Press Release: IMF Executive Board Completes the Sixth Review Under the SBA for Jordan

May 4, 2015

Press Release No.15/185
May 4, 2015

On April 24, 2015, the Executive Board of the International Monetary Fund (IMF) completed the sixth review of Jordan’s three-year economic program supported by a Stand-By Arrangement (SBA). The completion of the sixth review enables the immediate release of SDR 142.083 million (about US$200 million), bringing total disbursements under the program to SDR 1.08 billion (about US$1.58 billion). The 36-month SBA in the amount of SDR 1.364 billion (about US$2 billion) was approved by the Executive Board on August 3, 2012 (See Press release No. 12/288).

In completing the sixth review, the Executive Board approved the authorities’ requests to re-phase the undrawn Fund purchases in two disbursements over the remaining program period; and for waivers of applicability for the end-March 2015 performance criteria on the primary fiscal deficit and the combined public deficit.

Following the Executive Board’s discussion on Jordan, Mr. Mitsuhiro Furusawa, Deputy Managing Director and Acting Chair, said:

“Jordan continues to persevere in a difficult regional environment. Conflicts in neighboring countries and hosting refugees continue to put social and economic pressures on the economy, including on the fiscal and external accounts. Nonetheless, growth is picking up, inflation is low, the fiscal and external positions are gradually strengthening, and the banking system is sound overall.

“Fiscal adjustment will continue in view of the high public debt. In particular, the windfall from lower oil prices, which is expected to be temporary, will be saved to reduce debt and rebuild fiscal buffers. A prudent 2015 budget together with the adoption of the new income tax law and other measures will bring about most of the adjustment in 2015.

“The authorities will continue to implement their energy strategy aimed at bringing the electricity company back to cost recovery by 2018. Progress on new energy sources remains on track and, most importantly, the liquefied natural gas terminal is expected to start operating in mid-2015. This progress, together with the planned fiscal adjustment, should bring debt on a downward path starting in 2016.

“The central bank is appropriately focused on preserving comfortable reserve buffers while being mindful of external developments. The authorities will further strengthen financial supervision, including in the nonbank sector.

“Despite the progress made in structural reforms, more is needed to support growth and reduce persistently high unemployment. The focus should be on broad-based labor market policies, especially to increase female labor market participation and reform public sector hiring and compensation practices. There is also scope for further improving the business climate and strengthening public institutions.”

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