Despite global turmoil, tight monetary policies anchored Jordan's economy

Aqaba Container Terminal ACT
(File photo: Jordan News)
AMMAN – On Saturday, Adel Al-Sharkas, Governor of the Central Bank of Jordan (CBJ), emphasized that the CBJ has successfully established the foundations of monetary stability in the Kingdom over the last two decades, despite numerous challenges, such as the global financial crisis in 2008, the Arab Spring in 2011, the COVID-19 pandemic in 2020, and, most recently, the global inflation surge.اضافة اعلان

During a Jordanian Economic Forum (JEF) session, Sharkas stated that economic policies, particularly monetary policy, are intended to keep the economy on pace, Al-Mamlaka TV reported.

In response to the recent surge in inflation, the CBJ decided to hike interest rates in order to maintain monetary stability and reduce inflationary pressures.

The results of the CBJ's cautious monetary policies during the last two years, together with its credibility in preserving consistency between local, regional, and international interest rates, have considerably contributed to increased trust in the national economy. This confidence is shown in the steady fall in the dollarization rate, expected to reach 17.9 percent by the end of 2023, down from rates of over 20 percent before the COVID-19 outbreak.

In addition to maintaining record levels of foreign reserves, which currently total $18.2 billion and are enough to cover eight months of the Kingdom's imports of goods and services, the CBJ has prioritized monetary stability.

The inflation rate, which was 2.1 percent in 2023, fell to 2 percent in January of this year after reaching 4.2 percent in 2022. These rates are appropriate for economic activity, promoting the Kingdom's savings and investment environment.

Despite tight monetary policy and rising interest rates, credit facilities increased by 2.6 percent, equivalent to JD838 million, bringing the total to over JD33.4 billion by the end of 2023.

Jordan's monetary stability has been a foundation for strong economic progress in recent years, particularly in 2023. This achievement occurred in the face of a fragile global environment and widespread uncertainty. Notably, Jordan successfully completed its sixth and seventh IMF evaluations, indicating its commitment to undertaking economic reforms.

Furthermore, the government has switched to a new economic program with the IMF, allowing it to continue its economic reform plan uninterrupted. Various credit rating organizations have acknowledged Jordan's solid credit outlook. Furthermore, the Kingdom has been removed from the list of countries under investigation in anti-money laundering and counter-terrorism financing in 2023.

Sharkas emphasized that 2023 was not only marked by significant achievements, but also by positive performance across several economic indicators. Tourism revenue stands out among these indicators. The projections indicate that the economy will grow by 2.6 percent in 2023, with expectations of stability at this rate in 2024. These projections assume that the repercussions of the war in Gaza will not worsen and that tensions in the Red Sea will not escalate, both of which impact shipping and insurance costs.

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