This is quite an interesting story that’s been developing this week. Fares Sharaf, the now former governor of the Central Bank, handed in his resignation earlier this week after only 10 months on the job. Many are saying that his resignation of the ordinarily stable 5-year post was due to his rejection of the current state policy of fiscal appeasement. Unless you’ve been hiding under a rock, you’ve probably witnessed the out-of-control public spending the state has been pursuing in an attempt to quiet down the masses, which now amounts to tens of millions of dinars. While this spending, which to me is the equivalent of paying people off, has made some impact in the short run, it will do little if not exacerbate tensions in the long run – and in Jordan, long run is typically defined as “when the money runs out”.
…bankers and some officials say Sharaf was enraged by an appeasement policy adopted by the government to win over disgruntled public sector employees in the wake of Arab unrest that endangered the country’s financial and monetary stability.
Bankers say Sharaf, a highly respected financial expert who had senior posts in the banking and financial industry, has increasingly voiced privately his alarm at the government’s expansionary fiscal policy…Economists and bankers say Sharaf criticized a fiscal policy that saw government revenue shrinking and unable to cover rising current expenditure for security and a bloated bureaucracy whose salaries eat up most of the country’s $8.98 billion budget.
…Sharaf was worried policymakers’ efforts to resort to higher levels of domestic borrowing from banks and abroad, to finance growing social needs and the budget deficit, could derail growth and seriously jeopardize the economy’s ability to recover from sharp contraction, bankers close to him said. [source]
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