IMF lauds Jordan’s economic strides, makes $343m available

(Photo: IMF Facebook)
AMMAN  — The International Monetary Fund (IMF) praised Jordan's continuous effective policy response to challenging external factors. This came after the IMF completed its fifth review of Jordan's program supported by the Extended Fund Facility, the Jordan News Agency, Petra, reported.اضافة اعلان

 The completion of the review will make the equivalent of $343 million immediately, bringing the total IMF disbursements to Jordan since the start of 2020 to about $1.699 billion. This includes purchasing about $407 million in May 2020 under the Rapid Financing Instrument.

Jordan's four-year extended arrangement amounting to the equivalent of $1.293 billion, or about 270 percent of Jordan's quota in the IMF, was approved by the IMF's Board on March 25, 2020. It was later amended on June 30, 2021, to reach around $1.494 billion, equivalent to 312 percent of Jordan's quota in the IMF.

 According to an IMF statement, its stepped-up donor support was crucial to helping Jordan navigate the struggles of elevated commodity prices and tightening global financial conditions as it continues to shoulder the responsibility of hosting 1.3 million Syrian refugees.

It added that continued post-COVID recovery and positive spillovers from the region led to stronger growth in 2022–23. However, the medium-term outlook is weighed down by elevated commodity prices, tightening financial conditions, and a slowing global economy.

According to the IMF, GDP growth is projected to remain at around 2.7 percent in 2022–23, up from 2.4 percent in the fourth review. Inflation, projected at 4.4 percent for 2022, has increased but remains moderate and should ease in the period ahead.

The banking system remains resilient to shocks, it said.

In terms of electricity, the IMF said that financial challenges in the electricity sector are exacerbating fiscal pressures as subsidies have increased considerably on the back of high international commodity prices.

 Unemployment for Jordanians remained elevated at 22.6 percent in 2022, with youth unemployment showing some decline but remaining high at nearly 50 percent. The statement added that the IMF's financial support seeks to alleviate some of these struggles.

Following the Executive Board discussion, Deputy Managing Director and Acting Chair Kenji Okamura said: "Fiscal performance has been strong, on the back of sustained legislative and administrative reforms to reduce tax evasion and avoidance."

 "The authorities have also replaced untargeted and fiscally unaffordable fuel subsidies with cash transfers to protect the most vulnerable segments," Okamura added.

He noted that the planned gradual fiscal consolidation and efforts to improve public investment management and monitor fiscal risks would continue to support debt sustainability.

 "Monetary policy is appropriately anchored in safeguarding the peg. The financial sector remains healthy, and the Central Bank of Jordan continues to closely monitor banks' asset quality. Subsidized lending schemes should become more targeted and be gradually phased out as the recovery entrenches," Okamura explained.

 To further enhance the AML/CFT regime, Okamura said, the authorities are committed to implementing the remaining items in the action plan to exit the FATF's watch list.

 The IMF official underlined that electricity and water sector reforms are critical for preserving the sustainability of public finances.

 "Timely implementation of the action plan prepared in consultation with development partners is key to credibly reduce NEPCO's deficits. Strong policy efforts are also needed to address water scarcity and the persistent losses and arrears of the water sector. To this end, the recent adoption of the financial sustainability roadmap for the water sector is welcome," Okamura added.

 "Achieving strong and inclusive growth rests on steady progress on structural reforms to support female labor force participation, enhance youth employment and labor market flexibility, promote competition, reduce the costs of doing business, and strengthen governance and transparency," Okamura concluded.

Read more Business
Jordan News