In modern public finance, debt management is no longer simply about borrowing to finance fiscal deficits. It has evolved into a specialized discipline known as Active Debt Management, which focuses on reducing borrowing costs, extending debt maturities, diversifying funding sources, and minimizing refinancing, interest-rate, and exchange-rate risks.

These practices have become standard among both advanced and emerging economies. Countries such as Sweden, Denmark, Chile, and Ireland do not focus solely on the size of public debt; they place equal emphasis on the quality of debt management, recognizing that lower-cost debt is inherently more sustainable, even when debt levels remain relatively high.

This brings us to the important concept of fiscal space. Every dinar that is not spent on interest payments can instead be invested in productive projects or essential public services, giving governments greater flexibility to respond to changing economic and geopolitical conditions. Fiscal space is not created solely through higher taxes or lower expenditures; it can also be generated through more efficient management of public debt.

When government borrowing costs decline, the state's capacity to allocate resources toward capital investment rather than current expenditure increases significantly. This enables greater investment in water infrastructure, transportation, energy, digital transformation, education, healthcare, and industrial innovation—all of which raise productivity and generate lasting economic and social returns.

The benefits extend beyond public finances. As governments strengthen investor confidence through prudent debt management, borrowing costs gradually decline across the entire economy. Since sovereign bond yields serve as a benchmark for pricing financial assets, improvements in sovereign debt management eventually reduce financing costs for the private sector, encourage investment, and lessen the crowding-out effect, whereby government borrowing competes with businesses for available capital.

The success of such a strategy, however, should not be measured solely by lower financing costs. Equally important is how the resulting fiscal savings are utilized. If these savings merely finance additional current spending, their economic impact will be limited. But if they are directed toward infrastructure, technical education, scientific research, innovation, manufacturing, and the digital economy, they become a powerful engine for long-term growth, higher productivity, and stronger national competitiveness.

International experience clearly demonstrates that smart debt management is not a defensive policy; it is a proactive development strategy. It reduces financial risks, strengthens market confidence, expands fiscal space, and gives governments greater capacity to invest in the future rather than simply financing the past.

From this perspective, it may be time to rethink how fiscal policy performance is evaluated in Jordan. Public debate tends to focus on indicators such as the size of public debt, the fiscal deficit, and the debt-to-GDP ratio. While these remain important, they do not fully capture the quality of fiscal management. Many advanced economies now assess debt management offices using more sophisticated indicators, including the average cost of borrowing, average debt maturity, the share of fixed-rate versus floating-rate debt, refinancing risk, and the diversification of funding sources. These measures provide a far more accurate picture of debt management efficiency than debt size alone.

Such indicators should become a regular component of the Ministry of Finance's reporting framework and receive the same level of attention as traditional debt and deficit statistics. Efficient debt management has become one of the defining instruments of modern fiscal policy and a key pillar of macroeconomic stability and sustainable development.

As Jordan advances the implementation of its Economic Modernization Vision, it will increasingly require this more sophisticated approach to fiscal management. Genuine fiscal reform is not limited to increasing revenues or controlling expenditures; it also requires managing public debt as a strategic financial asset whose efficiency should be maximized rather than treating it merely as a liability to be serviced.

Ultimately, successful fiscal policy is not simply about balancing revenues and expenditures. It is about transforming every dinar saved into new economic value. When that happens, debt management becomes far more than a mechanism for financing budget deficits—it becomes an instrument of economic development and a catalyst for investing in people, infrastructure, innovation, and industry.

The writer is a Former Jordanian Minister of State for Economic Affairs.