AMMAN — An
International Monetary Fund (IMF) team reached an expert-level agreement with the Jordanian government on
the fifth review of the performance of the Kingdom’s economic reform program,
the IMF said in a statement, Al-Mamlaka TV reported.
اضافة اعلان
The IMF team is headed by its Advisor in the Middle
East and Central Asia Department Ali Abbas.
The IMF said in a statement that the reforms are
planned and implemented by the Jordanian government, and supported by the
“Extended Fund Facility” agreement with the IMF, which lauded Jordan for
exhibiting a “strong commitment to continue implementing the economic reform
program”.
The IMF said that the Kingdom’s economic recovery in
the wake of the COVID-19 is “gaining increased momentum”.
Following the review, the IMF envisages real GDP
growth to reach 2.7 percent in 2022, up from the 2.4 percent recorded during
the fourth review a year earlier.
The IMF asserted the need for the fiscal and
monetary policy to continue in order to enhance macroeconomic stability, while
supporting vulnerable groups in the face of a challenging external environment
as a result of high commodity prices, and tight global financial markets.
The IMF affirmed the Jordanian government’s
commitment to implementing structural reforms to achieve strong and inclusive
growth for all segments of society.
It said that includes improving labor productivity,
enhancing competitiveness, addressing the structural deficit in the electricity
sector, and the severe water scarcity, and meeting the requirements for
adapting to climate change.
Abbas said on Tuesday that the “prudence” of fiscal
and monetary policies helped maintain macroeconomic stability in the Kingdom,
and allowed it to access international markets, despite the turmoil in global
economic conditions.
Abbas expected that the government will reduce the
level of the primary deficit, excluding grants, by 0.7 percent of GDP to reach
3.7 percent of GDP in 2022.
The cost of subsidizing fuel and food will be
compensated by rationalizing spending on items that do not represent a priority
for Jordanians, or through improved revenue collection, such as curbing tax
evasion, according to the IMF. It praised the institutional and legislative
efforts made by the government to address tax avoidance.
Abbas said that the
Central Bank of Jordan raised
interest rates in line with the US Federal Reserve’s increase in the basic
interest rate for the purpose of maintaining the Jordanian dinar’s exchange
rate linked to the dollar, while keeping the balance of foreign reserves at
appropriate levels.
The IMF pointed to major financial challenges facing
the electricity sector, in “light of the obstacles imposed by the rise in
global oil and gas prices”.
The deficit of the
National Electric Power Company (NEPCO) increased in 2022, partly due to
reductions in the Bulk Supply Tariff paid by the electricity distribution
companies, although long-term contracts to import gas for electricity
generation mitigated the impact of the sharp rise in gas prices, according to
IMF.
“With the entry into force of the agreement to
purchase electricity generated from oil shale, the financial balance of the
NEPCO will come under greater pressure next year,” the IMF statement said.
The IMF said that
Jordan is preparing an action plan to decisively address the financial
challenges facing NEPCO, in cooperation with unspecified development partners.
The Ministry of Finance said in its financial
bulletin for September that the debt of
NEPCO and the Jordan Water Authority
amounts to about JD7.7 billion.
With regard to the
water sector, the Cabinet’s approval of a roadmap for the financial
sustainability of this sector represents an “important step” towards addressing
water scarcity, while containing the deficits that the sector suffers from, and
the payment of financial arrears.
Finance Minister Mohamed Al-Ississ said on Tuesday
that Jordan’s program with the IMF is a “national program with distinction,
based on national goals set by the government to raise the competitiveness of
the economy” with the aim of creating jobs, raising the level of transparency,
and improving financial accountability and the level of government services.
The minister explained during a press conference
that the IMF-supervised program seeks to “strengthen the social protection
network and maintain financial and monetary stability, something that many
countries have lost in light of the difficult economic conditions that the
world is going through, from recession accompanied by inflation during the
COVID-19 pandemic, and the Russian-Ukraine crisis.”
He attested that “Jordan has maintained financial and
monetary stability.”
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