Before being appointed Minster of Finance in November 2015, Omar Malhas held various positions at the Housing Bank for Finance and Trade, including CEO, a job he assumed in 2010. Malhas tells us how Jordan has been able to handle regional crises, as well as the government’s current plans to cut public debt.
How has Jordan been able to provide moderate economic growth despite regional turmoil, a mounting refugee crisis, and a lack of any natural energy wealth?
Jordan is the right country in the wrong neighborhood. It is true that there is turmoil in the region, but even though that has negatively impacted economic growth, it goes beyond economic issues. The determination of the leadership of the country, His Majesty the King, and the government, no matter what’s happening around us, this country has to continue. A lot of effort was exerted in order to keep the country up and running, and the stability that Jordan enjoys has encouraged local investors, regional investors, and international investors to keep doing business here. Therefore economic growth continued, but at a slower pace. Since the Syrian crisis began, we’ve been averaging between 2% to 3% of real GDP growth every year. In relative terms, that might be good compared to other countries. But in an emerging country like Jordan, for us to have better conditions we need to grow at double the growth rate of the population. That is not happening. This is why you see that unemployment has went up to over 15%, and the IMF has even concluded a study that the Syrian refugee crisis has negatively impacted 1% of potential GDP growth every year.
How is the country handling the crisis going forward?
The private sector has to prepare for the next move: the re-building of Syria. From Amman to downtown Damascus, it’s 190 kilometers. Therefore, the proximity should play a big role in potentially adding to the economic performance. At the same time, the rules of origin when it comes to exporting to Europe should also help in moving the economic growth. About five companies so far have started the process.
What is this ministry doing now to improve the country’s sovereign credit rating?
We are tackling the debt and the deficit. If you look at the national program, we’re targeting to reduce that from 95.1%, a debt size of roughly $40 billion. This year, we are probably continuing at that same level, but going forward it will start declining to a debt to GDP level of 77% by 2021. This will not come only from tackling deficit, but also through economic growth.
How satisfied are you with the compliance of banks in maintaining strict transparency and money laundering regulations?
The central bank has very tough regulations when it comes to compliance and anti-money laundering activities. I think the central bank has been very diligent in being tough with the banks. If you go back to 2008, our banking system was not impacted by the global financial crisis unlike other banks in the region. The reason is that the central bank is tough in implementing its regulations.
How do you assess the Gulf countries’ partnership and contribution to Jordan’s economic stability?
The Gulf states have always been supportive of Jordan and invested here, whether public entities or the private sector. Today, if you look at our telecom industry, for example, a Kuwaiti company called Zain owns one, and Patelco from Bahrain owns another one. The Qatar National Bank owns 34% of Housing Bank, while the Kuwaiti Investment Authority owns 18%, and the Omani Retirement Fund owns about 5%. Moreover, the Gulf grant, valued at $3.75 billion dollars over a five-year period, has tremendously changed the map of the Jordanian infrastructure. We’ve now fixed the main highways, all thanks to this money issued to us from our allies in the Gulf.