AMMAN –– With mounting public debt and a relatively high budget deficit, experts believe that policy makers have almost exhausted all remedies to generate the revenues required to close the fiscal gap.

According to recent official figures, overall public debt during the first quarter of this year stood at JD12.04 billion, which is around 58 per cent of the gross domestic product (GDP), while the budget deficit, with grants taken into account, reached JD241.5 million during the same period.

Estimated deficit in the JD6.36 billion state budget for 2011 is JD1.16 billion.

The economists agreed that the government’s ability to reduce its debts and deficits will slow this year amid rising food and fuel prices.

Economist Jawad Anani told The Jordan Times Tuesday that reducing the fiscal deficit will need higher revenues that cannot currently be generated through raising tax rates but instead by working on strengthening ties with the Gulf countries as well as through taking aggressive investment policies and adopting more austerity measures.

“We need to step outside the box and stop having the same way of thinking,” Anani said. “What we need is immediate cash support to enhance our fiscal conditions which could be secured by approaching Gulf states and other friendly countries.”

Officials should work to speed up procedures to join the Gulf Cooperation Council (GCC), the former Royal Court chief and several-time minister remarked. At least, he said, the government should convince GCC countries to supply the Kingdom with oil at preferential prices to cut down the multibillion fuel bill.

Stressing that the government should take immediate measures to cut spending, both military and civil, by at least 15 per cent, Anani said: “In order to receive financial support from others there should be real austerity policies in place.”

Anani warned that raising commodity prices and taxes to generate higher revenues will cause social problems. However, he said, the government can gradually remove subsidies on certain commodities and services, while keeping in mind to direct government subsidies to most vulnerable groups in the society.

Zayyan Zawaneh, a former adviser at the Central Bank of Jordan, the Ministry of Finance and the International Monetary Fund (IMF), said if the government manages to keep the budget deficit at the projected level it will be an achievement in light of regional events.

Stating that both policy makers and citizens are undergoing a rough situation, he said: “Citizens have done their part by paying their taxes while governments over the past years have failed somehow in improving Jordanians’ living conditions.”

The economist pointed out that the government has imposed new taxes and raised tax rates several times over the past years to reduce pressure on the budget, but the results showed that pressure increased and the deficit widened, voicing opposition to removing government subsidies on basic commodities and services.

In the short term, the government has exhausted all available means to fix the country’s fiscal woes, Zawaneh said, stressing there should be comprehensive medium- and long-term economic policies that encompass strategic projects in the fields of energy and transportation in addition to boosting the tourism sector.

“We cannot afford to continue importing oil derivatives and to keep ignoring solar power solutions,” he said, adding the government should also address the bloated public sector and reduce the number of independent public institutions.

In the short term, Zawaneh said political unrests in neighbouring countries should prompt the government to take direct measures to attract Arab investors, particularly from the Gulf.

“Competing countries in the field of tourism are not stable, while in Jordan we have enough stability and security to attract tourists to visit the country’s attractions,” he noted.

Jumana Ghneimat, an economic analyst at Al Ghad daily newspaper, said that government attempts to phase out subsidies regimes have proved unsuccessful in the past years, indicating the government should not discuss the idea of lifting subsidies on certain commodities or raise taxes at this critical moment, citing social and political upheavals in the region.

“People are against adding any financial burdens on them,” she said, adding the government has to choose between maintaining social stability or responding to IMF calls to lift subsidies and raise tax rates to improve public finance conditions.

Meanwhile, Anani highlighted that policy makers should inform the public on difficult financial conditions.

“They should tell people we need your assistance by telling us your priorities,” he noted.

However, several citizens interviewed by The Jordan Times yesterday indicated that they were fully aware of hard economic and financial difficulties the Kingdom is facing, but insisted more or higher taxes should not be the solution to reduce pressure on the budget.

Baha Khalil, a garment trader, complained of stagnation in economic activities due to “already poor purchasing power” for Jordanians, adding people find commodity prices relatively high.

“Instead of raising taxes the government should lower tariffs on goods,” he said.

“Life is difficult for the people and the government alike,” said Nihad Ahmad, a retired public employee who works as a security guard at a shopping centre in Amman, stating that increasing household needs eat away his pension as well as the income he generates from his second job.

Mutassem Hiasat, a financial manager at a private company, stressed that living conditions in Jordan are still “much” better than other regional countries, however, he was not for imposing taxes or removing subsidies on basic items and services.