Jordan's Economy, New Jobs Are Top Priority, King Abdullah Says

By Massoud A. Derhally

Oct. 5 (Bloomberg) -- Jordan's economy and job creation are a top priority, King Abdullah said in a speech inaugurating the second session of the country's 15th parliament today.

``The economy still tops our priorities, especially its social dimension, due to the economic challenges that resulted from international rising prices,'' the monarch said. ``At the top of national priorities there stands, in the medium range, economic reform and the completion of a strong national economy that reflects positively on Jordanians' standard of living.''

Jordan, one of the smallest economies in the Middle East, imports more than 90 percent of its oil and relies on foreign investment and grants. Rising property prices and investments from oil-exporting Persian Gulf countries boosted Jordan's finance, insurance and real-estate industries by 8.5 percent.

The kingdom bordering Israel and the Palestinian territories received 294.8 million dinars ($416 million) in foreign grants in the first seven months of the year, a 280 percent jump from the same period last year, helping to finance three-quarters of the budget deficit.

``Achieving the economic prosperity we seek requires the immediate application of measures to guarantee financial stability and enhance the investment environment.'' Abdullah said. ``Among these measures is controlling inflation, activating banking policies that guarantee the safety of banking institutions and their reputations and elevating the monitoring tools of depositors and guaranteeing clients' rights.''

Higher Salaries

The king said the government needs to link salaries to inflation and ordered it to raise salaries starting next year. He also said the minimum wage will be raised.

Inflation accelerated to 19.8 percent in August, the highest since 1990, as food and commodity prices soared after the government removed fuel subsidies this year, causing diesel and kerosene prices to nearly double in the first six months.

Unemployment fell to 12 percent in the third quarter from 12.5 percent in the previous quarter and 14.3 percent a year earlier.

Abdullah said the government will implement a social security net that guarantees financial aid to those who need it, and it will also seek to expand health care, in cooperation with private industry.

The monarch said he directed the government to take the ``necessary steps to promote and attract investment'' from Persian Gulf countries.

Foreign direct investment in Jordan may increase as much as 27 percent this year to 3 billion dinars as the country benefits from the Middle East's booming oil wealth, Jordan Investment Board Chief Executive Officer Maen Nsour said on March 3.

Investment in the country, which has no natural resources, advanced to 2.2 billion dinars last year from 1.8 billion dinars in 2006 as investors gained from incentives such as tax exemptions, according to the Jordan Investment Board.

About half of last year's investment was by Gulf states in telecommunications, construction, tourism and health care.

To contact the reporter on this story: Massoud A. Derhally in Amman, Jordan, at mderhally@bloomberg.net