The International Monetary Fund’s second review

Salameh daraawi
Salameh Darawi (Photo: JNews)
It is not easy for Jordan to get additional support from the International Monetary Fund (IMF) under the current difficult conditions brought about by the COVID-19 pandemic, throwing off the budget projections of last year, which has seen a contraction of 1.9 percent.اضافة اعلان

The second review of the IMF mission resulted in the approval of granting Jordan further facilitations, valued at $200 million. It also sends a positive message to donors and the international community on the necessity of supporting the Kingdom, to enable it to move forward with the correctional program, as agreed, despite the exceptional difficulties and burdens caused by the pandemic.

There is no doubt that a political component, as well as Jordan’s ties, played a part in enhancing the support of international institutions to the Kingdom, the foremost of which is the IMF.

But the government also played a convincing part for the international community of being adamant on moving ahead with economic reforms agreed upon with the fund, as the second review revealed that the Kingdom is still on a steady pace in the achievement of the structural program, covering the duration between 2020 and 2021.

It also showed strong progress in key reforms, the most important of which the is tax reform that resulted in significant figures in terms of combating tax evasion and the expanding the taxpayer base.

This resulted in unprecedented growth in the Treasury’s tax revenues, even during the pandemic and despite its economic repercussions on the various sectors, which impressed the IMF mission. This has led them to push the taxation success story on the rest of the financial institutions, topped by the customs department, which will probably undergo drastic structural reform in the coming weeks.

The second review provided cover for the government to get financial and administrative support from the IMF, in order to face the consequences of the pandemic, particularly as it pertains to the protection of social segments most affected by the pandemic, which is the cause for the government’s increased spending on this issue, with support from the IMF.

The IMF usually rejects any new economic measure, unless it has allocations in the budget, but the fund and the government were on the same page regarding the prioritizing economic policy to deal with the current alarming COVID-19 wave and mitigating its social and economic impacts.

The matter is not limited to increasing the appropriations of social protection via the IMF. The success of the second review provided the government with studied measures for its plan to confront the effects of the pandemic, by setting financial objectives for 2021 that seek to support economic recovery and job creation. Furthermore, they ensure more room for increasing social protection spending, while maintaining Jordan’s debt-bearing capacity and remaining compliant with the Kingdom’s external financial obligations without deferment or default, particularly since Jordan was able last year, despite all challenges, to fully pay its domestic and foreign financial obligations without delay.

In my opinion, the most important thing to come out of the fund’s second review is its message to the international donor community and to Jordan’s allies of the necessity to continue supporting Jordan and provide it with the financial assistance it needs to face the various pressures, up until reaching the recovery stage and returning to positive growth.

Foreign donor assistance, including the provision of vaccines and supporting the various reform priorities agreed upon in the program, remain critical for aiding Jordan in overcoming the pandemic and moving towards an economically safe state.

Those who believe that the Jordanian economy is strong enough to walk a solo path without foreign aid in general, and without IMF support in particular, are mistaken, as the international community cannot provide any form of assistance, including concessional loans, without the blessing of the fund.

Hence, those who do not like Jordan’s relationship with the fund are welcome to offer solutions for securing the necessary finances to fund the state’s various expenses first, and then they are free to criticize as they will.