Privatization Experience and the Jordanian Economy

Abstract

DOI: 10.7176/JESD/10-1-08

The wave of privatization began to sweep the world during the second half of the ninth decade of the twentieth century; England was one of the first countries that preceded it, followed by other developed countries such as France, Italy, Spain, Canada and others. Privatization has moved to developing countries such as Argentina, Brazil, Chile, Bangladesh, Pakistan, Turkey, Nigeria, Egypt, Jordan and others. The former socialist countries also began to adopt privatization programs such as the Soviet Union, Czech Republic, Slovakia, Poland, Hungary and others.

This trend emerged as a result of the conditions set by the International Monetary Fund and the World Bank in the run-up to the rescheduling of its debts "in accordance with the known rules of the Paris Club and the London Club", where the thought of these two institutions is based on the following analysis:[1]

"In order for these countries to avoid the difficulties of servicing their debts and their balance of payments problems, they need to restructure their economies so that they can improve the efficiency and allocate their resources, with a structural adjustment program; privatization comes from its most important components." [2]

"World Bank experts believe that the policy of privatization needs to develop a program that starts a full survey of public sector projects and its problems, and classification of these projects according to their situation, and then identify projects to be privatized, with the establishment of the basis for evaluating the assets of the sold companies, and set a schedule that sets sales payments, and the establishment of a special body responsible for the privatization program.[3]

The Bank does not object to providing financial and technical support for the development and implementation of this program, the success of the program requires that the government of the state create an environment that will revive the market economy, such as:[4]

1. Edit prices, especially exchange rate, interest rate.
2. Liberalization of foreign trade.
3. Changing the laws regulating public sector companies.
4. The return and development of the stock exchange.

As for Jordan, the process of privatization began in Jordan in 1992 with the implementation of the economic reform program in cooperation with the International Monetary Fund, which ended in 1998 and was extended three times until the end of the middle of 2004 but the pain of Jordan in 2009 of the impact of the global crisis and the resorting a large numbers in 2004 from Iraq and 2012 and 2013 because of the Syrian crisis made it difficult for them to continue without resorting to the World Bank and asked for loans from him and with each new loan required the lender for further reforms, including privatization, such operations will continue, including economic reform programs, within the framework of this program, a number of public companies and state-owned enterprises have been privatized or in which the State has a large share.

[1] See Reham Abdelmatti, Privatization and Economic Transformation in Egypt, Al Mahrousa Research and Publishing Center, Cairo, 1997, pp. 40,39.

[2] Mahmoud Sobh, Privatization to Meet Survival Requirements and Growth Challenges, Ain Shams University, Cairo, 1995, p.15

[3] Mahmoud Sobh, op. Cit., P. 15, 16.

[4] Jamal Mahmoud al-Kurdi, Legal Regulation of Privatization, Dar al-Nahda al-Arabiya, Cairo, 1998, p.11