Jordan's Rifai Named Premier, Vows to Make Economy a Priority

By Massoud A Derhally

Dec. 9 (Bloomberg) -- Samir Rifai, a former minister of Jordan’s Royal Court, was appointed prime minister by King Abdullah and said he will make the economy a priority.

The appointment of Rifai, 43, comes as Jordan, a U.S. ally, deals with a slowing economy and dwindling foreign investment. He was previously chief executive officer of Jordan Dubai Capital, an affiliate of Dubai International Capital. Rifai has a bachelor’s degree from Harvard University and a master’s degree from Cambridge University.

“The economy will be one of our priorities,” Rifai said in a telephone interview after his appointment. “We will be looking at the particulars set out by his Majesty in the royal decree in detail and we will be addressing each and every point comprehensively.”

The king asked Rifai to form a new government after the resignation today of Nader Dahabi’s cabinet. The monarch dissolved parliament on Nov. 23 and said today that legislative elections must be held no later than the last quarter of 2010.

“We began years ago a reform and modernization process, and we are determined to continue this process,” Abdullah told Rifai, according to a Royal Courtstatement on the state-run Petra news agency. “We want a government that works in confidence and transparency and team spirit serving the public without fear of making decisions.”

Rifai is the son of Zeid Rifai, a former prime minister and currently senate president.

The new prime minister “is well-educated, highly connected, open-minded, knows the problems and the challenges of the country close-up, and has an appropriate private-sector mentality,” Nashat Masri, a partner at Foursan Group, a Jordanian private equity firm and son of a former prime minister, said in a telephone interview.

Performance Targets

The monarch said Rifai’s new government should set specific targets for each ministry with clear criteria to assess performance.

The economy slowed to a 2.8 percent annual growth rate in the second quarter, half the rate for all of 2008. At the same time, the country received 144.5 million dinars ($204 million) in foreign grants in the first 10 months of 2009, a 71 percent drop amid the global financial crisis, according to Finance Ministry data.

“The government is hunkering for a long recession and these dramatic changes in the political order appear to be prompted by growing alarm at the country’s economic prospects,” Robert Powell, an economist at the Economist Intelligence Unit in New York, said today in a telephone interview. “Although Jordan has ridden out the recession and the global financial crisis relatively well its huge reliance on foreign aid and investment leaves it vulnerable.”

Tax Plans

Lawmakers in the 110-seat parliament have resisted legislation proposed by the cabinet, such as a social security bill and a new corporate tax law to spur foreign investment.

The government had aimed to cut taxes to stimulate foreign investment, which dropped 65 percent to 310.3 million dinars in the first half of the year from the same period a year earlier.

The plan would have reduced company taxes to 12 percent, from a range of 15 percent to 35 percent, except for banks, insurance and mining companies, which would pay at a 25 percent rate, outgoing Finance Minister Bassem Salem said in an April interview. The personal income tax rate would have changed to 12 percent, from a range of 5 percent to 25 percent, and customs tariffs would have become streamlined.

The new government will need to “stimulate domestic economic activity, which means overwhelming changes to the business environment including revisions to the corporate tax law and simplification of tax system and streamlining bureaucracy,” Powell said.