The International Monetary Fund said Jordan’s economy has continued to demonstrate resilience despite regional challenges, describing the government’s economic reform program as “on track” despite the impact of the regional conflict and heightened uncertainty.
According to the IMF’s fifth review of Jordan’s Extended Fund Facility (EFF), economic activity remained resilient throughout 2025, supported by steady domestic demand and improved performance across several sectors. Inflation remained low, while foreign exchange reserves stayed at comfortable levels.
The IMF noted that the government made significant progress in implementing its reform agenda, meeting all quantitative performance criteria through the end of December 2025, as well as most indicative targets through December 2025 and March 2026.
The report said Jordan’s economy has faced additional pressures from the regional conflict, including weaker tourism activity, slower trade, higher oil prices, and increased electricity generation costs, prompting the Fund to revise some of its economic forecasts.
The IMF lowered its 2026 economic growth forecast for Jordan to 2.7%, down from its previous projection of 2.9%, while expecting growth to accelerate to 3.1% in 2027, supported by continued economic reforms and the launch of major investment projects.
Average inflation is projected to reach 2.5% in 2026, driven mainly by higher energy and food prices, while remaining relatively low compared with many other economies.
The Fund said the government’s fiscal policy remains focused on placing public debt on a downward trajectory. Fiscal performance in 2025 exceeded expectations, with the primary deficit reaching 1.6% of GDP, compared with a target of 1.9%.
Public debt stood at 83.6% of GDP at the end of 2025, while the government reaffirmed its commitment to gradually reducing it to 80% of GDP by 2028.
The report noted that the regional conflict is expected to temporarily widen the fiscal deficit during 2026 because of higher energy costs and lower revenues. However, the government has pledged to manage these pressures by reprioritizing expenditures, securing additional budget grants, and gradually passing higher global oil prices on to domestic fuel prices.
On the external front, the IMF said Jordan’s foreign exchange reserves remained strong, reaching approximately 132% of the IMF’s Assessing Reserve Adequacy (ARA) metric during 2025 and continuing to increase during the first months of 2026, supporting the stability of the Jordanian dinar and maintaining market confidence.
The Fund also praised the Central Bank of Jordan for maintaining a prudent monetary policy, preserving the dinar’s peg to the U.S. dollar, closely monitoring domestic and global market developments, and remaining prepared to take additional measures to safeguard monetary and financial stability.
The report highlighted the resilience of Jordan’s banking sector, supported by strong capital, liquidity, and asset quality. The capital adequacy ratio reached 17.8%, while the non-performing loan ratio remained stable at 5.5% at the end of 2025.
The IMF emphasized that continued structural reforms remain essential for boosting economic growth and creating jobs. It commended the government’s progress in modernizing tax administration, expanding digital government services, reforming the electricity and water sectors, and improving the business environment.
According to the report, the government has completed the digitalization of 80% of government services eligible for automation, adopted the State Ownership Policy, approved pension reform measures, and submitted several reform-related laws to Parliament, including legislation on competition, insurance contracts, and amendments to the Social Security Law.
The IMF also said the Resilience and Sustainability Facility (RSF) program remains on schedule, with continued progress in reforms related to energy, water, climate risk management, and strengthening the healthcare system’s emergency preparedness.
The report warned that ongoing regional tensions remain the principal risk to Jordan’s economy because of their potential impact on tourism, trade, and global energy prices. Nevertheless, it stressed that continued international support, the government’s commitment to reforms, and strong foreign exchange reserves significantly enhance Jordan’s ability to withstand these risks.
The IMF concluded that the Jordanian authorities remain fully committed to implementing the economic program, adding that the country’s strong performance justifies completing the fifth review of the Extended Fund Facility and the second review of the Resilience and Sustainability Facility while continuing to support Jordan’s reform agenda.
Al Mamlaka
