| Summary/Abstract |
The fall of international oil prices by the mid-1980s and the associated economic downturn of the oil-rich countries of the Gulf represented a turning point in the economic history of Jordan, which has been historically dependent on international aid and workers’ remittances. Expansionary policies, failing to recognize the reduced inflow of external rent, led to an unprecedented rise in public debt. The situation culminated in 1989 in a deep financial crisis which induced Jordan to start a comprehensive economic reform program, inspired by the principles of the Washington Consensus. This study aims at investigating the emergence and main sources of Jordanian public debt, focusing on its external components. Based on archival research and interviews with experts, the study analyses the main reasons behind the rapid public debt increase in the second half of the 1980s and discusses its sustainability in relation to main creditor nations, negotiations with the donor community, conditionality of support, and implementation of reforms. The analysis reveals that before the 1989 crisis, there was no centralized management of public debt and debt was contracted to finance the needs of a bloated state apparatus and was not linked to comprehensive development strategies.
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