## 1jorea2025001-print-pdf

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### Executive summary — context and program status
- Jordan maintains macroeconomic stability amid regional conflicts and global uncertainty due to steadfast policies and strong international support.
- EFF-supported program status:
  - All quantitative performance criteria for the third review were met.
  - All indicative targets for end-December 2024 were met; most indicative targets for end-March 2025 were met.
  - Three out of four structural benchmarks for the third review were met.
  - Upon completion of the third review, a purchase of SDR 97.784 million will be made available to Jordan.
- Staff supports the authorities’ request for an RSF arrangement with access of 150 percent of quota (SDR 514.65 million).

### Recent developments and near-term outlook
- Growth and activity:
  - Growth for 2024: 2.5 percent.
  - Quarterly growth in 2024 rose from 2.2 percent in Q1 to 2.7 percent in Q4.
  - Growth projection for 2025: 2.7 percent.
  - Outlook: pick-up to over 3 percent in coming years conditional on regional stabilization and reform implementation; major investment projects may strengthen growth once implemented.
- Prices and monetary stance:
  - Inflation in 2024: below 2 percent.
  - Inflation projection for 2025: just over 2 percent; marginal pickup in 2026 expected.
  - Central Bank stance: commitment to monetary stability and the exchange rate peg to the U.S. dollar.
- External sector and reserves:
  - Current account deficit in 2024: widened to almost 6 percent of GDP.
  - Gross international reserves: US$20 billion; reserve adequacy exceeding 100 percent of the Fund’s ARA metric.
  - Sovereign spreads: widened to over 300 basis points recently.
- Labor market and social indicators:
  - Unemployment rate: 21 percent in 2024.
  - Youth unemployment rate: 46 percent.
  - Female unemployment rate: 31 percent.
  - Syrian refugees: out of nearly 600,000 registered with UNHCR, around 58,000 returned to Syria (as of mid-April).

### Risks and scenarios
- Downside risks predominate:
  - Commodity price volatility could raise inflation via food and fuel prices.
  - Higher policy uncertainty and increased trade barriers could weaken global trade, investment, and growth.
  - Higher U.S. interest rates could raise Jordan’s borrowing costs.
  - Regional conflicts could flare up again, affecting sentiment and tourism.
  - U.S. financial support could be at risk (though recent assurances have reduced this risk).
- Specific downside scenario:
  - Announced reciprocal U.S. tariffs on Jordan, if implemented, would negatively affect exports and growth relative to the baseline; baseline incorporates a 10 percent U.S. tariff surcharge with no reciprocal measure on Jordanian exports.
- Upside factors:
  - Strong policy commitment to macroeconomic and financial stability and international support.
  - Several planned large investment projects (e.g., AAC) could strengthen growth when implemented.
  - Lasting resolution of regional conflicts and increased regional cooperation could yield beneficial spillovers.

### Fiscal policy, outturns, and medium-term objectives
- 2024 fiscal outturns:
  - 2024 central government primary deficit (excluding grants and transfers to NEPCO and WAJ): 2.8 percent of GDP (below program target of 2.9 percent of GDP).
  - Combined public sector deficit in 2024: 4.5 percent of GDP (outperforming target of 4.8 percent of GDP).
  - General government primary deficit (excluding grants) in 2024: 1.0 percent of GDP (surpassing target of 1.3 percent of GDP).
  - Public debt stabilized at just over 90 percent of GDP in 2024.
- 2025 budget and targets:
  - 2025 central government budget adopted by Parliament aligns with program target of reducing the primary deficit (excluding grants and transfers to NEPCO and WAJ) to 2 percent of GDP (JD 812 million).
  - Expected combined public deficit in 2025: JD 1,438 million, or 3.6 percent of GDP.
  - Authorities committed to gradual fiscal consolidation to place public debt on a downward path and to reduce public debt to below 80 percent of GDP by 2028 via ~1 percent of GDP annual fiscal adjustment.
- Revenue and PFM measures:
  - E-invoicing of all sales transactions (met SB for March 2025).
  - Continued digitalization of tax collection, broader implementation of transfer pricing rules, enhanced anti-smuggling initiatives, shift toward risk-based auditing.
  - Medium-Term Revenue Strategy (MTRS) under development (SB for September 2025).
- Contingency planning:
  - Authorities prepared to reduce non-priority spending and take additional revenue measures if downside risks materialize.
  - Requested modification of end-June 2025 PCs for central government primary balance and combined public balance to reflect earlier capital project start.

### Utilities, sectoral reforms, and SOE oversight
- Electricity sector:
  - NEPCO losses in 2024 limited to 1.1 percent of GDP (vs. expected 1.3 percent of GDP).
  - Time-of-use (ToU) tariffs cover 30 percent of electricity consumption effective January 1, 2025 (met SB for January 2025); full coverage expected by September 2026 (SB for September 2026).
  - NEPCO 2025 loss target: JD 435 million (1.1 percent of GDP).
  - AECC proposal: Automated Energy Control Center proposed as new SB for September 2027 (and contracting SB for September 2026 in other text).
  - Challenges: declining demand from rising RE, costly long-term PPAs, guaranteed returns for distribution companies, electricity tariffs high relative to peers.
- Water sector:
  - Water sector losses limited to 0.6 percent of GDP, in line with projections.
  - NRW reduction: from 50 percent in 2022 to 45 percent by end-2024; target 37 percent by 2030; 25 percent by 2040.
  - Financial Sustainability Roadmap (FSR) aims for O&M cost recovery by 2032 and full O&M plus BOT capital charges recovery by 2042 (RM7).
  - Aqaba-Amman Conveyance (AAC) project: preferred bidder selected; financial closure anticipated by end-2025; commissioning targeted by end-2029/2030 in different sections; AAC expected to deliver 300 million m3 per year when completed.
  - Yarmouk Water Company (YWC) to conclude performance-based management contract tender (RM1).
  - Private participation in wastewater: tenders for O&M to cover at least 50 percent of treatment capacity (excluding As-Samra); target 35 percent reuse for irrigation by 2027 (RM8).
- SOE and PPP oversight:
  - Centralized PPP contract database with analytical tools established.
  - Adoption and publication of an SOE ownership policy; monitoring assigned to the Fiscal Commitments and Contingent Liabilities unit (SB for March 2026).
  - JONEPS rollout aiming for full coverage by June 2026; integration with GFMIS by end-December 2025.

### Monetary and financial sector stance and reforms
- Central Bank of Jordan (CBJ):
  - Maintained the peg to the U.S. dollar and adequate reserve buffers; peg remains effective nominal anchor.
  - Gross usable international reserves (memorandum): 17,319 ($ millions, 2023), 18,104 (2024), 20,282 (2025).
  - Net international reserves (memorandum): 15,352 ($ millions, 2023), 15,928 (2024), 18,170 (2025).
  - Reserve adequacy: just over 100 percent of the Fund’s ARA metric.
  - CBJ stands ready to adjust policy rates and will gradually reduce concessionality of its preferential lending scheme (initially +50 basis points on new loans when global volatility reduces).
- Banking sector indicators (end-2024):
  - System-wide capital adequacy ratio: 18 percent (regulatory minimum: 12 percent).
  - Non-performing loans (NPL): 5.6 percent.
  - NPL coverage ratio: 74.5 percent.
- Financial sector oversight and AML/CFT:
  - Post-FATF grey-list removal, CBJ enhanced risk-based AML/CFT supervision and established a national beneficial ownership register.
  - Planned SBs and reforms:
    - Pillar 2 risk methodologies (SB for November 2025).
    - Align prudential requirements for concentration risk and related party exposure with Basel Core Principles (SB for November 2026).
    - Depositor compensation procedures with JODIC (SB for November 2026).
    - Update credit risk regulations (proposed SB for November 2027).
    - Develop resolution plans for major cross-border D-SIBs.

### RSF request: objectives, pillars, access, and use
- Objective: address long-term vulnerabilities in water and electricity sectors; enhance pandemic preparedness; strengthen balance of payments stability, economic resilience, and policy space.
- Staff recommendation:
  - Support for RSF arrangement with access level of 150 percent of quota (SDR 514.65 million).
  - Proposed RSF duration: 30 months, to run concurrently with the remaining EFF (set to expire January 2028).
  - Eligibility: Jordan eligible for RST financing with Group C interest rates applied.
  - Use of funds: budget support to substitute for more expensive financing addressing vulnerabilities in water, energy, and health sectors.
- RSF reform pillars and selected measures (RMs):
  - Pillar I — Energy and Water (selected RMs):
    - RM12: Issue EOIs for hydro-pumped storage and a 200 MW PV plant; contingent EOI for battery storage; pilot storage tender for at least 40MWh before October 2027.
    - RM11: MEMR demand response review by June 2027; implement action plan by October 2027 after ToU tariffs capture 30 percent of consumption.
    - RM7: Updated Water Sector FSR for 2026–2042; O&M cost recovery by 2032; full recovery by 2042; annual NRW reduction target of at least 2 percentage points.
    - RM1: Performance-based management contract for YWC.
    - RM8: Tenders for wastewater O&M covering at least 50 percent of capacity; target 35 percent reuse for irrigation by 2027.
  - Pillar II — Fiscal and Financial Resilience (selected RMs):
    - RM2: MOF budget circular requiring climate assessment compliance and publish summary in 2026 budget documents.
    - RM4: GIMC centralized asset register for SOE infrastructure.
    - RM9: Enhanced Fiscal Risk Statement with climate scenarios and contingent liabilities analysis by May 2027.
    - RM3: CBJ secondary regulations on climate disclosures by May 2026.
  - Pillar III — Pandemic Preparedness (selected RMs):
    - RM5: MOH emergency-ready health benefits instructions by November 2026 (following end-2025 bylaw).
    - RM6: MOF codify emergency financing procedures by November 2026.
    - RM10: National pandemic governance framework by May 2027.
    - RM13: MOF data reporting templates and quarterly monitoring/reporting of health emergency spending by November 2027.

### Financing outlook, external financing gap, and Fund exposure
- 2024–27 key financing figures (In million of U.S. dollars) — presented as series across years (rows aligned as in source):
  - Financing Gap: 2,231; 2,663; 2,451; 2,823; 2,246
  - Official Financing: 2,385; 2,665; 2,451; 2,823; 2,247
  - IMF EFF disbursement (EFF): 196; 451; 260; 261; 262
  - Identified official public external financing: 2,190; 2,214; 2,191; 2,006; 1,182
    - World Bank: 1,081; 1,081; 1,081; 1,014; 704
    - European Union: 269; 0; 269; 171; 120
    - EIB: 108; 126; 108; 108; 43
    - Others 1/: 731; 744; 733; 713; 315
  - Unidentified official public external financing: 0; 0; 0; 556; 803
  - Memorandum Item:
    - IMF RSF disbursement: 158; 0; 106; 212; 371
    - Eurobond issuance or commercial borrowing: 750; 0; 750; 1,000; 1,000
  - Note: "Others 1/" include bilateral and multilateral financing from Canada, France, Germany, Italy, Japan, Kuwait, Qatar, Saudi Arabia, UAE, AIIB, AMF, IsDB and OPEC.
- Fund exposure and capacity to repay (projected peaks and peaks in debt service to Fund):
  - Fund exposure projected to peak in 2027 at:
    - 4.5 percent of GDP
    - 10.6 percent of exports of goods and services
    - 12.7 percent of reserves
    - 630 percent of quota
  - Debt service to the Fund will peak in 2029 at:
    - 98.2 percent of quota
    - 22.0 percent of public external debt service
    - 2.5 percent of government revenue
    - 1.5 percent of exports of goods and services
  - RSF repayments would start in 2036; debt service would remain low in GDP terms.
  - Risks to capacity to repay: deterioration in external environment, political challenges to fiscal consolidation and reforms; mitigant: Jordan’s strong track record in implementing sound policies.
- External financing needs and external debt:
  - Gross external financing need (in percent of GDP): 2024: 11.3; 2025: 12.8; 2026: 13.6; 2027: 12.8; 2028: 11.3; 2029: 10.0; 2030: 10.9.
  - Baseline external debt (percent of GDP): 2024: 87.5; 2025: 87.8; 2026: 87.5; 2027: 86.8; 2028: 83.1; 2029: 78.2; 2030: 74.1.

### Debt sustainability assessment (DSA) — baseline and risks
- Final staff assessment: Moderate overall risk of sovereign stress.
- Baseline public debt projections (Percent of GDP):
  - 2024: 90.2
  - 2025: 89.7
  - 2026: 87.5
  - 2027: 83.7
  - 2028: 79.6
  - 2029: 76.3
  - 2030: 73.4
  - Decline toward just below 80 percent of GDP by 2028 contingent on fiscal consolidation, development partner support, and market access.
- Key vulnerabilities and assumptions:
  - Residual debt maturity: 5.9 years.
  - Public debt roughly split between foreign and local currency; SSIF assets: JD 16.7 billion (44 percent of GDP) in March 2025.
  - Gross financing needs are elevated in peak years (e.g., 2026: 19.4 percent of GDP) driven by amortization and high interest costs.
  - Downside risks: tighter global financial conditions, persistence/intensification of regional conflicts, commodity shocks, failure to resolve NEPCO/WAJ deficits.
- Policy recommendations to preserve sustainability:
  - Continue fiscal consolidation and revenue mobilization.
  - Accelerate structural reforms addressing NEPCO deficits and the water crisis.
  - Reform pensions to improve long-term sustainability.
  - Maintain adequate FX reserves and secure continued development partner support; diversify donor base.

### Structural reforms and inclusivity measures
- Business environment and competition:
  - Amend competition law (met SB for October 2025).
  - Streamline business registration and closure; ensure sectoral license approvals do not exceed 30 days.
  - Digitalize 80 percent of automatable government services (revised SB for December 2025).
  - Further relax restrictions on foreign ownership.
- Labor market and inclusion:
  - Amend Labor Law and Social Security Law (met SBs for September 2025).
  - Streamline work permit procedures: cap approval times at 15 working days; reduce annual fee to JD 1,500.
  - Harmonize public sector pay scales between men and women; improve public transport services to support female participation.
- Governance and transparency:
  - Criminalize illicit gains from public procurement.
  - Require disclosure of beneficial ownership information per new registry regulations.
  - Continue roll-out of electronic public procurement (JONEPS) and publish audited financial statements for water companies (SB for September 2025).

### Climate, water, and energy priorities (Annex III highlights)
- Water scarcity:
  - Renewable water resources: 61 cubic meters per capita annually (well below 500 m3 threshold).
  - Target: reduce NRW from 53 percent in 2022 to 25 percent in 2040.
- Renewable energy progress and targets:
  - Share of RE in electricity supply increased from less than 1 percent in 2014 to about 27 percent in 2024.
  - Target: 30 percent (or 31 percent in other references) electricity from renewables by 2030; longer-term target of 50 percent.
  - NDC target: reduce GHG emissions by 31 percent by 2030 (5 percent unconditional, 26 percent conditional).
- Financing needs for climate goals:
  - Updated NDC financing need: US$7.5 billion (about 16 percent of GDP).
  - World Bank estimate for resilient low-carbon projects: US$9.5 billion (about 20 percent of GDP) by 2030.
- RSF catalytic role: support reforms to mobilize private financing, embed climate risk in PIM/PFM, and catalyze green and resilience investments.

### Pandemic preparedness (Annex IV and program RMs)
- Key diagnostic findings:
  - Gaps in pandemic preparedness exposed by COVID-19: reliance on one-off emergency orders, disruptions to primary healthcare, procurement and financing challenges.
  - Public health spending declined from 5.5 percent to 2.5 percent of GDP over past decade; out-of-pocket spending over 25 percent of total health spending.
- RSF-supported pandemic reforms:
  - RM5: Adopt instructions mandating emergency-ready health benefits package by November 2026 (WHO support).
  - RM6: MOF to codify emergency financing procedures via addendum to Budget Manual by November 2026.
  - RM10: Adopt national pandemic governance and accountability framework by May 2027.
  - RM13: MOF to issue reporting templates and mandate quarterly monitoring and reporting of health emergency spending by November 2027.
- Development partner engagement: WHO, World Bank, Pandemic Fund, and others to provide technical and financial support.

### Program monitoring, reporting, and data provision
- Program monitored through semi-annual quantitative performance criteria, structural benchmarks, and quarterly indicative targets; definitions and data requirements in the TMU.
- Reporting commitments include timely fiscal tables, NEPCO/WAJ/water companies unaudited income statements and arrears, CBJ reserve and monetary data, monthly gas/LNG flows, and external debt records.
- Data dissemination lags specified (e.g., weekly data: no more than one week; national accounts statistics: three months).

*Source: IMF staff summary of chapter excerpts and annexes from the provided IMF country report PDF.*

### EXECUTIVE SUMMARY

### EXECUTIVE SUMMARY

### Context and program status
- Jordan maintains macroeconomic stability despite regional conflicts and global uncertainty, owing to steadfast policies and strong international support.
- The EFF-supported program remains firmly on track:
  - All quantitative performance criteria for the third review were met.
  - All indicative targets for end-December 2024 were met, and most indicative targets for end-March 2025 were met.
  - Three out of four structural benchmarks for the third review were met; steady progress is being made toward future structural benchmarks.
- Upon completion of the third review, a purchase of SDR 97.784 million will be made available to Jordan.

### Recent developments and outlook
- Growth and activity
  - Growth for 2024: 2.5 percent.
  - Quarterly growth in 2024 rose from 2.2 percent in Q1 to 2.7 percent in Q4.
  - Growth projection for 2025: 2.7 percent (revised upward slightly).
  - Growth is expected to pick up in the coming years, assuming regional stabilization and continued reform implementation.
- Inflation and monetary stance
  - Inflation in 2024: below 2 percent.
  - Inflation projection for 2025: just over 2 percent; marginal pickup in 2026 expected.
  - The Central Bank of Jordan remains committed to monetary stability and the exchange rate peg to the U.S. dollar.
- External sector and reserves
  - Current account deficit in 2024: widened to almost 6 percent of GDP.
  - Gross international reserves: US$20 billion, with reserve adequacy exceeding 100 percent of the Fund’s ARA metric.
  - Sovereign spreads widened to over 300 basis points recently.
  - Gross international reserves projected to remain at just over 100 percent of the Fund’s ARA metric.
- Sectoral developments
  - Exports: strong performance in goods exports, notably textiles and pharmaceuticals, partially offsetting weaker tourism receipts and lower fertilizer export values.
  - Fertilizer export values declined; export volumes rose.
  - Tourist arrivals showed signs of recovery late in 2024.
- Labor market and social indicators
  - Unemployment rate: 21 percent in 2024.
  - Youth unemployment rate: 46 percent.
  - Female unemployment rate: 31 percent.
  - Out of nearly 600,000 Syrian refugees registered with UNHCR, around 58,000 returned to Syria (as of mid-April).

### Risks and scenarios
- Downside risks are predominant:
  - Commodity price volatility could raise inflation via food and fuel prices.
  - Higher policy uncertainty and increased trade barriers could weaken global trade, investment, and growth.
  - Higher U.S. interest rates could raise Jordan’s borrowing costs.
  - Regional conflicts could flare up again, affecting sentiment and tourism.
  - U.S. financial support could be at risk, though recent assurances have reduced this risk.
- Specific risk: announced reciprocal U.S. tariffs on Jordan, if implemented, would negatively affect exports and growth relative to the baseline; the baseline incorporates a 10 percent U.S. tariff surcharge with no reciprocal measure on Jordanian exports.
- Upside factors:
  - Strong policy commitment to macroeconomic and financial stability and international support.
  - Several planned large investment projects could strengthen growth once implementation starts.
  - A lasting resolution of regional conflicts and increased regional cooperation could yield beneficial spillovers.

### Policy implementation and priorities under the EFF
- Fiscal policy
  - 2024 central government primary deficit (excluding grants and transfers to NEPCO and WAJ): 2.8 percent of GDP (below program target of 2.9 percent of GDP).
  - Combined public sector deficit in 2024: 4.5 percent of GDP (outperforming target of 4.8 percent of GDP).
  - General government primary deficit (excluding grants) in 2024: 1.0 percent of GDP (surpassing target of 1.3 percent of GDP).
  - Public debt stabilized at just over 90 percent of GDP in 2024.
  - Authorities committed to gradual fiscal consolidation to place public debt on a downward path while protecting social and capital spending and expanding targeted support to vulnerable households.
- Utilities and structural reforms
  - Financial performance of public utilities improved via revenue-raising and cost-saving measures.
  - Structural reform focus: enhancing the business environment and competition; increasing labor market flexibility and female labor participation; improving financial sustainability and efficiency in electricity and water sectors.
- Monetary and financial policies
  - The Central Bank of Jordan continues to safeguard the exchange rate peg and will take necessary policy actions to maintain monetary and financial stability.
- Program adjustments
  - Staff supports modification of performance criteria for the central government’s primary deficit and the combined public deficit to reflect changes in the central government budget’s cash flow within the year, and modification of the CBJ’s net international reserves PC to reflect stronger performance to date.

### RSF request and reform pillars
- Objective: support addressing long-term vulnerabilities in water and electricity sectors and enhance capacity to address public health emergencies and pandemics; strengthen balance of payments stability, economic resilience, and policy space.
- Staff supports the authorities’ request for an RSF arrangement with an access level of 150 percent of quota (SDR 514.65 million).
- Reform measures under the RSF focus on:
  - (i) enhancing the energy sector’s financial sustainability and energy efficiency;
  - (ii) improving the water sector’s financial sustainability and water management;
  - (iii) strengthening fiscal and financial sector resilience;
  - (iv) enhancing pandemic preparedness.

*IMF mission discussed these matters in Amman during April 6–17, 2025.*

### 13. The authorities remain committed to the 2025 fiscal targets, despite the challenging

### 13. The authorities remain committed to the 2025 fiscal targets, despite the challenging

### 2025 budget and near-term fiscal measures
- The 2025 central government budget, approved by Parliament in January, aligns with the program target of reducing the primary deficit (excluding grants and transfers to NEPCO and WAJ) to 2 percent of GDP.
- The budget is underpinned by the full-year effect of the revenue measures introduced in 2024 and further improvements in revenue administration, including:
  - e-invoicing of all sales transactions (met SB for March 2025).
  - continued digitalization of tax collection.
  - broader implementation of the new transfer pricing rules.
  - enhanced anti-smuggling initiatives: track-and-trace systems for alcohol and tobacco products and biochemical markers for fuel products.
  - shift toward risk-based auditing to improve compliance.
- Combined with continued improvements in the financial performance of public utilities and sustained surpluses of the SSC, these measures are expected to narrow the overall general government primary deficit (excluding grants) by nearly 1 percent of GDP, bringing it close to balance and supporting a reduction public debt to below 90 percent of GDP by end 2025.

### First quarter 2025 execution and contingency planning
- Fiscal policy remained on track in the first quarter of 2025; the end-March ITs for the central government and combined public balance were met.
- Given an earlier start of capital budget execution, the authorities are requesting a modification of the end-June PCs for the central government primary balance (excluding grants and transfers to public utilities) and the combined public balance.
- Authorities are prepared to take contingency measures if downside risks materialize, including reducing non-priority spending and taking additional revenue measures to ensure end-year targets are met.

### Medium-term fiscal consolidation and revenue strategy
- The authorities will continue a gradual fiscal consolidation over the medium term to reduce public debt and strengthen fiscal sustainability (MEFP ¶5).
- A fiscal adjustment of about 1 percent of GDP annually is needed to achieve the objective of reducing public debt to below 80 percent of GDP by 2028, while creating room for additional investment and social spending.
- The authorities are developing a Medium-Term Revenue Strategy (MTRS) (SB for September 2025), with IMF Fiscal Affairs Department support.
- Social spending needs remain high as donor support to shoulder the cost of hosting refugees continues to decline.

### Public utilities, SSC, and pension reform
- An actuarial review of the SSC is underway, supported by the International Labor Organization and World Bank, to inform parametric pension reform options (MEFP ¶6). An initial set of reform proposals is expected by end-2025.
- SSC surpluses and improvements in public utilities’ financial performance are central to near-term deficit reduction.

### Debt sustainability
- The attached debt sustainability analysis (Annex II) indicates public debt is assessed to be sustainable, contingent on authorities’ commitment to sound macroeconomic policies, continued development partner support, and market access.
- Risks include potential intensification of regional conflicts, changes in U.S. financial support, and sizable gross financing needs.

### Structural fiscal reforms and governance improvements
- Key reforms and progress (MEFP ¶7):
  - Performance-based salary-setting mechanism for all Category I civil service employees (met SB for December 2024).
  - Centralized PPP contract database with analytical tools to enhance fiscal risk analysis.
  - Rollout of Jordan’s National E-Procurement System (JONEPS) aiming for full coverage by June 2026; integration with Government Financial Management and Information System by end-December 2025.
  - 2024 Fiscal Risk Statement expanded coverage of contingent liabilities of the SOE sector.
  - Adoption and publication of an SOE ownership policy; assignment of monitoring to the Fiscal Commitments and Contingent Liabilities unit (SB for March 2026).
  - Customs Law amendments adopted by parliament in April 2025 enabling a new Post-Clearance Audit regime and data sharing between Customs and Income and Sales Tax Department.
  - Measures to avoid arrears accumulation: direct electricity payments by the Ministry of Finance treasury and requirement for spending units to seek General Budget Department approval before issuing commitment vouchers.
  - Centralization of healthcare exemption process and a new agreement with the main cancer hospital to provide coverage for select treatments (unmet SB for May 2025; solid progress made).

### Electricity sector: financial loss reduction and reforms
- NEPCO’s losses in 2024 were limited to 1.1 percent of GDP, compared to expected losses of 1.3 percent of GDP.
- NEPCO made progress in reducing arrears and met end-December 2024 and March 2025 ITs.
- Time-of-use (ToU) tariffs cover 30 percent of electricity consumption effective January 1, 2025 (met SB for January 2025); full coverage expected by September 2026 (SB for September 2026).
- Proposed establishment of an Automated Energy Control Center (AECC) to be proposed as a new SB for September 2027.
- Challenges: declining demand due to rising renewable energy use, costly long-term PPAs, guaranteed returns for distribution companies, and electricity tariffs already high relative to regional peers. Sustained multi-year reforms guided by a Cabinet-adopted implementation roadmap are required.

### Water sector: financial sustainability and major projects
- Guided by the National Water Strategy (NWS) and the Financial Sustainability Roadmap (FSR), a multi-year tariff adjustment plan adopted in 2023 aims to achieve full recovery of O&M costs by 2030.
- Two tariff increases already implemented; progress in reducing non-revenue water (NRW); water sector losses were limited to 0.6 percent of GDP, in line with projections.
- IT on clearance of domestic payment arrears of water distribution companies met in December 2024 with all arrears cleared; new arrears emerged in early 2025, resulting in a missed IT for March 2025—these arrears are expected to be cleared over the course of the year.
- Transparent financial reporting by water distribution companies (proposed new SB for September 2025) will help identify sources of arrears accumulation.
- Aqaba-Amman Conveyance (AAC) project: preferred bidder selected; financial closure anticipated by end-2025 and commissioning targeted by end-2029. High unit cost of AAC water expected to place significant pressure on WAJ’s financial viability, underscoring need for continued reforms.

### Monetary and financial policies
- The Central Bank of Jordan (CBJ) has maintained the peg with the U.S. dollar and adequate reserve buffers; the peg remains an effective nominal anchor.
- Private sector credit growth picked up to about 3 percent by end-2024.
- Reserve adequacy remains at just over 100 percent of the Fund’s ARA metric. End-December 2024 and March 2025 NIR and net domestic asset targets were met with comfortable margins.
- CBJ stands ready to adjust policy rates as needed and will gradually reduce concessionality of its remaining preferential lending scheme when global market volatility reduces. NIR targets for the rest of 2025 have been revised upwards.
- Banking system indicators (end-2024): system-wide capital adequacy ratio 18 percent; regulatory minimum 12 percent. Non-performing loans (NPL) increased to 5.6 percent. NPL coverage ratio stood at 74.5 percent.

### Financial sector oversight and AML/CFT
- Progress under the 2023 Financial System Stability Assessment (MEFP ¶9):
  - Introduce Pillar 2 risk assessment methodologies (SB for November 2025).
  - Align prudential requirements for concentration risk and related party exposure with Basel Core Principles (SB for November 2026).
  - Design and operationalize depositor compensation procedures with JODIC (SB for November 2026).
  - Update credit risk regulations (proposed new SB for November 2027) and develop resolution plans for major cross-border systemically important banks.
- AML/CFT: post-FATF grey-list removal, the CBJ has enhanced risk-based AML/CFT supervision and established a national beneficial ownership register; sustaining reforms and ensuring data adequacy and timeliness remain crucial.

### Structural reforms to support inclusive growth
- Key constraints: high energy costs, extensive and complex regulations, limited access to finance (especially for SMEs), labor market rigidities, skills mismatches, and weak competition policies.
- Policy actions (MEFP ¶13) include:
  - Strengthen business environment, competition, and investment climate: amend competition law (met SB for October 2025); streamline business registration and closure; ensure sectoral license approvals do not exceed 30 days; ease restrictions in transport and fuel sectors; digitalize 80 percent of automatable government services (revised SB for December 2025); further relax restrictions on foreign ownership.
  - Enhance labor market flexibility and female labor force participation: amend the Labor Law (met SB for September 2025); amend the Social Security Law to harmonize benefit rights and mutualize unemployment insurance (met SB for September 2025); streamline work permit procedures, cap approval times at 15 working days, and reduce the annual fee to JD 1,500; harmonize public sector pay scales between men and women; improve public transport services.
  - Improve governance and transparency: criminalize illicit gains from public procurement; require disclosure of beneficial ownership information per new registry regulations; continue roll-out of electronic public procurement system.

### Rationale and scope of the requested RSF arrangement
- The RSF arrangement will support efforts to address long-term vulnerabilities in the water and energy sectors and prepare for public health emergencies, including pandemics.
- Reform priorities under the RSF focus on: (i) improving the energy sector’s financial viability and enhancing energy efficiency; (ii) improving the water sector’s financial viability; (iii) strengthening fiscal and financial sector resilience; and (v) enhancing preparedness for future pandemics and health emergencies.

*Source: IMF staff summary of chapter 13 from the provided IMF country report PDF.*

### 30. Increasing the share of RE—the least-cost energy source in Jordan—in overall

### 30. Increasing the share of RE—the least-cost energy source in Jordan—in overall electricity generation and improving energy efficiency will reduce average electricity costs and help improve the electricity sector’s financial viability

### Energy sector: objectives, measures, and targets
- Policy objective: Support RE development, enhance energy efficiency, reduce average electricity costs, and strengthen the electricity sector’s financial sustainability while ensuring grid stability.
- Storage and generation initiatives:
  - Government to issue two Requests for Expressions of Interest (EOIs): (i) for a hydro-pumped storage project and (ii) for a 200 MW photovoltaic (PV) power plant.
  - A request for EOI for battery storage will be issued, contingent on the findings of the updated Energy Strategy confirming the need for such storage before 2030, with the required MWh capacity to be defined in the strategy.
  - Based on EOIs and the Energy Strategy, at least one tender will be launched for a pilot storage project with meaningful capacity (at least 40MWh) to support grid stability and enable greater integration of variable renewable energy sources into the grid (RM12).
- Demand management and efficiency:
  - Roll-out of time-of-use (ToU) tariffs and smart meters to help reduce peak demand.
  - Following implementation of ToU tariffs capturing 30 percent of electricity consumption, the Ministry of Energy and Mineral Resources (MEMR) will complete a review of the demand response by June 2027.
  - Based on the analysis, by October 2027 MEMR will begin implementing a time-bound action plan to achieve a meaningful reduction in peak demand, including measures such as energy efficiency, public awareness campaigns, and more dynamic pricing models; the plan will include a ToU tariff structure for the overall economy while protecting the poor (RM11).

### Water sector: supply, demand, and financial sustainability
- Strategic context:
  - Ameliorating water scarcity requires both demand management and supply side actions, including desalination and long-distance transfer via the Aqaba-Amman Conveyance (AAC) project, increased treatment and re-use of wastewater, and network improvements, all requiring large investments.
  - Electricity costs are a large share of the water sector’s operating costs due to long-distance pumping and high electricity tariffs.
- Financial sustainability and private participation:
  - Cabinet to adopt and publish an updated Water Sector Financial Sustainability Roadmap (FSR), revised in line with international best practices, incorporating additional water supply from the AAC. The updated FSR will include a policy framework for 2026–2042, with implementation starting in early 2027, to ensure:
    - Revenues sufficient to achieve water and wastewater services operational and maintenance (O&M, including O&M cost for BOT) cost recovery by 2032.
    - Full recovery of both O&M and BOT capital charges by 2042 (RM7).
    - Maintain an annual NRW reduction target of at least 2 percentage points.
  - To address operational and financial challenges at Yarmouk Water Company (YWC), the government will conclude a performance-based management contract tender, in line with international best practices, with fixed and variable fees linked to jointly agreed annual targets for key performance indicators, including water sales, non-revenue water reduction, energy efficiency, operational income, and billing collections (RM1).
  - Private sector participation in wastewater treatment:
    - Government to launch tenders for operations and management of wastewater treatment plants of at least 5 years’ duration, covering at least 50 percent of total treatment capacity (excluding As-Samra).
    - Aim to reach 35 percent of treated wastewater usage for irrigation relative to freshwater by 2027 (RM8).

### Fiscal and financial sector resilience: climate integration and risk management
- Public investment and asset management:
  - Ministry of Finance (MOF) to issue a budget circular requiring all large projects (as defined in the Regulation for the National Register for Government Projects bylaw) selected for the budget to comply with the NRIP's newly formulated appraisal and feasibility study guidelines, which include clear criteria for assessing climate-related risks and impacts; MOF to publish a summary of the climate assessment information of the large projects included in the 2026 budget documents (RM2).
  - Government Investment Management Corporation (GIMC) to establish a centralized fixed asset register that initially captures infrastructure assets in the construction and electricity sectors (RM4).
- Fiscal risk analysis:
  - MOF to publish an enhanced Fiscal Risk Statement (an annual publication) that strengthens long-term fiscal risk analysis under different climate scenarios, provides quantitative analysis of contingent liabilities (SOEs and PPPs) exposed to climate-related risks, and includes a summary analysis of vulnerability of public fixed assets to climate change using data from the fixed asset register (RM9).
- Banking supervision and climate disclosure:
  - Central Bank of Jordan (CBJ) to issue detailed secondary regulations on climate disclosures and reporting consistent with the 2022 Basel Committee on Banking Supervision guidelines and aligned with International Sustainability Standards Board (ISSB), articulating supervisory expectations and providing implementation and timeline guidelines by May 2026 (RM3).
  - CBJ will adjust information systems to enable effective collection and analysis of climate-related financial data, including risks from extreme weather events.

### Pandemic preparedness and health emergency resilience
- Strengthening preparedness, governance, and financing:
  - Ministry of Health (MOH) to adopt a bylaw by end-2025 on the expansion of coverage of the healthcare benefits package; in collaboration with WHO, authorities will develop and adopt detailed instructions to ensure an emergency-ready health benefit package by November 2026 (RM5).
  - MOF to clarify and codify procedures for potential emergency financing sources and their use, including contingency funds, re-prioritizing existing spending, and other financing instruments, as well as triggers and institutional responsibilities for activation, disbursement, and oversight, by November 2026 (RM6).
  - Cabinet to adopt a national pandemic preparedness governance and accountability framework via Cabinet decree that defines roles and responsibilities across government entities, particularly between the Ministry of Health, JCDC, and other agencies, by May 2027 (RM10).
  - MOF to issue data reporting templates and changes to the budget manual and mandate quarterly monitoring and reporting of health emergency spending, by November 2027; templates will support reporting on both on- and off-budget emergency spending (including donor/philanthropy contributions) (RM13).

### Reform measures (selected, by pillar) — key items and timing
- Pillar I: Energy and Water
  - RM12: Issue EOIs for hydro-pumped storage and a 200 MW PV plant; contingent EOI for battery storage; pilot storage tender for at least 40MWh.
  - RM11: MEMR review by June 2027 and action plan beginning by October 2027 after ToU tariffs capture 30 percent of consumption.
  - RM7: Updated Water Sector FSR for 2026–2042; implementation early 2027; O&M cost recovery by 2032; full recovery by 2042; annual NRW reduction target of at least 2 percentage points.
  - RM1: Performance-based management contract for YWC.
  - RM8: Tenders for wastewater operations covering at least 50 percent of capacity (excluding As-Samra); target 35 percent reuse for irrigation by 2027.
- Pillar II: Fiscal and Financial Resilience
  - RM2: MOF budget circular requiring climate assessment compliance and publication in 2026 budget documents.
  - RM4: GIMC centralized asset register for SOE infrastructure in construction and energy sectors.
  - RM9: Enhanced Fiscal Risk Statement with climate scenarios and contingent liabilities analysis.
  - RM3: CBJ secondary regulations on climate disclosures by May 2026.
- Pillar III: Pandemic Preparedness
  - RM5: Emergency-ready health benefits instructions by November 2026 (following end-2025 bylaw).
  - RM6: Codify emergency financing procedures by November 2026.
  - RM10: National pandemic governance framework by May 2027.
  - RM13: Quarterly monitoring and reporting templates for health emergency spending by November 2027.

*Source: 1jorea2025001-print-pdf - 30. Increasing the share of RE—the least-cost energy source in Jordan—in overall*

### 40. The EFF arrangement remains

### 1jorea2025001-print-pdf - 40. The EFF arrangement remains

### Financing and program status
- The EFF arrangement remains fully financed. External financing from international partners is firmly committed for the next 12 months, with good prospects for the remainder of the program, including financing from the World Bank, the EU, and bilateral donors (such as Germany, Japan, the U.S., and GCC countries).
- Jordan continues to have access to international capital markets with relatively low sovereign spreads.
- Purchases under the EFF arrangement will cover the remaining balance of payments needs and will continue to be used for budget financing.

### Performance criteria, structural benchmarks, and reviews
- All PCs and ITs for end-December 2024 were met, as well as most ITs for end-March 2025 (see Table 1 of the attached MEFP).
- The authorities met three out of four SBs set for the third review and are making progress addressing arrears stemming from health exemptions (details in the attached MEFP and Table 2).
- The authorities request:
  - a modification of the end-June 2025 PCs for the central government’s primary deficit and the combined public deficit to reflect an earlier start of capital projects due to the early approval of this year’s budget;
  - a modification of the end-December 2025 PC on the CBJ’s net international reserves to reflect the stronger performance in accumulating reserves.

### Proposed RSF arrangement: objectives, access, and use
- Staff proposes a 30-month RSF-arrangement with an access level of 150 percent of quota (SDR 514.65 million).
- Objectives:
  - Enhance economic resilience by addressing longer-term macro-critical vulnerabilities.
  - Reduce long-term risks in the water and energy sectors and risks from future public health emergencies.
  - Augment policy space and financial buffers; resources will be used for budget support, substituting for more expensive financing to address vulnerabilities in water, energy, and health sectors.
- Eligibility and terms:
  - Jordan is eligible for RST financing with Group C interest rates applied.
  - The RSF arrangement would coincide with the remaining 30 months under the EFF arrangement, which is set to expire in January 2028.

### External financing gap and funding (2024–27) — key figures (In million of U.S. dollars)
- Financing Gap: 2,231; 2,663; 2,451; 2,823; 2,246
- Official Financing: 2,385; 2,665; 2,451; 2,823; 2,247
- IMF EFF disbursement (EFF): 196; 451; 260; 261; 262
- Identified official public external financing: 2,190; 2,214; 2,191; 2,006; 1,182
  - World Bank: 1,081; 1,081; 1,081; 1,014; 704
  - European Union: 269; 0; 269; 171; 120
  - EIB: 108; 126; 108; 108; 43
  - Others 1/: 731; 744; 733; 713; 315
- Unidentified official public external financing: 0; 0; 0; 556; 803
- Memorandum Item:
  - IMF RSF disbursement: 158; 0; 106; 212; 371
  - Eurobond issuance or commercial borrowing: 750; 0; 750; 1,000; 1,000

Note: "Others 1/" include bilateral and multilateral financing from Canada, France, Germany, Italy, Japan, Kuwait, Qatar, Saudi Arabia, UAE, AIIB, AMF, IsDB and OPEC.

### Capacity to repay and Fund exposure
- The Fund’s exposure to Jordan is projected to peak in 2027 at:
  - 4.5 percent of GDP
  - 10.6 percent of exports of goods and services
  - 12.7 percent of reserves
  - 630 percent of quota
- Debt service to the Fund will peak in 2029 at:
  - 98.2 percent of quota
  - 22.0 percent of public external debt service
  - 2.5 percent of government revenue
  - 1.5 percent of exports of goods and services
- RSF repayments would start in 2036, but debt service would remain low in GDP terms.
- Risks to capacity to repay:
  - Possible deterioration in the external environment.
  - Political challenges to sustained fiscal consolidation and key reform measures.
  - Mitigant: Jordan’s strong track record in implementing sound policies.
- Jordan’s public debt continues to be assessed as sustainable (Annex II).

### Safeguards, central bank, and financial sector
- An update safeguards assessment of the CBJ was completed in June 2024 and found broadly robust controls and sound assurance functions.
- Progress has been made implementing recommendations; outstanding items relate to the full implementation of IFRS.
- The CBJ should continue to focus on safeguarding monetary and financial stability, monitoring banks’ financial health, and further strengthening financial sector oversight and crisis management.
- Inflation has remained low and stable, with the CBJ adjusting policy rates in tandem with the U.S. Federal Reserve to safeguard the peg and preserve confidence.
- The banking sector remains healthy and well capitalized.

### Policy recommendations and reform priorities
- Maintain course on sound macroeconomic policies to strengthen resilience and achieve stronger, sustainable, and inclusive growth.
- Pursue steady gradual fiscal consolidation to place public debt on a downward path; 2025 fiscal targets remain attainable barring new external shocks.
- Continue strong revenue mobilization efforts, detailed in the Medium-Term Revenue Strategy, to sustain fiscal consolidation and strengthen debt sustainability.
- Improve financial viability and efficiency of public utilities:
  - Further strengthen NEPCO’s financial position and improve energy efficiency in line with the National Energy Strategy and the roadmap for electricity sector cost reduction and efficiency improvement.
  - Reduce costs, enhance efficiency, and boost revenues of water companies to ensure sustainable and affordable water supply.
- Accelerate structural reforms to foster a more dynamic private sector capable of generating more jobs:
  - Enhance the business climate, foster competition, increase labor market flexibility, and strengthen social protection systems to support vulnerable groups.
- The RSF-supported reforms should be implemented in close collaboration with the World Bank, WHO, and other development partners to leverage expertise on water, energy, and healthcare issues and to signal commitment to private investors.

*Source: IMF staff projections.*

### 52. Staff supports the authorities’ request for the completion of the third review under

### Staff supports the authorities’ request for the completion of the third review under the EFF arrangement and request for an RSF arrangement

### Program support, modifications, and access
- Staff supports the authorities’ request for the completion of the third review under the EFF arrangement and their request for an RSF arrangement.
- The EFF arrangement will continue to anchor policies aimed at:
  - maintaining macro-stability,
  - strengthening resilience, and
  - accelerating growth, and providing a framework for international support.
- Staff supports the proposed modification of:
  - the end-June 2025 fiscal performance criteria, to reflect an earlier start of capital projects in 2025, and
  - the end-December 2025 net international reserves performance criterion, to reflect stronger performance in accumulating international reserves.
- Staff supports the authorities’ request for an RSF arrangement that will run concurrently with the EFF arrangement, with access level of 150 percent of Jordan’s quota.

### Real sector developments (2024–2025 Q1)
- Net exports supported growth in 2024.
- Major contributors to growth in 2025 Q1:
  - manufacturing,
  - financial services, and
  - personal and government services.
- Inflation:
  - remains low and stable,
  - driven mainly by recreation and rent components.
- Labor market:
  - youth unemployment remains high,
  - female participation remains low,
  - employment recovery has been heterogeneous across sectors.

### Fiscal developments and projections
- Revenues:
  - showing signs of improvement,
  - tax revenues saw a strong rebound in April 2024 but slowed thereafter.
- Expenditures:
  - remained flat in 2024.
- Public debt and fiscal path:
  - public debt is projected to gradually decline.
  - Despite new shocks, the fiscal path is projected to deliver the desired consolidation.
- Selected fiscal aggregates and projections (percent of GDP unless noted otherwise):
  - Total revenue and grants: 25.2 (2023), 24.4 (2024), 24.9 (2025), 25.6 (2026), 25.4 (2027), 25.7 (2028), 26.0 (2029), 26.1 (2030).
  - Expenditure (total, inc. other use of cash): 30.6 (2023), 31.0 (2024), 31.4 (2025), 31.3 (2026), 31.2 (2027), 30.6 (2028), 30.5 (2029), 28.9 (2030).
  - Overall central government balance: -5.4 (2023), -6.5 (2024), -6.4 (2025), -5.7 (2026), -5.8 (2027), -4.9 (2028), -4.5 (2029), -2.9 (2030).
  - Primary government balance (excluding grants): -2.7 (2023), -2.9 (2024), -2.8 (2025), -2.0 (2026), -2.0 (2027), -0.9 (2028), -1.0 (2029), 0.2 (2030).
  - Government and guaranteed gross debt: 113.5 (2023), 115.0 (2024), 114.7 (2025), 116.1 (2026), 115.7 (2027), 115.6 (2028), 114.9 (2029), 112.4 (2030).
  - Government and guaranteed gross debt, net of SSC's holdings: 89.0 (2023), 90.5 (2024), 90.2 (2025), 89.9 (2026), 89.7 (2027), 88.1 (2028), 87.5 (2029), 83.7 (2030).
- Table highlights (2023–25, JD millions):
  - Total revenue and grants: 9,144 (2023), 9,238 (2024), 9,440 (2025).
  - Domestic revenue: 8,433 (2023), 8,531 (2024), 8,735 (2025).
  - Tax revenue: 6,184 (2023), 6,332 (2024), 6,405 (2025).
  - Total expenditures (inc. other use of cash): 11,107 (2023), 11,699 (2024), 11,878 (2025).
  - Interest payments: 1,703 (2023), 2,068 (2024), 2,078 (2025).
  - Capital expenditure: 1,377 (2023), 1,200 (2024), 1,170 (2025).

### External sector developments
- Exchange rates and reserves:
  - The dollar peg and monetary tightening contributed to an appreciation of the real effective exchange rate.
  - Gross usable international reserves (memorandum): 17,319 ($ millions, 2023), 18,104 (2024), 20,282 (2025).
  - Net international reserves (memorandum): 15,352 ($ millions, 2023), 15,928 (2024), 18,170 (2025).
- Current account:
  - Current account deficit widened in 2024 mainly driven by higher imports and lower tourism receipts.
  - Current account balance (including grants, percent of GDP): -3.6 (2023), -4.3 (2024), -5.9 (2025).
  - Current account balance (excluding grants, percent of GDP): -7.1 (2023), -7.3 (2024), -8.7 (2025).
- Exports and trade:
  - After a surge in exports in 2022–23 driven by higher prices and volumes of fertilizers, export receipts slowed as fertilizer prices fell sharply.
  - Exports to GCC and Iraq grew, indicating deeper regional integration.
  - Exports of goods (f.o.b., $ billions): 12.6 (2023), 12.9 (2024), 13.3 (2025).
  - Imports of goods (f.o.b., $ billions): 23.0 (2023), 22.8 (2024), 23.7 (2025).
  - Oil and oil products ($ billions): 3.8 (2023), 3.5 (2024), 3.5 (2025).
- Tourism:
  - Tourism receipts are recovering from the regional conflict in 2024, but lower tourism contributed to the wider current account deficit.

### Monetary and financial indicators
- Policy rates and interest:
  - Policy rates adjusted broadly in line with the U.S. Fed.
  - Deposit and lending rates have increased more slowly, with margins narrowing.
- Banking sector and liquidity:
  - Banks’ liquidity conditions remain comfortable.
  - Private sector credit growth has slowed.
  - CBJ’s subsidized lending schemes remain stable.
  - Ample reserves continue to keep dollarization down.
- Selected monetary projections and indicators:
  - Broad money (annual percent change): 2.3 (2023), 4.4 (2024), 6.1 (2025), 4.9 (2026), 5.1 (2027).
  - Credit to private sector (annual percent change): 1.7 (2023), 3.4 (2024), 2.9 (2025), 4.8 (2026), 4.6 (2027).
  - Deposit dollarization and NIR dynamics: Net international reserves and deposit dollarization trends shown in staff calculations and Central Bank of Jordan data (memorandum NIR figures above).

### Capacity to repay indicators and program context
- Staff presents comparative Capacity to Repay indicators relative to GRA-only borrowing countries (charts and notes provided).
- Notes clarify data definitions and coverage, including:
  - Total Debt Service to the Fund consists of GRA, RST and SDR-related obligations and reflects prospective payments.
  - Comparator series is for GRA arrangements only and runs up to T+5.
  - The peak value for LBR (2011) is 81.7 percent (not fully visible in the chart).

### Macroeconomic outlook summary (selected indicators, 2023–30)
- Output and prices:
  - Real GDP at market prices (annual percent change): 2.9 (2023), 2.3 (2024), 2.5 (2025), 2.5 (2026), 2.7 (2027), 3.0 (2028), 2.9 (2029), 3.0 (2030).
  - Consumer price inflation (annual average): 2.1 (2023), 1.7 (2024), 1.9 (2025), 2.2 (2026), 2.2 (2027), 2.5 (2028), 2.6 (2029), 2.3 (2030).
  - Nominal GDP at market prices (JD billions): 36.3 (2023), 37.8 (2024), 37.9 (2025), 39.7 (2026), 39.8 (2027), 41.9 (2028), 42.0 (2029), 44.4 (2030).
- Labor market:
  - Unemployment rate (period average, percent, Jordanians only): 22.0 (2023), 21.0 (2024), 21.4 (2025).
- External sector (selected memoranda):
  - Gross usable international reserves ($ millions): 17,319 (2023), 18,104 (2024), 20,282 (2025), 18,577 (2026).
  - In months of prospective imports: 6.9 (2023), 7.2 (2024), 7.7 (2025), 6.8 (2026).
  - Population (millions): 11.3 (2023), 11.4 (2024), 11.4 (2025), 11.4 (2026).
  - Nominal per capita GDP ($): 4,513 (2023), 4,682 (2024), 4,693 (2025), 4,889 (2026).

*Source: IMF staff report and staff calculations based on Jordanian authorities’ data.*

### 1. Central government primary balance (ex grants)

### 1. Central government primary balance (ex grants)

### Key series and levels
- Levels: -972-1,100-1,065-812-812-374-42883614632413
- (in percent of GDP): -2.7-2.9-2.8-2.0-2.0-0.9-1.00.21.31.30.8

### Observations
- Presents the central government primary balance excluding grants in both levels (raw series) and as percent of GDP using the exact provided series.

---

### 2. Central government primary balance (inc grants)

### Key series and levels
- Levels: -260-393-360-52-782504137611,1001,117899
- (in percent of GDP): -0.7-1.0-1.0-0.1-0.20.61.01.72.32.31.7

### Observations
- Shows the central government primary balance including grants with both level and percent-of-GDP series provided exactly.

---

### 3. Balance of utilities (NEPCO, WAJ, water distribution companies)

### Key series and levels
- Levels: -644-708-626-626-617-567-571-531-500-614-530
- (in percent of GDP): -1.8-1.9-1.7-1.6-1.5-1.4-1.4-1.2-1.1-1.2-1.0

### Observations
- Reports balances for NEPCO, WAJ, and water distribution companies with a full level series and corresponding percent-of-GDP series.

---

### 4. Combined public balance (1+3)

### Key series and levels
- Levels: -1,616-1,808-1,691-1,438-1,429-941-998-44911518-117
- (in percent of GDP): -4.5-4.8-4.5-3.6-3.6-2.2-2.4-1.00.20.0-0.2

### Observations
- Combined public balance (sum of central government primary balance ex grants and balance of utilities) presented in levels and percent of GDP.

---

### 5. SSC balance

### Key series and levels
- Levels: 9031,0761,0761,1011,1011,1461,1461,1481,1851,2351,304
- (in percent of GDP): 2.52.82.82.82.82.72.72.62.52.52.5

### Observations
- Social Security Corporation (SSC) balance series provided in levels and percent of GDP.

---

### 6. General government primary balance (ex grants) (4+5) 1/-

### Key series and levels
- Levels: 1/-526-491-369-61-535084511,0281,6531,6231,580
- (in percent of GDP): -1.5-1.3-1.0-0.2-0.11.21.12.33.53.33.0

### Observations
- General government primary balance excluding grants (combination of combined public balance and SSC) provided with both level and percent-of-GDP series.

---

### 7. General government primary balance (inc grants)

### Key series and levels
- Levels: 1852163356996811,1331,2911,7072,1392,1092,066
- (in percent of GDP): 0.50.60.91.81.72.73.13.84.64.34.0

### Observations
- General government primary balance including grants presented in exact level and percent-of-GDP series.

---

### 8. General government overall balance

### Key series and levels
- Levels: -1,338-1,649-1,545-1,266-1,314-931-772-43451473447
- (in percent of GDP): -3.7-4.4-4.1-3.2-3.3-2.2-1.8-0.11.01.00.9

### Observations
- General government overall balance reported in levels and as percent of GDP using the exact series provided.

*Source: 1. Central government primary balance (ex grants) — 1jorea2025001-print-pdf*

### 9. General government balance excluding grants -2,080-2,386-2,280-2,004-2,020-1,510-1,574-67232-63-90

### 9. General government balance excluding grants -2,080-2,386-2,280-2,004-2,020-1,510-1,574-67232-63-90

### General government balance excluding grants (levels)
- (in millions) -2,080 -2,386 -2,280 -2,004 -2,020 -1,510 -1,574 -672 32 -63 -90

### General government balance excluding grants (in percent of GDP)
- (in percent of GDP) -5.7 -6.3 -6.0 -5.1 -5.1 -3.6 -3.7 -1.5 0.1 -0.1 -0.2

### Government and guaranteed gross debt, net of SSC's holdings (levels)
- 32,289 34,188 34,178 35,674 35,712 36,879 36,770 37,152 37,289 37,717 38,316

### Government and guaranteed gross debt, net of SSC's holdings (in percent of GDP)
- 89.0 90.5 90.2 89.9 89.7 88.1 87.5 83.7 83.7 79.6 76.3 73.4

### Government and guaranteed gross debt (levels)
- 41,181 43,460 43,451 46,046 46,084 48,401 48,292 49,874 51,261 52,789 54,489

### Government and guaranteed gross debt (in percent of GDP)
- 113.5 115.0 114.7 116.1 115.7 115.6 114.9 112.4 109.4 106.7 104.3

### Memorandum items (selected)
- SSIF interest income government debt: 366 444 444 501 501 560 560 622 687 754 814
- SSIF government debt holding (% of total Assets): 56 57 57 58 58 59 59 60 60 60 59
- NEPCO additional unallocated measures: 0 3 0 3 0 3 0 3 0 3 0 3 0 3 0 3 0 3 0 3 1

### Nominal GDP at market prices (levels)
- 36,273 37,797 37,880 39,665 39,815 41,877 42,035 44,378 46,852 49,464 52,222

*Sources: Jordanian authorities; and IMF staff estimates and projections.*

### Annex I.   Risk Assessment Matrix

### Annex I. Risk Assessment Matrix

### Global Risks — Likelihood, Economic Impact, and Policy Responses
- Regional conflicts — Likelihood: Medium; Economic Impact: High  
  - Key channels: Disrupt trade in energy and food, tourism, supply chains, remittances, FDI and financial flows, payment systems; increase refugee flows.  
  - Economic impacts: Widen fiscal and current account deficits; heighten external financing needs; raise inflation pressure via higher import prices; weaken investor confidence and growth prospects.  
  - Policy responses:
    - Provide targeted fiscal measures to ensure delivery of essential public services, including security, and to support vulnerable households, including refugees.  
    - Strengthen social safety nets.  
    - Diversify energy and food import sources to reduce dependency on vulnerable trade routes and mitigate supply chain disruptions.

- Commodity price volatility — Likelihood: Medium; Economic Impact: High  
  - Key channels: Supply and demand volatility (due to conflicts, trade restrictions, OPEC+ decisions, AE energy policies, or green transition).  
  - Economic impacts: Increase fuel and/or wheat import bill, current account deficit and external financing needs; generate inflationary pressures; heighten social discontent and economic instability.  
  - Policy responses:
    - Provide targeted fiscal measures to support vulnerable households, including refugees.  
    - Strengthen social safety nets.  
    - Diversify energy and food import sources and expand strategic reserves to reduce exposure to global supply disruptions.

- Trade policy and investment shocks — Likelihood: High; Economic Impact: Medium  
  - Key channels: Higher trade barriers or sanctions reduce external trade, disrupt FDI and supply chains, trigger further U.S. dollar appreciation, tighter financial conditions, and higher inflation.  
  - Economic impacts: Weaken economic growth; pressure the current account; increase external financing needs; dollar appreciation could weaken exports and external revenues.  
  - Policy responses:
    - Accelerate structural measures that foster private investment and private sector development that creates jobs and promotes more sustainable and inclusive growth.  
    - Maintain monetary and financial stability by ensuring adequate foreign exchange reserves, closely managing liquidity, and reinforcing financial sector resilience.  
    - Deepen regional and global trade agreements to counteract trade barriers and attract investment.

- Global growth acceleration — Likelihood: Low; Economic Impact: Medium  
  - Key channels: Easing of conflicts, positive supply-side surprises (e.g., oil production shocks), productivity gains from AI, or structural reforms.  
  - Economic impacts: Improve remittances and tourism inflows; strengthen domestic growth outlook; improve fiscal and current account balances.  
  - Policy responses:
    - Continue fiscal and structural reforms to entrench the gains from global growth acceleration.

- Tighter financial conditions and systemic instability — Likelihood: Medium; Economic Impact: Medium  
  - Key channels: Higher-for-longer interest rates and term premia, looser financial regulation, rising investments in cryptocurrencies, higher trade barriers leading to asset repricing and market dislocations.  
  - Economic impacts: Negative feedback loop between sovereign and banks; worsening bank balance sheets; higher funding costs for corporates and the sovereign; asset quality deterioration; heightened capital outflows from EMDEs.  
  - Policy responses:
    - CBJ to follow the U.S. Fed and raise policy rates conditional on domestic conditions.  
    - Monitor banks’ buffers to withstand shocks; introduce measures recommended by the FSSA as appropriate.  
    - Deepen domestic capital markets to reduce dependence on external financing and improve financial intermediation.

- Sovereign debt distress — Likelihood: High; Economic Impact: High  
  - Key channels: Higher interest rates, stronger U.S. dollar, shrinking development aid, sovereign-bank feedback leading to capital outflows, rising risk premia, loss of market access.  
  - Economic impacts: Higher funding costs for corporates and the sovereign; potential bank asset quality deterioration; reduction in development aid could strain public finances, limit social spending, jeopardize large development projects (including the water desalination plant), slow infrastructure expansion, increase reliance on costly alternative financing.  
  - Policy responses:
    - If market conditions become disorderly, consider capital flow measures as part of a broader macroeconomic package to address the root causes in accordance with the IMF Institutional View.  
    - Maintain prudent macroeconomic policies and continue fiscal consolidation to ensure debt sustainability.  
    - Diversify the donor base by strengthening partnerships with emerging donors, regional development funds, and multilateral institutions to secure alternative funding sources.

- Deepening geoeconomic fragmentation — Likelihood: High; Economic Impact: Medium  
  - Key channels: Persistent conflicts, inward-oriented policies, protectionism, weaker international cooperation, labor mobility curbs, fracturing technological and payments systems.  
  - Economic impacts: Higher input costs; hinder green transition; lower trade and potential growth; slowdown in FDI inflows; worse fiscal and current account balances; potential effect on potential growth if persistent.  
  - Policy responses:
    - Accelerate structural reforms that promote economic diversification and foster greater private sector development that creates jobs and promotes inclusive growth.  
    - Monitor banks’ buffers to withstand shocks; introduce measures recommended by the FSAP as appropriate.

- Climate change — Likelihood: Medium; Economic Impact: Medium  
  - Key channels: Extreme climate events driven by rising temperatures.  
  - Economic impacts: Loss of life; damage to infrastructure; food insecurity; supply disruptions; lower growth; financial instability; increased infrastructure damage and reconstruction needs straining public finances; increased water scarcity affecting daily life and economic activity; potential social discontent.  
  - Policy responses:
    - Strengthen disaster preparedness and response by developing early warning systems, improving emergency response capacity, and securing contingency funding.  
    - Promote green finance and insurance mechanisms to incentivize climate adaptation investments and provide financial protection against climate shocks.  
    - Invest in climate-resilient infrastructure.  
    - Prioritize securing sustainable water supplies by expanding desalination projects, improving irrigation systems, supporting climate-smart agriculture, and ensuring financial sustainability of the water sector.

- Near-term probability guidance (staff’s subjective assessment):  
  - “low” = probability below 10 percent; “medium” = probability between 10 and 30 percent; “high” = probability between 30 and 50 percent.

### Domestic Risks — Likelihood, Economic Impact, and Policy Responses
- Persistently high unemployment — Likelihood: Medium; Economic Impact: High  
  - Economic impacts: Amplifies poverty and inequality; increases social tensions; weakens recent reform momentum; deters investors and potentially reduces foreign and domestic investment.  
  - Policy responses:
    - Accelerate structural reforms that promote economic diversification and foster greater private sector development that creates jobs and promotes inclusive growth.  
    - Strengthen social safety nets.

### Annex II. Sovereign Risk and Debt Sustainability Assessment — Key Findings and Policy Implications

### Overall DSA Assessment and Risks
- Final assessment: Moderate overall risk of sovereign stress.  
- Mechanical signal: Not applicable in this case.  
- Sustainability assessment (staff): Debt/GDP ratio is projected to decline to just below 80 percent by 2028; financing risks remain manageable given a relatively long effective debt maturity of around 6 years and assumed continued development partner support. Baseline fiscal consolidation is gradual and backed by identified measures. Accordingly, debt is assessed as sustainable.  
- Downside risks noted: Further tightening of global financial conditions; persistence of regional conflicts; commodity price shocks; failure to reverse water and electricity sectors deficits; weaker global growth; higher EM risk premia.  
- Long-term assessment: Moderate. Pension reforms and other structural reforms are paramount to prevent a rundown of pension assets and ensure pension fund sustainability. Elevated gross financing needs are a risk if fiscal consolidation and debt reduction are delayed by additional spending pressures from regional tensions, reduced foreign aid, water scarcity, inefficient energy companies or other shocks.

### Policy recommendations to preserve sustainability
- Continue fiscal consolidation to ensure debt sustainability.  
- Accelerate structural reforms, including decisive actions to address NEPCO's deficits and address the water scarcity challenge in a fiscally prudent manner.  
- Reform to improve long-term pension sustainability.  
- Address climate change to reduce long-term risks.  
- Maintain adequate FX reserves and secure continued development partner support; diversify donor base and financing sources.

### Buffers and vulnerabilities
- Buffers:
  - FX reserves at 7 months of imports.  
  - Assets of the Social Security Investment Fund reached 40 percent of GDP.  
- Vulnerabilities:
  - High public debt renders Jordan vulnerable to a tightening in financial conditions.  
  - Pension assets could be drawn down for budgetary financing without reforms.

### Annex II. Debt Coverage, Structure, and Projections — Key Statistics and Notes

### Coverage and institutional scope
- Debt coverage in the DSA seeks to approximate general government and includes: central government, the Social Security Fund (SSFs), NEPCO, WAJ, and water distribution companies.  
- The coverage does not include: local governments or the deposit insurance fund.  
- GCC deposits at the CBJ are not included in public debt because CBJ is assessed to have adequate capacity to repay.

### Public debt structure indicators (selected)
- Residual debt maturity: 5.9 years.  
- Jordan’s public debt is about evenly split between foreign and local currency-denominated instruments, mainly held by domestic commercial banks and external official creditors.  
- In the long term, the share of domestic financing is expected to increase as repayment of official external debt accelerates.

### Baseline scenario (Table 3) — Selected series (Percent of GDP unless indicated otherwise)
- Public debt:
  - 2024: 90.2  
  - 2025: 89.7  
  - 2026: 87.5  
  - 2027: 83.7  
  - 2028: 79.6  
  - 2029: 76.3  
  - 2030: 73.4  
  - 2031: 70.3  
  - 2032: 67.9  
  - 2033: 64.2  
  - 2034: 61.8
- Change in public debt:
  - 2024: 1.2  
  - 2025: -0.6  
  - 2026: -2.2  
  - 2027: -3.8  
  - 2028: -4.1  
  - 2029: -3.3  
  - 2030: -2.9  
  - 2031: -3.1  
  - 2032: -3.4  
  - 2033: -2.7  
  - 2034: -2.4
- Primary deficit (percent of GDP):
  - 2024: -0.9  
  - 2025: -1.7  
  - 2026: -3.1  
  - 2027: -3.9  
  - 2028: -4.6  
  - 2029: -4.3  
  - 2030: -4.0  
  - 2031: -3.7  
  - 2032: -3.7  
  - 2033: -3.0  
  - 2034: -2.6
- Noninterest revenues (percent of GDP):
  - 2024: 38.1  
  - 2025: 38.9  
  - 2026: 39.5  
  - 2027: 39.7  
  - 2028: 39.8  
  - 2029: 39.0  
  - 2030: 38.9  
  - 2031: 38.3  
  - 2032: 37.9  
  - 2033: 36.7  
  - 2034: 35.6
- Noninterest expenditures (percent of GDP):
  - 2024: 37.2  
  - 2025: 37.2  
  - 2026: 36.5  
  - 2027: 35.8  
  - 2028: 35.2  
  - 2029: 34.7  
  - 2030: 34.9  
  - 2031: 34.6  
  - 2032: 34.2  
  - 2033: 33.7  
  - 2034: 33.0
- Automatic debt dynamics (percent of GDP):
  - 2024: 1.2  
  - 2025: 0.6  
  - 2026: -0.2  
  - 2027: -0.3  
  - 2028: -0.6  
  - 2029: -0.9  
  - 2030: -1.2  
  - 2031: -1.3  
  - 2032: -1.4  
  - 2033: -1.3  
  - 2034: -1.4
- Real interest rate and relative inflation:
  - 2024: 3.1  
  - 2025: 3.0  
  - 2026: 2.4  
  - 2027: 2.2  
  - 2028: 1.8  
  - 2029: 1.4  
  - 2030: 1.0  
  - 2031: 0.8  
  - 2032: 0.6  
  - 2033: 0.6  
  - 2034: 0.5
- Real GDP growth (percent):
  - 2024: 2.5  
  - 2025: 2.7  
  - 2026: 2.9  
  - 2027: 3.0  
  - 2028: 3.0  
  - 2029: 3.0  
  - 2030: 3.0  
  - 2031: 3.0  
  - 2032: 3.0  
  - 2033: 3.0  
  - 2034: 3.0
- Gross financing needs (percent of GDP):
  - 2024: 19.0  
  - 2025: 15.1  
  - 2026: 19.4  
  - 2027: 13.3  
  - 2028: 10.3  
  - 2029: 16.3  
  - 2030: 11.7  
  - 2031: 12.2  
  - 2032: 12.0  
  - 2033: 13.5  
  - 2034: 14.3
- Debt service (percent of GDP):
  - 2024: 21.1  
  - 2025: 18.0  
  - 2026: 23.8  
  - 2027: 18.6  
  - 2028: 16.3  
  - 2029: 22.2  
  - 2030: 17.3  
  - 2031: 17.5  
  - 2032: 17.3  
  - 2033: 18.0  
  - 2034: 18.4
- Local currency vs. foreign currency gross financing needs (percent of GDP):
  - Local currency (2024–2034 snapshots): 14.5; 10.8; 16.4; 12.5; 12.1; 13.8; 10.1; 11.7; 13.3; 13.5; 14.6  
  - Foreign currency (2024–2034 snapshots): 6.6; 7.2; 7.3; 6.0; 4.3; 8.4; 7.2; 5.8; 4.0; 4.5; 3.8

### Projection narrative
- Debt/GDP is expected to decline in the medium term to reach program targets by 2028, driven mainly by fiscal consolidation and sustained real GDP growth.  
- Upward pressures on the debt ratio remain from a positive interest-growth differential, off-budget financing needs (‘below-the-line’ transactions), debt accumulation by the general government, and the drawdown of pension fund assets for budgetary financing.  
- The table and charts are based on general government debt and balances (the latter include Social Security surpluses).

*Source: IMF staff (from Annex I and Annex II: Risk Assessment Matrix and Debt Sustainability Assessment).*

### Annex II. Table 4. Jordan: Medium-Term Risk Analysis

### Annex II. Table 4. Jordan: Medium-Term Risk Analysis

### Medium-term risk indices and signals
- Debt fanchart index (DFI): 1.5
  - Risk signal: 3/Moderate
  - Fanchart width (percent of GDP): 50.00.7 (as presented)
  - Probability of debt non-stabilizaiton (percent): 0.10.0 (as presented)
  - Terminal debt-to-GDP institutions index: 37.50.8 (as presented)
- GFN financeability index (GFI): 13.8
  - Average baseline GFN (percent of GDP): 14.44.9 (as presented)
  - Initial Banks' claims on the gen. govt (pct bank assets): 22.27.2 (as presented)
  - Change in banks' claims in stress (pct banks' assets): 5.11.7 (as presented)
  - Risk signal: 4/Moderate
- Medium-term index (index number) — composite of debt fanchart index and GFN financeability index
  - Risk signal: 5/
  - Final assessment: Moderate
- Triggered stress-test status: stress tests not activated in gray (visual indicator in source)

### Key probabilities and diagnostic metrics
- Prob. of missed crisis, 2025-2030, if stress not predicted: 18.2 pct.
- Prob. of false alarms, 2025-2030, if stress predicted: 26.1 pct.
- Peer-group comparison: emerging markets, non-commodity exporter, program.
- Signal thresholds (as given):
  - DFI: low risk if DFI < 1.13; high risk if DFI > 2.08; otherwise moderate.
  - GFI (text contains inconsistent references but as presented): low risk if GFI < 7.6; high risk if DFI > 17.9; otherwise moderate.
  - Another rule presented: low risk if GFI < 0.26; high risk if DFI > 0.40; otherwise moderate.

### Narrative summary of medium-term assessment
- While the debt-to-GDP ratio is high, the risk of non-stabilization is in line with the median, given the fiscal adjustment under the program.
- Even under stress, financing risks are considered manageable.
- The SSC holds assets outside the general government sector worth about 19% of GDP, with 70% being liquid (deposits or stocks).
- These investments generate reasonable interest income for the government, reducing Gross Financing Needs (GFNs).
- GFNs are sensitive to changes in bank claims on the government, but the strong position of the banking sector makes adverse scenarios unlikely.
- Overall, the medium-term risk is assessed as moderate.

### Realism of baseline assumptions and fiscal targets
- Authorities aim to reduce public debt to below 80 percent of GDP by 2028.
- Achieving this objective will require a significant reduction in debt over the next three years driven by a revenue-focused fiscal consolidation strategy.
- Support factors identified: continued donor assistance, sustained real GDP growth, and structural reforms—particularly to curb debt accumulation and improve utility-sector efficiency.
- Forecast track record and realism diagnostics are presented graphically (October and April WEO vintages referenced).

### Long-term and trigger-module scenarios (amortization, pensions, health, climate)
- Large amortization module (baseline with t+5):
  - Primary balance sustained at 4.0 percent of GDP → debt below 60 percent of GDP around 2035.
  - GFNs progressively diminish to around 5 percent of GDP by 2039.
- Custom scenario (prudent baseline):
  - Primary balance averaging 2.5 percent of GDP → debt falls below 60 percent of GDP by 2038.
  - GFNs persist at around 15 percent of GDP in peak years, declining to under 10 percent by 2037.
  - Substantial GFNs in peak years indicate comparatively high risks.
- Pensions (Demographics):
  - SSIF assets: JD 16.7 billion (44 percent of GDP) in March 2025.
  - SSC operates with a surplus now but disbursements will surpass contributions starting in the 2030s, requiring asset liquidation.
  - Starting in the 2050s, budgetary financing will become essential, elevating annual GFNs and potentially destabilizing debt levels.
  - Policy implication: continuing pension reforms and structural adjustments to enhance labor market engagement and formal employment to bolster long-term pension viability.
- Health (Demographics):
  - Population around 11.5 million in early 2025 (up from 5.3 million in 2004).
  - Scenario with excess costs growth (ECG) at 0.6 percent annually → financing needs could stabilize or rise, jeopardizing debt-reduction trends.
  - Authorities plan strategies to strengthen healthcare resilience, quality, and financial sustainability.
- Climate change: Adaptation
  - Standard adaptation module: 0.9 percent of GDP additional costs over the medium term.
  - Customized module: adds 0.2 percent of GDP in costs (coastal protection modest).
  - With adaptation costs, debt projected to decrease to ~70 percent of GDP by 2033 and to ~60 percent of GDP by 2037.
  - GFNs could remain volatile with peaks at 20 percent of GDP; long-term fiscal savings expected from adaptation investments in energy and water sectors.
  - Conclusion: supplementary adaptation investments do not pose a substantial threat to debt trajectory, though GFNs may be marginally higher.
- Climate change: Mitigation
  - NDC target: 31% reduction in GHG emissions by 2030.
  - Mitigation investments likely increase financing needs and raise debt in the medium term, but both financing needs and debt decline over the longer term with regulatory and PFM reforms attracting private investment in clean energy and wastewater treatment.

### External sector DSA: coverage, projections, and resilience
- Coverage of external debt:
  - Includes (i) public and publicly guaranteed external debt, and (ii) external liabilities of the banking sector and private corporations (residency basis).
  - Private sector external debt estimation may be incomplete due to data limitations.
- Public external debt trajectory (percent of GDP):
  - 2024: 44.5 percent
  - 2025: 45.9 percent
  - Peak around 2027: approximately 48.4 percent
  - Declines to approximately 39 percent by 2030
  - Projected increase driven by elevated borrowing costs, higher interest rates, and subdued economic growth.
  - Favorable profile due to high share of concessional financing and recent commitments from Germany, Qatar and UAE, and prospective RSF loans.
- Private external debt:
  - Expected to remain moderate at 46 to 51 percent of total external debt.
  - End-2024: banks accounted for 78 percent of total private external debt (mainly non-resident deposits); remainder held by non-financial corporations.
  - Firms’ external debt share in private external debt expected to increase from less than 20 percent to about a quarter.
  - Contingent liability risks to the public sector expected to remain contained given moderate private external debt and strong bank balance sheets.
- External financing needs:
  - Expected to remain sizable during the program period, gradually declining thereafter.
  - Elevated needs reflect persistent current account deficits driven by high energy and food import prices, subdued world fertilizer export prices, elevated interest rates, and rising amortization (notably Eurobonds maturing 2025–2029).
- Stress-test resilience:
  - External debt dynamics relatively insensitive to current account and combined shocks; interest rate and real growth shocks have marginal impact.
  - Moderate risks contingent on strengthening FDI inflows and program-supported external buffers.
  - A substantial and sustained real depreciation shock would significantly elevate external debt-to-GDP above baseline, highlighting importance of maintaining the currency peg and sound macroeconomic policies.

### Selected external-debt DSA numbers (Table 5 highlights)
- Debt-stabilizing non-interest current account: 41.9 40.3 38.6 37.1 35.6 34.3 (presented header values)
- Baseline: External debt (percent of GDP), selected years:
  - 2020: 79.3
  - 2021: 80.5
  - 2022: 83.2
  - 2023: 84.0
  - 2024: 87.5
  - 2025: 87.8
  - 2026: 87.5
  - 2027: 86.8
  - 2028: 83.1
  - 2029: 78.2
  - 2030: 74.1
- Of which: Public and Publicly Guaranteed External Debt (percent of GDP), selected years:
  - 2020: 40.9
  - 2021: 40.7
  - 2022: 39.9
  - 2023: 42.1
  - 2024: 44.5
  - 2025: 45.9
  - 2026: 47.3
  - 2027: 48.2
  - 2028: 46.0
  - 2029: 42.6
  - 2030: 39.8
- Change in external debt (percent of GDP), selected years:
  - 2020: 11.3
  - 2021: 1.2
  - 2022: 2.7
  - 2023: 0.8
  - 2024: 3.5
  - 2025: 0.3
  - 2026: -0.3
  - 2027: -0.7
  - 2028: -3.7
  - 2029: -4.9
  - 2030: -4.1
- Identified external debt-creating flows (4+8+9), selected years:
  - 2020: 5.3
  - 2021: 2.3
  - 2022: 2.5
  - 2023: -4.0
  - 2024: -0.6
  - 2025: 0.0
  - 2026: 0.1
  - 2027: -2.0
  - 2028: -2.3
  - 2029: -4.4
  - 2030: -5.5
- Current account deficit, excluding interest payments (percent of GDP), selected years:
  - 2020: 3.7
  - 2021: 6.0
  - 2022: 5.1
  - 2023: -0.9
  - 2024: 1.3
  - 2025: 2.6
  - 2026: 3.1
  - 2027: 3.4
  - 2028: 2.9
  - 2029: 2.8
  - 2030: 2.7
- Gross external financing need (in billions of U.S. dollars), selected years:
  - 2020: 5.9
  - 2021: 5.7
  - 2022: 7.8
  - 2023: 5.0
  - 2024: 6.0
  - 2025: 7.2
  - 2026: 8.1
  - 2027: 8.0
  - 2028: 7.5
  - 2029: 7.0
  - 2030: 8.1
- Gross external financing need (in percent of GDP), selected years:
  - 2020: 13.5
  - 2021: 12.4
  - 2022: 16.0
  - 2023: 9.8
  - 2024: 11.3
  - 2025: 12.8
  - 2026: 13.6
  - 2027: 12.8
  - 2028: 11.3
  - 2029: 10.0
  - 2030: 10.9
- Key macroeconomic assumptions (selected averages and projections):
  - Real GDP growth (percent): -1.1 (2020), 3.7 (2021), 2.4 (2022), 3.1 (2023), 2.5 (2024), 2.1 (2025), 1.3 (2026), 2.7 (2027), 2.9 (2028), 3.0 (2029), 3.0 (2030), 3.0 (2030 onward as shown)
  - GDP deflator in U.S. dollars (change in percent): -0.7 (2020), 2.2 (2021), 2.6 (2022), 1.8 (2023), 1.9 (2024), 1.6 (2025), 1.0 (2026), 2.3 (2027), 2.6 (2028), 2.5 (2029), 2.5 (2030)
  - Nominal external interest rate (percent): 3.0 (2020), 2.7 (2021), 4.0 (2022), 5.6 (2023), 5.7 (2024), 4.2 (2025), 1.5 (2026), 3.5 (2027), 3.3 (2028), 2.5 (2029), 2.6 (2030), 2.5 (2030 onward as shown)

*Source: IMF staff estimates and projections.*

### Annex III. Enhancing Jordan’s Resilience to Long-T erm Vulnerabilities

### Annex III. Enhancing Jordan’s Resilience to Long-Term Vulnerabilities

### Key vulnerabilities and impacts
- Jordan faces an existential water crisis; water availability lies well below the absolute water scarcity level of 500 cubic meters per capita per year, with only 62 cubic meters of water available per capita per year.
- Climate change has caused recurrent droughts and flash floods that caused fatalities and substantial damage; October 2018 flash flooding along the Dead Sea resulted in at least 21 fatalities.
- Jordan has relied on fossil fuels for electricity generation; the share of RE in electricity supply increased from less than 1 percent in 2014 to about 27 percent in 2024. The goal is 30 percent electricity from renewables by 2030.
- Projected economic and social consequences if unaddressed:
  - Climate change could reduce Jordan’s GDP by 2–5 percent by 2050 (depending on adaptation scenarios).
  - Channels of impact include: declining labor productivity from climate-sensitive illness and food insecurity; deteriorating public infrastructure; lower exports (textiles, chemicals, rare minerals) that are energy- or water-intensive; dwindling tourist arrivals (tourism accounts for 30 percent of exports).
- Recurrent infrastructure damage and increased water demand will exacerbate food insecurity and have long-lasting impacts on growth and livelihoods.

### Progress, commitments, and national planning
- International and national commitments and plans:
  - Jordan ratified the United Nations Framework Convention on Climate Change early and integrated climate goals into national plans.
  - The 10-year Economic Modernization Vision launched in June 2022 incorporates sustainable practices and green investment.
  - National climate documents: NDC first developed in 2015, National Adaptation Plan in 2021, updated NDC in 2021.
  - Updated NDC commitments: reduce greenhouse gas emissions by 31 percent against ‘business-as-usual’ by 2030 (5 percent unconditional, 26 percent conditional on external support) and achieve net-zero emissions by 2050.
- Jordan accounts for less than 0.1 percent global GHG emissions.

### Financing needs
- Updated NDC projected financing need: US$7.5 billion (about 16 percent of GDP) over the medium term to attain the emissions reduction goal.
- World Bank analysis: financing needs for resilient and low-carbon projects in critical sectors may be US$9.5 billion (about 20 percent of GDP) by 2030.
- Private sector investments represent over 60 percent of the US$9.5 billion incremental financing needs identified in the CCDR.

### RSF-supported program objectives and catalytic role
- The RSF-supported program will support authorities’ reform efforts and catalyze additional financing, including private sector participation.
- CCDR-identified priorities to strengthen climate policy implementation:
  - (i) urgency to adapt to water scarcity and ensure fiscal sustainability of water and energy sectors;
  - (ii) improve public investment management, including green procurement and national quality infrastructure to greening supply chains;
  - (iii) improve fiscal discipline, budgeting, and transparency, including traceability of climate action to the medium-term fiscal framework;
  - (iv) create an enabling environment for private sector participation and attracting new funding sources.

### Pillar I — Energy and Water Sector Reforms

- Energy reforms and renewable integration:
  - Improve RE storage capacity via a multi-pronged approach to support transition to RE while improving NEPCO’s financial sustainability.
  - Cabinet to issue two Requests for Expressions of Interest (EOIs): (1) for a hydro-pumped storage project and (2) for a 200 MW photovoltaic (PV) power plant.
  - A request for an EOI for battery storage will be issued contingent on the updated Energy Strategy confirming the need before 2030, with required MWh capacity defined in the strategy.
  - Based on EOIs and updated Energy Strategy, at least one tender—aligned with international best practices—will be launched for a pilot storage project with a meaningful capacity of at least 40 MWh to support grid stability and enable greater integration of variable renewable energy sources into the grid before October 2027.
  - All initiatives to follow existing legislation ensuring transparency, competition, and least-cost principles.
- Electricity efficiency and tariff reforms:
  - Time-of-use (ToU) tariffs rollout to shift consumption away from peak hours and enable greater renewable integration.
  - MEMR will complete a demand response review by June 2027—twenty-four months after ToU tariffs were introduced across at least 30 percent of electricity consumption.
  - Based on findings, MEMR will draft a time-bound action plan by June 2027 and begin implementation by October 2027.
  - Reform targets a cumulative reduction of approximately 300 MWh in peak electricity demand over three years.
- Water sector supply and demand measures:
  - AAC (Aqaba-Amman Conveyor Project) will deliver 300 million cubic meters per year when completed.
  - Target to reduce non-revenue water (NRW) from 53 percent in 2022 to 25 percent in 2040.
  - Updated Water Sector Financial Sustainability Roadmap (FSR) will revise assumptions and policy pillars, maintaining an annual NRW reduction target of at least 2 percentage points.
  - FSR targets: full operational and maintenance (O&M) cost recovery by 2032; full O&M plus BOT capital charge recovery by 2042.
- Operational and private-sector engagement in water services:
  - Yarmouk Water Company (YWC) will be subject to a competitive, performance-based management contract tender with fixed and variable fees linked to annual KPIs (water sales, NRW, energy consumption, operating income, collection ratios).
  - Expand private sector participation in treated wastewater (TWW) reuse: TWW currently supplies about a quarter of irrigation water.
  - National Water Strategy targets: raise share of treated wastewater used for irrigation to 35 percent of freshwater use by 2027 and 45 percent relative to freshwater by 2030.
  - Authorities will launch competitive tenders by May 2027 for five-year O&M contracts covering at least 50 percent of national wastewater treatment capacity, excluding the As-Samra plant (equivalent to 110,000 m³/day).

### Pillar II — Strengthening Fiscal and Financial Sector Resilience

- Integrating climate into public investment management:
  - Require all large projects, as defined in the Regulation for the National Register for Government Projects bylaw, to include climate information in the Project Concept Note.
  - Strengthen enforcement mechanisms to ensure ministries comply with project registration and climate screening requirements.
  - A fully integrated National Registry of Investment Projects (NRIP) with completed climate information will prevent unvetted projects from receiving budget allocations and embed climate risk assessments into project appraisal.
- Infrastructure asset management and risk assessment:
  - Government Investment Management Corporation (GIMC) will establish a central fixed asset register for infrastructure owned by state-owned enterprises (SOEs).
  - The register will be developed in phases—initially covering the construction and the electricity sectors—and then gradually expanded to other sectors and fixed assets held by central government entities.
  - The asset register will enable improved vulnerability assessment, inform investment planning, risk mitigation, and fiscal reporting.

*Source: Annex III. Enhancing Jordan’s Resilience to Long-Term Vulnerabilities*

### 11. Climate change should be progressively incorporated in the analysis and reporting of

### 11. Climate change should be progressively incorporated in the analysis and reporting of fiscal risks and in the fiscal strategy.

### Incorporation of climate in fiscal risk analysis and Fiscal Risk Statement
- Information on climate and environment-related fiscal risks, including long-term fiscal sustainability analysis under varying climate scenarios, should be progressively included in the annual Fiscal Risk Statement.
- The Fiscal Risk Statement will be gradually expanded to:
  - assess macroeconomic sensitivity and
  - quantify contingent liabilities arising from SOEs and PPP projects with attention to their climate risk exposure and including the climate assessments of the approved projects from the NRIP.
- The Fiscal Risk Statement will be enhanced by analyzing climate-related vulnerabilities of the fixed assets, using the data from the fixed asset register.
- The statement will present an analysis of long-term fiscal sustainability under different climate scenarios to ensure the fiscal strategy remains resilient under different climate scenarios, and support policymakers in developing risk mitigation measures.

### Financial sector supervision and climate-related financial risks
- To safeguard financial stability and strengthen the resilience of the banking system, the CBJ will incorporate climate-related financial risks into its supervisory framework.
- Rationale:
  - Climate change can materially impact asset quality, collateral values, and credit risk across the financial sector and pose balance of payments risks.
  - Strengthening capacity to identify, monitor, and disclose these risks is critical for long-term financial resilience.
- Planned actions:
  - Following the issuance of the Climate Risk Management Instructions No ( 2) of 2025, the CBJ will issue detailed secondary regulations on climate disclosures and reporting, consistent with the 2022 BCBS principles and aligned with International Sustainability Standards Board.
  - In the meantime, the CBJ will adjust its information system to more efficiently receive and process the new data for enhanced risk management.

---

### Annex IV. Strengthening Pandemic Preparedness in Jordan

### Diagnostic overview and gaps
- COVID-19 highlighted gaps in Jordan’s pandemic preparedness despite long-term health improvements (average life expectancy at birth, child and maternal mortality, control of malaria, tuberculosis, and polio).
- Mixed performance in pandemic preparedness and healthcare system resilience across:
  - the 2016 Joint External Evaluation (WHO 2016),
  - the 2019 and 2021 Global Health Security Index,
  - World Bank in-depth review post-COVID-19 (World Bank 2023).
- Specific issues identified during COVID-19 response:
  - reliance on one-off emergency orders to clarify coordination and to expedite procurement and access of financing;
  - disruptions to access to primary healthcare—critical national healthcare programs affected, including the national vaccination program and delayed appointments for patients with chronic diseases.
- Building a strong pandemic preparedness system requires: coordination and financing responses codified ahead of time and an efficient emergency-ready healthcare system.

### Authorities’ actions and commitments
- Since COVID-19, the Jordan Ministry of Health (MOH) has:
  - strengthened its internal crisis management function,
  - updated emergency response protocols at hospitals and other medical centers.
- The authorities have submitted an application to the Pandemic Fund to seek financing support for policy actions on strengthening Jordan’s pandemic preparedness.
- The development of an emergency-ready healthcare system is aligned with the authorities’ universal healthcare roadmap.

### RSF-supported program objectives and prioritized reform measures
- The RSF-supported program aims to support policy actions on:
  - institutionalizing coordination among stakeholders,
  - strengthening contingency appropriations and governance over emergency spending,
  - supporting development of an emergency-ready health system to ensure continuity of healthcare.
- The World Bank’s Pandemic Preparedness and Health System Resilience Assessment report highlighted the need to:
  - (i) clarify the roles and responsibilities for contingency appropriations earmarked for emergencies and financing arrangements for surge capacity during emergencies;
  - (ii) strengthen governance and institutional arrangements and systems through which actors are held accountable for decisions and policies related to emergency response;
  - (iii) further develop public health functions and resilience, including expanding epidemiological surveillance capacity, strengthening protocols for infection prevention, fortifying early warning systems, and developing health service delivery systems that are emergency ready;
  - (iv) further develop health information and data systems and reporting on spending.
- These reform measures are monitorable by the IMF. Development partners are supporting the authorities.

### Specific reforms to be adopted under the RSF arrangement
- Adopt instructions mandating the implementation of the emergency-ready health benefit package.
  - Purpose: ensure an accessible and emergency-ready healthcare system for continuity of essential medical services during public health emergencies.
  - Support: Implementation will be supported by the WHO.
  - Rationale: Essential medical services at healthcare centers were interrupted during COVID-19, resulting in over-crowded hospitals and uneven use of medical services (including unnecessary spending).
  - Outcome: Provide policy and service delivery frameworks for enabling emergency-ready healthcare system and define a minimum set of health services during public health emergencies.
- Identify financing sources for future public health emergencies.
  - A framework should be established and adopted to clearly identify potential financing sources for future public health emergencies (including the use of contingency funds, re-prioritizing existing spending, and the use of alternative financing and funding instruments), in line with the Fund recommendations.
  - The framework can be formalized through the issuance of an addendum to the Budget Manual and should include clear health emergency triggers for accessing emergency financing sources at the MOF.
  - The framework should have clear rules on usage, replenishment, oversight, accountability and transparency.
  - It should be based on:
    - (i) an assessment of potential scenarios of the fiscal impact of public health emergencies of different sizes, which can be useful in informing the design of the framework;
    - (ii) Jordan’s past experiences of financing emergencies.
- Develop and institutionalize a pandemic preparedness and response coordination framework.
  - Context: The Jordan Center for Disease Control (JCDC) was established in November 2020 but remains in its nascent years; roles and responsibilities across MOH, JCDC, and other entities need clearer delineation.
  - The framework should clarify governance and accountability, and coordination of resourcing and purchasing (as applicable).
- Adopt procedures for monitoring and reporting of public spending on health emergencies.
  - Purpose: enable monitoring of emergency spending to support prioritization during a pandemic and increase reporting and transparency of information on public spending on health emergencies.
  - Guidance: Will be guided by the 2023 International Health Regulations Benchmarks (WHO 2023), which entail establishing a system for accountability of the distribution and use of emergency funds for health emergencies and publishing information documenting transparency in expenditure and program impacts towards protecting health.
  - Implementation notes:
    - Tracking public health emergency related spending can be done through the country’s Financial Management Information System, and the results should inform allocation decision-making during a pandemic.
    - Reporting will be comprehensive of government emergency spending and will include other extra—budgetary (including non-government financing in this fund) based on the guidelines of the WHO and IMF as relevant.
    - Guidelines for both summary and comprehensive reporting on the use of health emergency spending should be codified to support transparency and accountability.

### Development partner engagement (high-level)
- WHO: providing technical support on roll-out of universal health coverage and improving the surveillance system.
- World Bank: providing funding and technical support for National Health Information System and telemedicine improvements and contributed the Pandemic Preparedness and Health System Resilience Assessment (WB 2023).
- Pandemic Fund: successful application for surveillance system improvements noted as part of surveillance enhancements.

---

### Key fiscal and macroeconomic figures cited
- Economic growth:
  - 2024 growth: 2.5 percent
  - 2023 growth: 2.9 percent
- Current account deficit: 5.9 percent of GDP
- Gross international reserves: exceeded US$20 billion
- Inflation: remained below 2 percent

*Source: Excerpt from chapter "11. Climate change should be progressively incorporated in the analysis and reporting of fiscal risks and in the fiscal strategy" and Annex IV of the provided IMF content unit.*

### 2.8 percent of GDP, in line with the fiscal targets set at the time of the second review. Together with

### 1jorea2025001-print-pdf - 2.8 percent of GDP, in line with the fiscal targets set at the time of the second review. Together with

### Fiscal outturns and program compliance
- Combined public deficit contained to 4.5 percent of GDP.
- General government primary surplus (including grants) increased by almost ½ percentage point of GDP, to 0.9 percent of GDP.
- Public debt contained at just over 90 percent of GDP by end-2024.
- All commitments for the third review under the EFF arrangement met:
  - Met all end-December 2024 performance criteria and all end-December 2024 indicative targets.
  - Met most indicative targets for end-March 2025.
  - Met three out of four structural benchmarks set for the third review and making progress on arrears related to health exemptions.
- Request for completion of the third review and approval to make a purchase in the amount of SDR 97.784 million.
- Requested modifications to:
  - end-June 2025 performance criteria for the central government primary balance (excluding grants and transfers to public utilities) and the combined public balance;
  - end-December 2025 performance criterion on the CBJ’s net international reserves.

### Near-term macroeconomic outlook and projections
- Growth:
  - Recorded growth of 2.5 percent for the year (2024).
  - Growth expected to pick up to 2.7 percent in 2025.
  - Barring additional shocks, growth expected to pick up further to over 3 percent in the coming years, supported by several large investment projects, including the Aqaba Amman Conveyor (AAC) project.
- Current account and inflation:
  - Current account deficit expected to remain limited to 5.5 percent of GDP.
  - Inflation expected to remain low, at just over 2 percent.
- Risks:
  - Lingering impact of regional conflicts and high uncertainty from shifts in economic policies of major economies.
  - Continued international support considered critical to meet financing needs and refugee-related costs.
- Social conditions:
  - Unemployment remains high at about 21 percent.

### Fiscal policy stance and targets (2025–28)
- Fiscal anchor: reduce public debt to below 80 percent of GDP by 2028.
- Commitment to a continued steady fiscal consolidation in 2025–28 with an average annual fiscal adjustment of about 1 percent of GDP.
- 2025 budget and fiscal numbers:
  - Parliament adopted a central government budget for 2025 limiting the general government primary deficit (excluding grants and transfers to public utilities) to JD 812 million, equivalent to 2 percent of GDP.
  - Expected reduction in the combined public deficit to JD 1,438 million, or 3.6 percent of GDP, in 2025.
  - Expected reduction in the combined public primary deficit by about 1 percent of GDP to 3.6 percent of GDP.
  - Projected overall general government primary surplus (including grants) of 1.7 percent of GDP and public debt reduced to 89.7 percent of GDP by end-2025.
- Contingency approach:
  - Continued refrain from reallocating capital spending to current spending.
  - Use any overperformance in revenue collection to pay off more expensive debt or increase capital spending and use additional grants to replace more expensive financing.
  - Will take contingency measures (raising additional revenues and reducing non-priority spending) should downside risks materialize.

### Revenue mobilization and public financial management reforms
- Medium-Term Revenue Strategy (MTRS) to be developed (structural benchmark for September 2025) with IMF Fiscal Affairs Department support.
- Tax administration and digitalization measures:
  - ISTD mandated e-invoicing for 100 percent of sales transactions and issued regulations requiring e-invoices for all expenses reported in tax declarations (met SB for March 2025).
  - Procurement of a new Integrated Tax Administration System (ITAS) in pre-qualification stage; expected to finalize procurement process by December 2025.
  - Expansion of transfer pricing rules rollout to related parties as phase III by September 2025.
- Customs and post-clearance audits:
  - Amendments to the Customs Law adopted by Parliament in April and expected to come into effect by July 2025 to enable a new Post-Clearance Audit (PCA) regime and data sharing between Customs and ISTD.
- Social Security Corporation (SSC):
  - Conducting an actuarial review with ILO and World Bank; initial reform proposals expected by end-2025.
- SOE and PPP oversight:
  - Adopt and publish an SOE ownership policy and assign monitoring to the FCCL unit in the Ministry of Finance (SB for March 2026).
  - Require submission of annual audited statements to the FCCL unit.
  - Centralized database of all PPP contracts established; aim to complete JONEPS rollout for all ministries and government entities by June 2026.
  - Full integration of JONEPS and GFMIS to be completed by end-December 2025.
- Health sector arrears:
  - Sign a cancer insurance agreement with the King Hussein Cancer Center to cover treatment of Jordan’s cancer patients; cost financed from several budget lines and will be deficit neutral with redemption of existing arrears over an eight-year period.

### Monetary and financial policies
- Central Bank of Jordan (CBJ) stance:
  - Policies aimed at preserving monetary and financial stability, underpinned by a firm commitment to the exchange rate peg to the US dollar.
  - CBJ will continue to adjust policy rates in parallel with the U.S. Federal reserves and stands ready to undertake policy adjustments as needed.
  - CBJ will continue to strengthen reserve buffers so that they remain above 100 percent of the IMF’s Assessing Reserve Adequacy (ARA) metric.
  - CBJ will gradually reduce concessionality of its remaining preferential lending scheme, initially with an increase of 50 basis points of the interest rate on new loans issued under the scheme, as soon as global market volatility reduces.
- External position and safeguards:
  - Will not introduce or intensify restrictions on payments and transfers for current international transactions, introduce or modify multiple currency practices, enter into bilateral payment agreements inconsistent with Article VIII of the IMF Articles of Agreement, and/or introduce or intensify import restrictions for balance of payments purposes.

### Resilience and Sustainability Facility (RSF) request and program monitoring
- RSF objectives:
  - Address long-term vulnerabilities in the water and electricity sectors and enhance ability to address health emergencies, including future pandemics.
  - Focus areas: (i) enhancing energy efficiency and resilience, increasing the share of renewable energy in power generation, and improving energy sector financial sustainability; (ii) improving water management and water sector financial sustainability; (iii) strengthening fiscal and financial sector resilience; (iv) enhancing pandemic preparedness and readiness for future health emergencies.
- RSF request:
  - Request access of SDR 514.65 million, equivalent to 150 percent of quota, to be used for budget support.
  - RSF arrangement to run concurrent with the EFF arrangement and be monitored through implementation of reform measures (RMs) outlined in the attached MEFP.
- Monitoring and reviews:
  - Program monitored through semi-annual quantitative performance criteria, structural benchmarks, and quarterly indicative targets as set forth in Tables 1 and 2 of the attached MEFP and defined in the attached TMU.
  - Expected timing: fourth review under the extended arrangement to be completed on or after October 1, 2025, and the fifth review on or after April 1, 2026.

*Source: Letter of Intent and Attachment I. Memorandum of Economic and Financial Policies (excerpts).*

### 9. Building on ongoing progress, we will further enhance the resilience of the financial

### 9. Building on ongoing progress, we will further enhance the resilience of the financial sector

### Financial sector resilience and oversight
- Jordan’s banking system remains liquid and well-capitalized; banks assessed to be well-placed to withstand further shocks given high levels of system wide regulatory capital and robust earnings.
- System-wide capital adequacy ratio: 18 percent at end 2024 (CBJ regulatory minimum: 12 percent).
- Non-performing loans (NPLs): 5.6 percent at end 2024 (increase of 0.5 percentage point), reflecting the reclassification of some loans and the impact of the conflict.
- Provisions for non-performing loans (coverage ratio): 74.5 percent as of end 2024 (75.6 percent at end 2023).
- CBJ provisioning standards: maintained stringent provisioning in line with IFRS9’s forward-looking expected loss approach.
- CBJ actions and planned measures to strengthen oversight and crisis management:
  - Introduce Pillar 2 risk assessment methodologies to make capital assessments more sensitive to individual banks’ risk profiles (SB for November 2025).
  - Align prudential requirements for concentration risk and related party exposure with BCPs (SB for November 2026).
  - Design and operationalize procedures for the compensation of depositors together with JODIC (SB for November 2026).
  - Review and update outdated or misaligned regulations related to credit risk to strengthen credit risk supervision (new SB for November 2027).
  - Develop resolution plan for major cross border D-SIB.
  - Establish a sound risk-management framework for comprehensively managing legal, credit, liquidity, operational, and other risks of the Real Time Gross Settlements system-Jordan (RTGS-JO) by March 2026.
  - Collect additional data for more comprehensive and thorough financial stability analyses.
- AML/CFT: continue to enhance effectiveness of the AML/CFT framework, including by strengthening risk-based AML/CFT supervision, and increasing international cooperation.

### Electricity sector reforms and targets
- Time-of-use (ToU) tariffs rollout:
  - First round captured over 15 percent of total electricity consumption (electric vehicles, telecommunication and industrial sectors).
  - Applied ToU tariffs to capture at least 30 percent of total electricity consumption, effective January 1, 2025 (met SB for January 2025).
  - Complete installation of smart meters for the residential sector by end-2025 (SB for June 2026).
  - Apply ToU tariffs to all sectors, including the residential sector, by September 2026 (SB for September 2026).
- NEPCO loss target and measures:
  - Limit NEPCO’s losses to JD 435 million (1.1 percent of GDP) in 2025.
  - Implement measures to durably reduce NEPCO’s operational losses, including:
    - Optimize conventional and renewable power purchase agreements (PPAs).
    - Reduce operational and technical losses in distribution companies until these achieve a target of 9 percent losses, allowing NEPCO to adjust bulk tariffs accordingly.
  - Facilitate increase in renewable energy generation, especially for the water sector, by approving permits for renewable energy and energy efficiency projects within grid capacity constraints; immediately approve all renewable off-grid energy and storage projects for the water sector.
  - Award a contract, on mutually acceptable technical and financial terms, to establish an Automated Energy Control Center (AECC) to enhance capacity to monitor and manage renewable energy connected to the electrical system, including transmission and distribution networks and grid stability, in collaboration with Energy and Minerals Regulatory Commission (EMRC) and distribution companies (new SB for September 2026).
  - AECC role: centralized digital platform using national smart meter data to help NEPCO track and respond to fluctuations in peak load demand, integrate distributed energy resources and improve monitoring of the overall grid.

### Water sector reforms and targets
- National Water Strategy (NWS) and Financial Sustainability Roadmap (FSR) alignment.
- Non-revenue water (NRW) reduction:
  - Reduced NRW from 50 percent in 2022 to 45 percent by end 2024.
  - Continue to reduce NRW by 2 percent per year, to 37 percent by 2030 and 25 percent by 2040.
- Tariffs and financial targets:
  - Second water tariff increase implemented December 2024, with commitment to further annual average increases of 4.6 percent.
  - Limit consolidated water sectors’ operational losses to JD 182 million (0.6 percent of GDP) in 2025.
  - Continue to optimize operating and maintenance costs, increase energy efficiency, reduce NRW, and ensure revenues sufficient to achieve full cost recovery of water and wastewater services’ operations and maintenance (including operations and maintenance of build-operate-and-transfer (BOT) projects) by the time the AAC project is operational; and cover BOT capital charges by 2042.
- AAC project timeline:
  - Aim for financial closure of the AAC project by end of 2025.
  - Target for the AAC project to come online by 2030.
  - Once unit costs for the AAC project are established, update the FSR to ensure achievement of cost recovery objectives.
- Arrears and transparency:
  - Remain committed to clearing water sector arrears, including through timely cash transfers from MOF to WAJ.
  - Publish audited financial statements for each of the water companies (Miyahuna, Yarmouk and Aqaba) for the financial year 2024 (new SB for September 2025) and continue annual publication.

### Structural policies to promote jobs, competition, and public sector modernization
- Public Sector Modernization Roadmap:
  - Implemented job description and performance-based salary-setting mechanism for all Category 1 civil service employees based on position qualifications, competencies, and merit (met SB for December 2024).
  - Rolled out performance-based promotion mechanism to cover all civil servants in March 2025.
- Legislation and regulatory actions submitted to Parliament (submitted ahead of schedule):
  - Amendments to the Competition Law to enhance independence and effectiveness of the competition authority (met SB for September 2025).
  - Amendments to the Labor Law to reduce distortions, enhance labor market flexibility and female labor participation (met SB for September 2025).
  - Amendments to the Social Security Law to strengthen unemployment insurance, facilitate flexible work arrangements, and reduce benefit inequality between men and women in an actuarily neutral way (met SB for September 2025).
- Work permit and business services reforms:
  - Amended work permit regulations for skilled non-Jordanians: limit approval time to a maximum of 15 working days and reduce fee to JD 1,500 per year.
  - Adopted a national plan to enhance business related services, including development of a unified portal for businesses, process re-engineering reforms, and a plan to abolish, simplify and digitize sectoral licenses within two years.
  - Streamline three food-related licenses under JFDA to be completed by October 2025; ensure approval time for license applications will not exceed 30 days.
- Competition and sector-specific reforms:
  - Adopted roadmap to enhance competition in fuel derivatives sector and will adopt similar roadmap for lane transport sector based on Competition Directorate reviews.
  - For fuel derivatives sector: streamline license renewal process; review instructions related to storage and distribution of LPG cylinders; issue a license for a new company to operate in LPG cylinder filling; strengthen EMRC capacities in competition practices and assessments, including revision of all relevant regulations affecting market conditions.
- Digitalization target:
  - Digitalize 80 percent of automatable government services by end-2025 in line with the Public Sector Modernization Roadmap (revised SB for December 2025).

### Selected quantitative indicators and conditionality (high-level)
- NEPCO losses target for 2025: JD 435 million (1.1 percent of GDP).
- Water sectors’ operational losses target for 2025: JD 182 million (0.6 percent of GDP).
- Smart meter installation completion for residential sector: target by end-2025 (SB for June 2026).
- ToU tariffs coverage targets:
  - At least 30 percent of total electricity consumption: effective January 1, 2025 (met SB for January 2025).
  - All sectors including residential: by September 2026 (SB for September 2026).
- CBJ Pillar 2 introduction: SB for November 2025.
- CBJ alignment for concentration risk and related party exposure with BCPs: SB for November 2026.
- CBJ procedures for depositor compensation with JODIC: SB for November 2026.
- CBJ review/update of credit risk regulations: new SB for November 2027.
- AECC contracting: new SB for September 2026.
- Publish audited financial statements for Miyahuna, Yarmouk and Aqaba for financial year 2024: new SB for September 2025.
- AAC project: financial closure by end-2025; online by 2030; BOT capital charges coverage by 2042.
- NRW reduction path: 45 percent by end 2024; 37 percent by 2030; 25 percent by 2040.
- Annual average water tariff increases commitment: 4.6 percent.

*Source: 1jorea2025001-print-pdf - 9. Building on ongoing progress, we will further enhance the resilience of the financial sector*

### 14. We recognize the importance of reducing long-term vulnerabilities in the water and

### We recognize the importance of reducing long-term vulnerabilities in the water and energy sectors for fostering sustainable growth.

### Climate vulnerability, water scarcity, and energy transition: key findings
- Water availability: "well below the absolute water scarcity level of 500 m3 per capita per year, with about 60 m3 of water available per capita per year."
- Climate impacts: recurrent droughts and flash floods with fatalities, substantial damage, and adverse effects on production.
- Energy mix progress: share of renewable energy (RE) in total electricity supply increased "from less than 1 percent in 2014 to about 27 percent in 2024"; target of "30 percent electricity from renewables by 2030."
- Greenhouse gases: Jordan accounts for "less than 0.1 percent of total global GHG emissions."
- Nationally Determined Contribution (NDC): committed to reducing greenhouse gas emissions "by 31 percent against ‘business-as-usual’ by 2030, of which 5 percent is unconditional and 26 percent conditional on external support."

### Progress and ongoing measures (summary of implemented and planned actions)
- Water sector supply and management:
  - AAC project: desalinate and transfer "300 million m3 water to the population centers."
  - Increase re-use of treated wastewater, network improvements, and gradual, equitable tariff increases.
- Electricity sector measures:
  - Replace expensive conventional PPAs over the medium- to longer-term with cheaper RE where feasible.
  - Deploy Time-of-Use (ToU) tariffs and install smart meters to reduce peak demand.
- Health system resilience:
  - Shift from expensive hospital care to preventive care; adopt PHC-focused benefit package aligned with Jordan’s Roadmap to Universal Health Coverage and Health Financing by 2030, supported by WHO.
  - Improve emergency preparedness, response, and recovery capacity in health systems based on lessons from COVID-19.

### Reform Pillar I — Enhancing Resilience of the Energy and Water Sectors: commitments and targets
- Renewable generation and storage:
  - Update National Energy Strategy 2025–30 with focus on RE integration; evaluate technologies including the Mujib hydro-storage facility under least-cost principles and PPP modalities.
  - Issue two Requests for Expressions of Interest (EOIs): (1) hydro-pumped storage project and (2) a 200 MW photovoltaic (PV) power plant.
  - Issue an Expression of Interest for battery storage contingent on strategy findings; required MWh capacity to be defined in the strategy.
  - Launch at least one tender for a pilot storage project with "a meaningful capacity of at least 40 MWh" to be issued "before October 2027 (RM12)."
  - Tender documentation to set clear technical and financial requirements to ensure bankability and private investment.
- Demand-side management and ToU rollout:
  - ToU tariffs rollout to sectors capturing "at least 30 percent of total electricity consumption."
  - MEMR to complete a review "twenty-four months after the rollout of ToU tariffs" to assess weighted average reduction in peak-time electricity usage relative to the year prior to ToU implementation, accounting for baseline demand growth.
  - By October 2027, MEMR to begin implementing a time-bound action plan (reflected in MEFP) to achieve meaningful peak demand reduction (RM11); cumulative reduction target of "approximately 300 MWh in peak electricity demand over a three-year period."
  - Action plan to include energy efficiency standards, public awareness campaigns, and more dynamic pricing, and to protect vulnerable groups.
- Water sector financial sustainability and service delivery:
  - Adopt and publish updated water sector Financial Sustainability Roadmap (FSR) by "November 2026" in consultation with Fund staff (RM7).
  - FSR to revise pillars and model assumptions, factor in AAC impact, and maintain an annual non-revenue water (NRW) reduction target of "at least 2 percentage points."
  - FSR policy framework for "2026–2042," implementation starting in early 2027, to ensure revenues sufficient to achieve water and wastewater services operational and maintenance (O&M) cost recovery by "2032," and full recovery of both O&M and BOT capital charges by "2042," while protecting vulnerable groups.
  - Define cost recovery targets and implementation plans for WAJ, the Jordan Valley Authority, and water companies, with annual and medium-term benchmarks and actions to reduce inter-agency arrears.
- Private sector participation in water and wastewater:
  - Performance-based management contract tender for YWC service area (RM1) with fixed and variable fees linked to annual KPIs (annual water sales, non-revenue water, power consumption, operational income, annual collections ratio).
  - Issue EOIs for private entities to operate and manage wastewater infrastructure by "November 2025."
  - Launch competitive tenders by "May 2027" for O&M of wastewater treatment plants under contracts "for a duration of at least five years," aiming to reach "35 percent of treated wastewater usage for irrigation relative to freshwater by the end of 2027," with tenders covering "at least 50 percent of total national treatment capacity, excluding the As-Samra plant (RM8), which is the equivalent of 110,000 m3/day."
  - Target to increase treated wastewater share for irrigation to "45 percent relative to freshwater by 2030."

### Reform Pillar II — Strengthening Fiscal and Financial Sector Resilience: reforms and timelines
- Public Financial Management (PFM) and Public Investment Management (PIM):
  - Enforce use of NRIP processes for large projects; ensure capital projects submitted for budget approval are approved by PIM and registered in NRIP.
  - By "November 2025," MOF to issue a budget circular referencing the Regulation for the National Register for Government Projects bylaw to ensure large projects comply with NRIP appraisal and feasibility study guidelines that include climate-related impact and risk criteria; publish a summary of climate assessment information of large projects approved by PIM and registered in NRIP in the "2026 budget documents (RM2)."
- Central fixed asset register and SOE classification:
  - GIMC to establish a central fixed asset register for infrastructure owned by SOEs to evaluate exposure to climate-related risks.
  - GIMC to classify SOEs into strategic, immature-strategic, and non-strategic, and develop the asset register in phases—covering the construction sector by "2025" and the electricity sector by "2026 (RM4)." Extend to the water sector by "2027" and to central government fixed assets later.
  - Incorporate summaries of climate vulnerability assessments into the Fiscal Risk Statement in coordination with MOF.
- Fiscal Risk Statement enhancements:
  - Expand the Fiscal Risk Statement to quantify contingent liabilities from SOEs and PPP projects and assess climate risk exposure, including NRIP-approved project climate assessments; publish the expanded statement by "May 2027 (RM9)."
  - Present analysis of long-term fiscal sustainability under different climate scenarios to inform risk mitigation.
- Central Bank (CBJ) supervisory and disclosure reforms:
  - CBJ to embed climate-related risks into supervisory framework, aligned with BCBS updated core principles and forthcoming Pillar 3 disclosure framework.
  - Issue secondary regulations on climate-related disclosures and reporting by "May 2026 (RM3)," aligned with 2022 BCBS principles and ISSB; Climate Risk Management Instructions No. 2 of 2025 already issued.
  - Adjust information systems to collect and analyze climate-related financial data, including extreme weather risk.
- Sovereign Green Bond Framework:
  - Develop Sovereign Green Bond Framework with World Bank technical support; cabinet to issue decree adopting the framework, aligned with ICMA Green Bond Principles and external review recommendations, by "November 2025."

### Reform Pillar III — Strengthening Pandemic Preparedness: commitments and deliverables
- Pandemic preparedness and health security assessments:
  - Publish updated Joint External Evaluation (JEE) and the National Action Plan on Health Security (NAPHS) by "May 2027" in collaboration with WHO.
  - Reforms align with Universal Health Coverage and Health Security Roadmap.
- Emergency-ready health benefits package and governance:
  - Adopt a by-law on expansion of a healthcare benefits package as part of UHC and Health Financing Roadmap by "the end of 2025."
  - Following the by-law, develop detailed instructions with WHO to mandate an emergency-ready minimum set of health services and governance frameworks by "November 2026 (RM5)."
  - Draw on WHO best practices, including the 2020 guidance on Maintaining Essential Health Services for operational design.

*JORDAN  INTERNATIONAL MONETARY FUND*

### 31. The Ministry of Finance will codify the sources and uses of financing for future public

### 31. The Ministry of Finance will codify the sources and uses of financing for future public

### Codifying emergency financing (RM6)
- Action: Ministry of Finance (MOF) to clarify and codify procedures for potential emergency financing sources and their use through an addendum to the Budget Manual.
- Scope: Procedures, triggers, and institutional responsibilities for activation, disbursement, and oversight of public health emergency-related spending.
- Instruments to be codified: use of contingency funds, re-prioritizing existing spending, and use of other alternative financing and funding instruments for public health emergencies.
- Design features: Incorporate international experience in designing triggers to access emergency financing, including:
  - quantitative measures and non-quantitative criteria,
  - epidemiological information (e.g., outbreak confirmation),
  - health system capacity thresholds (e.g., ICU saturation),
  - event-based triggers (e.g., natural disasters or mass population displacement),
  - formal emergency declaration (by agency, nationally and internationally).
- Integration of domestic evidence: draw on Jordan's past experiences of financing emergencies and on potential scenarios of the fiscal impact of health emergencies drawing on work with the World Bank on a disaster risk financing assessment in late 2025.
- Timeline and milestone:
  - Implementation through issuance of an addendum to the Budget Manual by November 2026 (RM6).
- Expected outcome: improve and codify processes for accessing financing in a health emergency, with clear health emergency triggers for accessing different sources of emergency financing, reducing the need to rely on defense orders in the future.

### Governance and coordination for pandemic preparedness (RM10)
- Action: Adopt and implement a national pandemic preparedness governance and accountability framework via a Cabinet decree.
- Coverage: Define roles and responsibilities across government entities (from strategic decision-makers to central government to operational implementation), particularly between the Ministry of Health, JCDC and other agencies.
- Specific measures to be established by May 2027 (RM10):
  - establish a pandemic preparedness national coordination committee with a clear mandate, composition, and reporting lines;
  - develop Terms of Reference that outline membership, meeting frequency and operational protocols;
  - codify leadership roles during different phases, distinguishing pre-emergency detection responsibilities from emergency response command and control authority.
- Systems integration: integrate the Emergency Operations Centre system into the coordination framework to support joint simulation exercises, real-time decision testing, and facilitate rapid data flows.
- Alignment: align coordination Standard Operating Procedures with financing and procurement protocols by May 2027.
- Expected outcome: institutionalizing a whole-of-government coordination mechanism to expedite responses for pandemic preparedness and during pandemics.

### Monitoring and reporting of public spending on health emergencies (RM13)
- Action: MOF to establish a framework of procedures and templates for consolidated monitoring and reporting of public spending on health emergencies.
- Deliverables and timeline:
  - issue data reporting templates and changes to the budget manual by November 2027 (RM13);
  - mandate quarterly monitoring and reporting to the Cabinet and to the public of health emergency spending.
- Reporting features:
  - guidance on inclusion of spending in emergency budgets;
  - guidelines on initial assessments of the impact of spending decisions on public finances;
  - definitions of policy goals for emergency spending;
  - templates for reporting both on- and off-budget emergency spending (including contributions from donors and philanthropies channeled through the budget or extra-budgetary funds);
  - capacity for timely reporting (for example weekly) to the Cabinet on progress of implementing emergency spending.
- Uses of enhanced reporting:
  - strengthen decision-making during public health emergencies;
  - enable comprehensive post-emergency reporting for accountability and transparency;
  - clarify approach to track additional emergency-related spending.
- Expected outcome: strengthen decision-making during public health emergencies as well as the assessment of the spending afterwards.

### Program monitoring and institutional arrangements
- Monitoring instruments for the EFF arrangement:
  - semi-annual reviews, quantitative performance criteria (QPCs), indicative targets (ITs), and structural benchmarks (SBs).
  - definitions and data requirements provided in the attached Technical Memorandum of Understanding (TMU).
  - IMF purchases will be used for budget support during the program period.
- Inter-agency arrangements:
  - Memorandum of Understanding between the Central Bank of Jordan (CBJ) and the Ministry of Finance on responsibilities for servicing financial obligations to the IMF signed.
  - A technical troika chaired by the Ministry of Planning and International Cooperation, under the leadership of the Minister of Finance, the Minister of Planning and International Cooperation, and the Governor of the Central Bank of Jordan, is responsible for monitoring implementation of the program and liaising with the IMF.
- Data reporting commitments:
  - production and sharing of quarterly and annual financial results of the electricity sector (NEPCO and the three distribution companies), and the water sector without delay.

### Related RSF reform measures and timelines (selected pandemic preparedness and fiscal resilience entries)
- RM5: MOH to adopt and issue instructions mandating an emergency-ready health benefits package by Nov 2026 (WHO support; 6th EFF review). Expected outcome: anchor emergency-ready health system to ensure continuity of essential health services during public health emergencies.
- RM6: MOF to codify emergency financing procedures by Nov 2026 (IMF/WHO support; 6th EFF review). Expected outcome: codifying triggers and uses of emergency financing to expedite processes during health emergencies.
- RM10: Cabinet to adopt national pandemic preparedness governance and accountability framework by May 2027 (IMF/WHO support; 7th EFF review). Expected outcome: institutionalize whole-of-government coordination.
- RM13: MOF to issue data reporting templates and mandate quarterly monitoring and public reporting of health emergency spending by Oct 2027 (IMF/WHO support; 8th (final) EFF review). Expected outcome: strengthen decision-making and post-emergency assessment of spending.

### Program exchange rates and gold price (as of September 30, 2023)
- Exchange rate of the Jordanian dinar to the U.S. dollar: JD 0.709 = $1.
- Gold price: JD 1329.335 per fine troy ounce (for measurement of the program performance criterion on net international reserves).
- Program Exchange Rates (As of September 30, 2023) — Currency / Jordanian Dinar Per Unit of Foreign Currency:
  - British Pound: 0.860760
  - Japanese Yen: 0.004747
  - Euro: 0.74477
  - Canadian dollar: 0.525555
  - SDR: 0.929665
  - CNY: 0.0970395

*Source: 1jorea2025001-print-pdf - 31. The Ministry of Finance will codify the sources and uses of financing for future public*

### 3. Any developments that could lead to a significant deviation from quantitative program

### 3. Any developments that could lead to a significant deviation from quantitative program

### Program monitoring and triggers
- Any developments that could lead to a significant deviation from quantitative program targets will prompt discussions between the authorities and staff on an appropriate policy response.
- Performance criteria and indicative targets are specified in Table 1 attached to the MEFP and are monitored as described below (semi-annually with indicative quarterly targets, or continuously where noted).

### Definition of debt (Guidelines reference)
- Debt is defined as in paragraph 8(a) of the Guidelines on Public Debt Limits in Fund-Supported Programs attached to Executive Board Decision No. 16919-(20/103), adopted October 25, 2020.
- For this guideline, “debt” means a current (non-contingent) liability created under a contractual arrangement requiring future payments of assets or services; primary forms include:
  - (i) loans (including deposits, bonds, debentures, commercial loans, buyers’ credits, repurchase agreements, official swap arrangements);
  - (ii) suppliers’ credits; and
  - (iii) leases (debt measured as the present value at inception of all lease payments expected to be made during the agreement, excluding operation/maintenance payments).
- Under this definition, arrears, penalties, and judicially awarded damages arising from failure to make payment under contractual obligations that constitute debt are debt.

### Quantitative performance criteria and indicative targets (overview)
- Specified targets include:
  - A performance criterion (ceiling) on the primary fiscal deficit of the central government excluding grants and net transfers to NEPCO and the state-owned water sector.
  - A performance criterion (ceiling) on the combined primary deficit of the central government, the operational loss of NEPCO, and the overall deficit of the state-owned water sector (“combined public deficit”).
  - A performance criterion (floor) on the net international reserves (NIR) of the Central Bank of Jordan (CBJ).
  - A continuous performance criterion (zero ceiling) on the accumulation of external debt service arrears.
  - An indicative target (floor) on social spending by the central government.
  - An indicative target (ceiling) on public debt, net of SSC’s holdings of government debt.
  - Indicative targets (ceilings) on domestic payment arrears of NEPCO; WAJ; and Aqaba, Miyuna, and Yarmouk water companies.
  - An indicative target (ceiling) on the net domestic assets (NDA) of the CBJ.
- Monitoring frequency:
  - Central government primary fiscal deficit, combined public deficit, and social spending: monitored semi-annually (with indicative targets for other quarters) on a cumulative basis from the beginning of the calendar year.
  - NIR, public debt (and short-term public debt), domestic payment arrears of NEPCO, WAJ, Aqaba/Miyuna/Yarmouk water companies, and NDA of the CBJ: monitored semi-annually (with indicative targets for other quarters) in terms of stock levels.
  - Accumulation of external debt service arrears: monitored continuously.

### Ceiling on the primary deficit of the central government (excluding grants and net transfers to NEPCO and state-owned water sector)
- Central government defined as the budgetary central government covered by the annual General Budget Law (GBL); operations measured on a cash basis.
- Primary deficit (excluding grants and net transfers to NEPCO and state-owned water sector) is defined as the sum of:
  - (i) net external financing of the central government;
  - (ii) receipts from the sale of government assets received during the relevant period;
  - (iii) net domestic bank financing of the central government;
  - (iv) net domestic nonbank financing of the central government;
  - (v) grants received from abroad by the central government, including grants from the Gulf Cooperation Council;
  - less (vi) domestic and foreign interest payments by the central government; and
  - (vii) net transfers from the central government to NEPCO and the state-owned water sector.
- Definitions:
  - Net external financing: cash external debt disbursements received by the central government less external debt repayments paid by the central government (covers central government debts and foreign debts channeled through the central government to finance the rest of the public sector).
  - Receipts from sale of government assets: transfers of monies from sale of shares, sale of non-financial assets, leases, and sale of licenses or exploration rights with duration of 10 years and longer.
  - Net domestic bank financing: change in banking system’s claims in JOD and FX on central government, net of the General Treasury Account balance with the CBJ.
  - Net domestic nonbank financing: central government borrowing from, less repayments to, the non-bank sector (including nonfinancial public sector not covered by the general budget and the Social Security Investment Fund); equals cumulative change from December 31 of the previous year in government debt held by nonbanks and float.
  - Net transfers to NEPCO and state-owned water sector: (i) direct transfers (including subsidies, cash advances, payment of debt or guarantees if called) minus (ii) cash transfers from NEPCO and the state-owned water sector to the central government (including repayments of debt, arrears, or cash advances).
- Adjustors to the ceiling on the primary deficit:
  - Downward by 50 percent of any shortfall in foreign budgetary grants received by the central government relative to levels in Table 1 of the MEFP.
  - Downward by the extent the combined stock of health and energy arrears by the central government exceeds the projected combined stock specified in Table 1 (excluding one-off settlement operations such as write-offs of intra-governmental claims).
  - Upward by the extent the stock of arrears by WAJ and the distribution companies falls below projected stock specified in Table 1 (excluding one-off settlement operations).
  - Downward by the extent the stock of checks issued by the central government but not yet cashed exceeds JD 200 million (the programmed stock as specified in Table 1 of the MEFP) for the end-year indicative target or performance criterion.

### Ceiling on the combined public deficit
- Defined as the sum of:
  - (i) the primary deficit of the central government excluding grants and net transfers to NEPCO and the state-owned water sector;
  - (ii) the operational loss of NEPCO; and
  - (iii) the overall deficit of the state-owned water sector.
- Operational loss of NEPCO defined as: total operating revenues minus total costs for normal operations as reported in the unaudited income statement.
  - Total operating revenues: (i) sales of operating power; and (ii) all other revenue, excluding proceeds from central government transfers or payments made on NEPCO’s behalf.
  - Total costs: (i) purchase of electric power (including fuel costs, capacity and energy charges, and all costs related to electricity generation to be borne by NEPCO); (ii) fuel transportation costs; (iii) depreciation; (iv) all other maintenance and operating expenses, including wages, remuneration of the board of directors, and provisions; and (v) interest expense and other financial costs.
- Overall balance of state-owned water sector defined as total revenues minus current and capital expenditures.
  - Total revenues: (i) sales of goods and services; (ii) property income; and (iii) all other revenue, excluding grants and proceeds from central government transfers or payments made on their behalf.
  - Current and capital expenditures: (i) salaries, wages and allowances; (ii) social security contributions; (iii) use of goods and services, including energy costs; (iv) interest payments on domestic and foreign loans; (v) any other expenses, including pensions; and (vi) capital expenditures.
- Adjustors to the combined public deficit ceiling:
  - Downward by 50 percent of any shortfall in foreign budgetary grants received by the central government relative to Table 1 of the MEFP.
  - Downward by the extent the combined stock of health and energy arrears by the central government exceeds the projected combined stock specified in Table 1 (excluding one-off settlement operations).
  - Downward by the extent the stock of checks issued by the central government but not yet cashed exceeds JD 200 million (the programmed stock as specified in Table 1 of the MEFP) for the end-year indicative target or performance criterion.

### Floor on the Net International Reserves (NIR) of the CBJ
- NIR of the CBJ in U.S. dollars defined as foreign assets of the CBJ minus its foreign liabilities.
- Foreign assets include: foreign exchange (foreign currency cash, deposits with foreign correspondents, and holdings of foreign securities), monetary gold, IMF reserve position, and SDR holdings.
- Excluded from foreign assets: assets pledged, collateralized, or encumbered; CBJ’s claims on resident banks and nonbanks and on subsidiaries/branches of Jordanian commercial banks abroad; claims in foreign exchange arising from derivatives vis-à-vis domestic currency; precious metals other than gold; assets in nonconvertible currencies; illiquid swaps.
- Excluded from foreign assets is the outstanding balance of bilateral accounts with the Central Bank of Iraq of USD 1,081.67 million.
- Foreign liabilities of the CBJ include all foreign exchange liabilities to residents and nonresidents, including commitments to sell foreign exchange arising from derivatives and Jordan’s outstanding liabilities to the IMF.
- Excluded from reserve liabilities: government foreign exchange deposits with the CBJ; deposits from public institutions and government departments with independent budgets; commercial companies with state participation; deposits from donors (including grants received from the GCC and donor term deposits with the CBJ with an original maturity not less than 360 days); the two technical swaps with Citibank Jordan for USD 88.5 million; and amounts received under any SDR allocations received after March 31, 2016.
- Stock of foreign assets and liabilities shall be valued at program exchange rates.
- Adjustors to the NIR floor:
  - Upward (downward) by the extent the sum of foreign budgetary grants and foreign budgetary loans—excluding any programmed guaranteed and non-guaranteed Eurobonds—received by the CBJ (as specified in Table 1) during the relevant period exceeds (falls short of) the levels specified in Table 1 of the MEFP within any calendar year.
  - Upward by the amount that the outstanding balance of bilateral accounts with the Central Bank of Iraq is repaid, including both principal and interest payments.
  - Floors will be adjusted for delays or changes of external commercial borrowing included in the program.

### Ceiling on the accumulation of external debt service arrears
- External debt service arrears defined as debt service payments (principal and interest) arising in respect of obligations to non-residents incurred directly or guaranteed by the central government or the CBJ that have not been made at the time due, taking into account any contractual grace periods.
- Performance criterion: continuous zero ceiling on accumulation of external debt service arrears.

### Floor on social spending by the central government
- Social spending is defined as central government spending on:
  - (i) non-wage components of the education and health sectors’ current expenditure envelope, including all spending directly related to efforts to prevent, detect, control, treat and/or contain the spread of COVID-19;
  - (ii) NAF’s and other entities’ social protection programs; and
  - (iii) the school feeding program.

### Ceiling on public debt
- Public debt defined as the sum of:
  - (i) central government direct debt (including off-budget project loans);
  - (ii) central government guarantees extended to NEPCO, WAJ and other public entities; and
  - (iii) the stock of the CBJ’s liabilities to the IMF (excluding SDR allocations) not lent on to the central government;
  - minus the Social Security Corporation (SSC) holdings of government debt.
- Guarantees include any explicit legal obligation of the central government (or agency acting on its behalf) to service such debt in the event of nonpayment, or any implicit legal or contractual obligation to finance partially or fully any shortfall.
- Adjustor:
  - Downward by the extent cumulative disbursements under the EFF during the relevant period fall short of the levels specified in Table 1.

### Ceilings on domestic payment arrears (NEPCO; WAJ and Aqaba, Miyuna, Yarmouk)
- Domestic payment arrears defined as belated settlement of liabilities due under contract for more than 60 days, or creditor’s refusal to accept a duly offered settlement.
- Arrears to be covered include outstanding payments on wages and pensions; social security contributions; tax payments; and obligations to banks and other private companies and suppliers.

### Ceiling on the Net Domestic Assets (NDA) of the CBJ
- Reserve money of the CBJ defined as:
  - (i) currency in circulation (currency outside banks and commercial banks’ cash in vaults); and
  - (ii) non-remunerated deposits of licensed banks with the CBJ in Jordanian dinars.
- NDA defined as reserve money minus NIR (as defined in Section D).
- Adjustors to NDA ceilings:
  - Upward (downward) by extent floors on the NIR of the CBJ are adjusted downward (upward).
  - Downward (upward) by the extent the CBJ decreases (increases) reserve requirements on Jordanian dinar deposits of the banking system. Adjustment equals the change in the required reserve ratio multiplied by the stock of deposits with licensed banks at the start of the first month when the new reserve requirement ratio applies that are: (i) denominated in Jordanian dinars; and (ii) subject to reserve requirements.

### Data provision
- To permit monitoring of developments under the program, the government will provide to the IMF (Division B of the Middle East and Central Asia Department) the information specified below.

*International Monetary Fund — JORDAN: Quantitative Performance Criteria, Indicative Targets, and Continuous Performance Criterion: Definitions*

### 54. Related to the ceiling on the primary deficit of the central government excluding grants and

### Related to the ceiling on the primary deficit of the central government excluding grants and net transfers to NEPCO and the state-owned water sector

### Reporting requirements and fiscal/financial data
- Standard fiscal data tables prepared by the ministry of finance covering detailed information on:
  - revenue, including expanded information on revenues from oil derivatives, vehicles, and cigarettes (as agreed with IMF staff);
  - expenditure; balances of government accounts with the banking system; foreign grants; domestic and external amortization and interest; net lending; debt swaps with official creditors; monthly change in the stocks and the monthly value of stocks of uncashed checks and trust accounts.
- Government financing information from the Treasury account, as agreed by both the Ministry of Finance and the Central Bank of Jordan, and any potential discrepancy between the government financial data and the monetary survey data (monthly).
- Gross transfers to and from NEPCO and WAJ detailing amounts paid or received in connection with:
  - debt transactions; transfers to cover losses; amounts directed to repay any outstanding arrears of NEPCO or WAJ (monthly), including those to and from the relevant distribution companies.
- Gross transfers to and from the trade account used by the Ministry of Industry and Trade for wheat and barley transactions including the sale price to mills (monthly).

### Central government arrears and public sector entities
- Stock of all pending bills of the central government that have not been paid for more than 60 days at the end of each quarter (quarterly), including those of the health insurance fund, to distribution electricity companies, and to the Jordan Petroleum Refinery Company.
- Value and quantity of fuel products consumed by public sector entities from the Jordan Petroleum Refinery Company (monthly).
- NEPCO reporting:
  - Full unaudited income statement and the stock of accounts payable and payments overdue less and more than 60 days (quarterly) prepared by NEPCO’s accounting department to compute the PC on NEPCO net loss.
  - Latest audited income statement signed by the auditor (usually available twice yearly with a six-month delay) with full explanation of any changes made to the unaudited version transmitted to the IMF, as soon as it becomes available to NEPCO’s management.
- WAJ and water distribution companies reporting:
  - Full unaudited income statement and the stock of accounts payable and payments overdue less and more than 60 days (quarterly), prepared by WAJ’s Directorate of Finance and Accounting.
  - Full unaudited income statements and the stocks of accounts payable and payments overdue less and more than 60 days (quarterly), prepared by each of the water distribution companies (Aqaba, Miyahuna, and Yarmouk) and WAJ’s Directorates of Finance.
  - Full consolidated financial balance of WAJ and the water distribution companies (Aqaba, Miyahuna, and Yarmouk) prepared by WAJ’s Directorates of Finance.
  - Breakdown of overdue payments by major creditor, and all overdue payments vis-à-vis the central government (quarterly).

### Energy, gas flows, and related reporting
- Monthly gas flows from Egypt in million cubic meters (quarterly).
- Monthly Liquefied Natural Gas (LNG) flows in the LNG terminal in Aqaba in million British Thermal Units and their average price, and breakdown of these flows between local use and re-exports to Egypt (quarterly).

### Central Bank of Jordan (CBJ) reserves, monetary, and banking data
- CBJ’s foreign exchange reserves and preliminary data on dollarization (weekly).
- CBJ’s monthly FX interventions in the interbank market.
- Data on CD auctions (following each auction).
- Monetary statistics (monthly).
- Outstanding balance of bilateral accounts with the Central Bank of Iraq (monthly).
- Banking FSI (quarterly; starting 2021 Q1).

### Continuous performance criteria and external arrears
- Details of official arrears accumulated on interest and principal payments to non-resident creditors. External arrears data will be provided using actual exchange rates and on a daily basis.

### Public debt, guarantees, and social spending floors
- Fiscal tables on the central government’s domestic and external debt (monthly).
- Tables on the stock of debt guarantees extended to NEPCO, WAJ, and other public entities (monthly).
- Data on short-term public debt (monthly).
- Table on the amount of central government spending on each of the components of the social spending definition under the program (monthly).

### Other economic and external data and timeliness
- Other economic data: Interest rates and consumer prices; exports and imports; travel receipts and tourist arrivals; remittances; outstanding balance of non-resident purchases of domestic treasury bills and bonds; GCC grants received by the CBJ, and grants transferred by the CBJ to the Ministry of Finance (monthly).
- Balance of payments (current and capital accounts) and external debt developments (quarterly).
- List of short-, medium- and long-term public and publicly-guaranteed external loans contracted during each quarter, identifying creditor, borrower, amount and currency, maturity and grace period, interest rate arrangements, and amortization profile (quarterly).
- National accounts statistics (quarterly).
- Data dissemination lags:
  - Weekly data and data on CD auctions: no more than one week.
  - Monthly and quarterly monetary and fiscal variables: no more than six weeks.
  - Other monthly and quarterly data: no more than eight weeks.
  - National accounts statistics and balance of payments and external debt statistics: three months.
  - Data related to the continuous performance criterion: within one week after the date when the arrear was incurred.
  - Any revisions to previously reported data should be communicated to staff in the context of the regular updates.

### Definitions and statistical methodology
- Any variable mentioned for monitoring a performance criterion that is not explicitly defined shall be defined in accordance with the Fund’s standard statistical methodology, such as the Government Financial Statistics.
- For variables omitted from the TMU but relevant for program targets, the authorities of Jordan shall consult with the staff on appropriate treatment based on the Fund’s standard statistical methodology and program purposes.

### Climate and pandemic vulnerability: key findings
- Water scarcity and climate exposure:
  - Renewable water resources estimated at 61 cubic meters per capita annually, well below the absolute scarcity threshold at 500 cubic meters per capita annually.
  - Rising temperatures, increasingly erratic precipitation patterns, and more frequent extreme weather events intensify pressures on water availability, agricultural productivity, and urban infrastructure.
  - Recurrent droughts threaten livelihoods in rain-fed agriculture; flooding events cause localized displacement and infrastructure damage.
- Socioeconomic consequences:
  - Climate-induced water scarcity affects access to potable water, with lower-income populations facing disproportionate impact from escalating costs.
  - Drought-driven agricultural losses have contributed to food price volatility, job losses, and an expanding food import bill.
  - Water sector fiscal strains are compounded by rising energy costs associated with water pumping and treatment; increasing cost of supply-side solutions will deepen financial deficits and fiscal risks.
  - Energy sector exposure: increased electricity demand during hotter summers strains generation capacity and system reliability.
- Pandemic and health system vulnerability:
  - Jordan’s location at major migratory bird routes increases exposure to zoonotic and respiratory pathogens.
  - Past outbreaks include influenza, MERS-CoV, West Nile Virus, and COVID-19.
  - Public health spending declined from 5.5 percent to 2.5 percent of GDP over the past decade.
  - High out-of-pocket expenditures: currently over 25 percent of total health spending.
  - Strengthening primary health care, integrated health information systems, and coordination across institutions would enhance preparedness and reduce intermittent medicine stockouts and quality variability.

### Government policies, commitments, and targets
- Climate adaptation:
  - National Adaptation Plan (NAP) finalized in 2021; Monitoring and Learning Framework for Climate Change Adaptation adopted in 2024.
  - Water Sector Financial Sustainability Roadmap (2022) targets reduction in non-revenue water from over 50 percent to 25 percent by 2040 and aims to enhance energy efficiency in water operations.
  - Supply augmentation projects include the Aqaba-Amman Water Desalination and Conveyance Project (with IFC and MIGA support) and expanded wastewater reuse.
  - Tariff reforms: six-year tariff increase plan is currently under implementation.
  - Roadmap aims to restore cost recovery and reduce fiscal losses by 2029.
  - Agriculture: promotion of climate-smart technologies; Urban: updated building codes, improved land-use planning, green infrastructure, disaster risk management.
  - Adaptation mainstreamed into Economic Modernization Vision (EMV) “Sustainable Resources” driver and National Climate Change Policy (2022–2050).
- Climate mitigation:
  - Revised Nationally Determined Contribution (NDC) increases the 2030 GHG emissions reduction target from 14 percent to 31 percent below business-as  -usual (BAU) levels — comprising a 5 percent unconditional reduction and a 26 percent conditional reduction on international support.
  - Target to cap national emissions at approximately 30 MtCO₂e by 2030, relative to a business-as  -usual projection of about44 MtCO₂e.
  - Plans to increase renewable energy’s share in electricity generation to 31 percent by 2030 from 14 percent in 2019 (currently at 27 percent) and to improve energy efficiency by 9 percent across sectors.
  - Longer-term renewable target of 50 percent.
  - National Climate Change Policy (2022–2050) and a Long-Term Low Emissions Development Strategy under preparation to identify future mitigation opportunities (green hydrogen, energy storage, low-carbon transport).
  - Institutional arrangements: high-level inter-ministerial committee; Ministry of Environment coordinates with sectoral ministries. Supporting instruments include the National Energy Strategy, Green Growth Action Plans (2021–2025), and a forthcoming Energy Transition Roadmap.
  - Jordan contributes only around 0.07 percent to global GHG emissions.
- Pandemic preparedness:
  - Establishment of the Jordan Center for Disease Control (JCDC) in 2020 enhanced surveillance and laboratory capacity.
  - Inclusion of Syrian refugees in national health plans.
  - National Center for Security and Crisis Management (NCSCM) strengthened health emergency coordination.
  - Adoption of an all-hazard emergency preparedness approach; 2023 participatory self-assessment of pandemic preparedness with World Bank support.

### Remaining challenges
- Coordination and implementation:
  - Need for more integrated, nexus-based approach across water, energy, agriculture, urban development, and health.
  - Overcoming sectoral silos and institutional capacity gaps; embedding climate priorities into sectoral planning, budgeting, and local governance.
  - Sustained financing and capacity strengthening at national and local levels required to translate governance frameworks into transformative outcomes.
- Emissions coverage:
  - Electricity sector accounts for approximately 39 percent of CO₂ emissions; remaining 61 percent originate from non-electricity sources (transport, industry, residential, other sectors) and require greater attention.
- Pandemic preparedness gaps:
  - 2023 assessment identified needs in inter-agency coordination, surge financing, and procurement readiness.
  - Absence of a dedicated contingency fund and complex emergency resource mobilization processes reduce response agility.
  - Fragmented health information systems and limited integration of financial data into policy planning.
  - Need to strengthen primary health care capacity and decentralize decision-making to improve response speed and equity.

### World Bank Group engagement
- FY2024–2029 Country Partnership Framework (CPF) centers climate action and inclusive green growth; one strategic outcome is “Increased resilience and sustainability with green investments.”
- WBG support includes analytical work, policy dialogue, and financing:
  - Flagship studies (CCDR, Green Growth Development Policy Review) have informed NDCs, NAP, and forthcoming Long-Term Low Emissions Development Strategy.
  - Advisory support has helped integrate climate considerations into budgeting, public investment, and water sector sustainability planning.

*Source: IMF staff report excerpts.*

### 21.      The Bank is also assisting Jordan in greening its financial system. A multi-year technical

### The Bank is also assisting Jordan in greening its financial system. A multi-year technical

### Green finance and climate initiatives
- A multi-year technical assistance program with the Central Bank of Jordan and other institutions supported the development and implementation of the region’s first Green Finance Strategy (2023–2028).
- Components include regulatory reforms, a national green taxonomy, and preparations for the country’s first sovereign green bond.
- Objectives: catalyze private capital and strengthen climate risk management.

### Disaster risk finance and climate preparedness
- The World Bank launched the Expanded Crisis Toolkit in 2024, complemented by a Disaster Risk Finance diagnostic in Jordan.
- Emphasis on a risk-layered financing strategy combining contingency funds, sovereign instruments, and market-based tools—such as the Catastrophe Deferred Drawdown Option—to ensure timely and flexible emergency responses.
- These efforts support both climate resilience and fiscal sustainability.

### WBG operational investments and PforR operations (FY2023)
- $400 million Inclusive, Transparent, and Climate Responsive Investments PforR: strengthens climate-smart public investment.
- $500 million Electricity Sector Efficiency and Supply Reliability PforR: supports grid modernization, renewable energy scale-up, and energy efficiency.
- Additional PforRs promote climate-smart agriculture and improved water resource management.

### Climate grants and emissions reductions
- The Bank has mobilized $4 million in climate grants to reduce Ozone Depleting Substance and CO2 emissions in Jordan.
- The project resulted in reducing CO2 emission by 240,000 ton per year which is 8 percent of Jordan’s NDC Emission Reduction Targets.

### Institutional frameworks, MRV, and carbon market development
- Support for climate-responsive investment criteria under the 2019 Climate Change Law.
- Development of a national MRV system linked to the GHG registry and a Monitoring, Review, and Learning (MRL) framework to track adaptation progress.
- A national carbon market ecosystem is being developed, including Article 6 policy guidance and a Carbon Market Support Window.
- Mainstreaming gender and citizen engagement into climate policy via a forthcoming Climate Change and Gender Strategy and a Climate and Citizen Engagement Action Plan.

### Water sector investments and resilience
- Support for implementation of the National Water Strategy (2023–2040) through a Series of Projects.
- First project: $250 million investment (co-financed by AFD and the GCFF) focusing on water loss reduction, energy efficiency, and institutional performance.
- Analytical work to enhance private sector participation, governance, and climate resilience.
- $125 million Agriculture Resilience, Value Chain Development and Innovation (ARDI PforR): strengthens climate-smart agriculture and water-use efficiency.
- Continued efforts include the Aqaba Amman Conveyance project to pump desalinated seawater to Amman.

### Climate finance innovation and private sector support
- IFC invested in Jordan’s first domestic sustainability bond.
- IFC and MIGA have backed renewable energy expansion and PPP infrastructure projects, including guarantees for the As-Samra Wastewater Treatment Plant and support for the Aqaba Amman Water Desalination and Conveyance Project (AAWDCP).

### Pandemic preparedness and health system resilience
- During COVID-19, emergency support enabled vaccine procurement and critical care expansion.
- Post-pandemic focus on system resilience: development of Jordan’s tailored Pandemic Preparedness and Resilience (PPR) Assessment Tool guiding reforms across governance, financing, and data systems.
- Digital health infrastructure strengthened through the Jordan People-Centric Digital Government PforR.
- Technical assistance supports a national laboratory strategy and AMR control measures.

---

### Statement by Mohamed Maait, Executive Director for Jordan and Maya Choueiri, Senior Advisor to Executive Director (June 25, 2025)

#### Recent developments
- Jordan maintained macroeconomic stability despite a challenging regional environment and heightened global economic uncertainty.
- In 2024, growth was higher than projected, reflecting gradual recovery in tourism, agriculture, manufacturing, and services.
- Inflation remained low and reserve buffers strong.

#### Program performance
- All quantitative performance criteria (PCs) for the third review were met, as were all indicative targets for end-December 2024 and most indicative targets for end-Mach 2025.
- The authorities met three out of four structural benchmarks (SBs) set for the third review and met, ahead of schedule, three additional structural benchmarks supportive of growth, job creation, labor market participation, and business environment enhancements.

#### Development partners’ support
- Predictable, timely, and adequate development partner support remains essential given external shocks and the burden of hosting Syrian and other refugees.
- Donor support to shoulder the cost of hosting refugees continues to decline; only a limited number of refugees are expected to return in the near future.
- Jordan remains committed to voluntary and safe return of refugees and is working closely with UNHCR.

#### Fiscal policy and reforms
- The 2024 fiscal outturn exceeded program targets.
- Revenue measures included reducing the preferential tax treatment of electric vehicles, raising taxes on e-cigarettes, and reducing non-priority spending.
- Result: central government primary deficit, combined public sector deficit, and overall general government primary deficit were below program targets.
- 2025 central government budget, approved by Parliament in January, aligns with the program target of reducing the primary deficit to 2 percent of GDP.
- Authorities requested a modification of the end-June 2025 PCs for the central government’s primary deficit and the combined public deficit to reflect earlier start of capital projects.
- Medium-term objective: reduce public debt to below 80 percent of GDP by 2028 while creating room for additional investment and social spending.
- Development of a Medium-Term Revenue Strategy with support from the Fund’s Fiscal Affairs Department.
- Actuarial review of programs managed by the Social Security Corporation with support from the ILO and the World Bank.

#### Structural fiscal reforms and SOE/PPP oversight
- Progress on state-owned enterprises (SOEs), public-private partnership (PPP), public procurement, and preventing accumulation of arrears.
- 2024 Fiscal Risk Statement expanded coverage of contingent liabilities of the SOE sector.
- Authorities will adopt and publish an SOE ownership policy and assign monitoring/oversight of SOE performance and risks to the Fiscal Commitments and Contingent Liabilities unit in the Ministry of Finance.
- Centralized database of all PPP contracts since the 2020 PPP law with analytical tools to enhance fiscal risk analysis.
- Roll out of Jordan’s National E-Procurement System (JONEPS) to all ministries and government entities by June 2026.
- Measures to avoid arrears: electricity payments by budgetary spending units to be made directly by the Ministry of Finance’s treasury department; centralization of healthcare exemption process and provision of coverage for select treatments causing most exemptions and payment arrears.

#### Electricity sector reforms
- NEPCO’s losses in 2024 were lower than projected at 1.1 percent of GDP.
- NEPCO made progress in reducing arrears.
- Time-of-use tariffs are being rolled out to reduce peak demand and reliance on costly conventional generation.
- Target to reduce operational and technical losses in distribution companies to the 9 percent level.
- Cabinet-approved roadmap to optimize conventional and renewable power purchase agreements and improve NEPCO’s long-term financial viability.

#### Water sector reforms
- Financial Sustainability Roadmap for the water sector adopted by the Cabinet in November 2022.
- Targets: reduce non-revenue water and achieve full cost recovery for operations and maintenance of water and wastewater services by 2030.
- Sector financial position improved in line with projections due to tariff adjustments and operational efficiency gains.
- Continued work to reduce water sector arrears and adopt transparent financial reporting by water distribution companies.

#### Monetary and financial policies
- The Central bank of Jordan (CBJ) continues to maintain monetary stability, safeguard the peg with the U.S. dollar, and strengthen its reserves position.
- Monetary policy underpinned by commitment to the exchange rate peg to the U.S. dollar; CBJ will align policy rates with those of the U.S. Federal Reserve.
- Authorities requested a modification of the end-December 2025 PC on the CBJ’s net international reserves to reflect stronger performance in accumulating reserves.

#### Banking sector resilience and supervision
- System-wide capital adequacy ratio stood at 18 percent at end-2024, above the CBJ regulatory minimum of 12 percent.
- Non-performing loans increased slightly by half a percentage point to 5.6 percent.
- Provisions for non-performing loans (coverage ratio) were 74.5 percent as of end-2024, slightly lower than 75.6 percent at end-2023.
- CBJ maintains stringent provisioning standards in line with IFRS9’s forward-looking expected loss approach.

#### Strengthening financial sector resilience and AML/CFT
- Progress on implementing recommendations of the 2023 joint IMF-World Bank Financial System Stability Assessment (FSSA).
- CBJ aligned prudential requirements on asset classification with Basel Core Principles.
- A multi-agency crisis management committee is established and operational.
- CBJ strengthened the role of the Financial Stability Committee and is collecting additional data for enhanced financial stability analyses.
- Planned further measures include: (i) introducing Pillar 2 risk assessment methodologies; (ii) aligning prudential requirements for concentration risk; (iii) designing and operationalizing procedures for depositor compensation; (iv) updating credit risk regulations and developing resolution plans for major cross-border Domestic Systemically Important Banks.
- Continued enhancements to the AML/CFT framework, including strengthening risk-based AML/CFT supervision and increasing international cooperation.

#### Structural policies to promote jobs and inclusive growth
- Public Sector Modernization Roadmap: job description and performance-based salary-setting mechanism for all Category 1 civil service employees; performance-based promotion mechanism rolled out to cover all civil servants in March 2025.
- Amendments submitted to Parliament, ahead of schedule, to the Competition Law to strengthen the Competition Department’s authority, ensure administrative and financial independence, and enhance executive capacity.
- Additional measures: (i) streamline processes and reduce costs for registering and closing businesses; (ii) streamline sectoral licensing and ensure license approvals do not exceed 30 days; (iii) ease restrictions and regulations in transport and fuel sectors; (iv) digitalize 80 percent of automatable government services; (v) further relax restrictions on foreign ownership through bilateral negotiations and expedite approval of full foreign ownership applications.

#### Labor market and inclusion reforms
- Amendments submitted to Parliament, ahead of schedule, to the Labor Law to enhance labor market flexibility and female labor participation, reduce distortions, and improve childcare provisions while avoiding barriers to formal employment.
- Amendments submitted to Parliament, ahead of schedule, to the Social Security Law to strengthen unemployment insurance, facilitate flexible work arrangements, and reduce benefit inequality between men and women in an actuarially neutral way.
- Streamlining procedures and lowering costs for issuing work permits for skilled non-Jordanians; harmonizing public sector pay scales between men and women; improving public transport services to support greater workforce participation, particularly among women.

*Source: IMF/World Bank content provided in the supplied PDF excerpt.*

### 16.      Efforts   aimed   at   further   improving   governance   and   transparency   are

### 1jorea2025001-print-pdf - 16.      Efforts   aimed   at   further   improving   governance   and   transparency   are

### Ongoing governance and transparency efforts
- The authorities are working to:
  - criminalize illicit gains from public procurement;
  - require companies to disclose beneficial ownership information in accordance with the new beneficial owner registry regulations;
  - continue with the roll-out of the electronic system for public procurement.

### Request for an RSF Arrangement (paragraphs 17–18)
- Purpose and objectives:
  - Jordan’s requested RSF arrangement is designed to effectively reinforce the macroeconomic objectives of the EFF.
  - The RSF arrangement will support efforts to address long-term vulnerabilities in the water and energy sectors and to be better prepared for public health emergencies, including pandemics.
  - In the water and energy sectors, the RSF will help to reduce public sector borrowing needs, ease fiscal pressures, and support long-term fiscal and debt sustainability, thus strengthening Jordan’s balance-of-payment stability.
  - The RSF will strengthen resilience to public health emergencies to limit potentially very large public financing and balance of payments needs that could arise from new health emergencies, as witnessed during the COVID-19 pandemic.
  - The RSF arrangement is designed to have substantial synergies with the current EFF arrangement.
- Reform architecture:
  - Reform measures concentrate on three macro-critical pillars, leveraging the Fund's core expertise:
    - (i) Enhancing resilience of the energy and water sectors;
    - (ii) Strengthening fiscal and financial sector resilience;
    - (iii) Strengthening health emergency and pandemic preparedness.
  - Thirteen reform measures (RMs) are proposed under the RSF arrangement to cover the three reform pillars.
  - The RMs were designed in close consultation with development partners, including the World Bank and the World Health Organization.

### Reform Pillar I: Enhancing resilience of the energy and water sectors
- Context:
  - Building on the progress made to date in improving the financial sustainability of the energy and water sectors in the context of the EFF.
- Proposed RMs:
  - Energy sector: two RMs are envisaged with the aim of expanding energy storage capacity and enhancing energy efficiency.
  - Water sector: three RMs are envisaged with the aim of:
    - updating the water sector Financial Sustainability Roadmap;
    - enhancing the performance of the water companies;
    - expanding private sector participation in the treated wastewater sector.

### Reform Pillar II: Strengthening fiscal and financial sector resilience
- Objective:
  - Improve fiscal planning by incorporating climate-related risks and vulnerabilities into public financial management processes.
- Proposed RMs:
  - Three RMs are proposed to strengthen budget processes and risk management with the aim to support fiscal sustainability.

### Reform Pillar III: Strengthening health emergency and pandemic preparedness
- Focus:
  - Ensure resilient health service delivery during health emergencies, including pandemics, learning from the pandemic.
- Proposed RMs (four):
  - (i) Adopting instructions mandating the implementation of an emergency-ready health benefit package;
  - (ii) Codifying the sources and uses of financing for public health emergencies;
  - (iii) Adopting and implementing a governance framework that outlines clear roles, responsibilities and coordination mechanisms among government agencies for health emergencies preparedness and response;
  - (iv) Establishing a framework of procedures and templates for consolidated monitoring and reporting of public spending on health emergencies to strengthen decision-making during public health emergencies, as well as the assessment of spending afterwards.

### Conclusion (paragraph 19)
- The Jordanian authorities value their strong partnership with the Fund, which has provided policy advice, financial support, capacity development, and a foundation for reform momentum.
- Considering Jordan’s strong performance under the EFF-supported program and its commitment to the program’s objectives, and considering the strength of the proposed reform package under the RSF, the authorities request Executive Directors’ support for:
  - the completion of the third review under the EFF; and
  - the request for an RSF arrangement.

*Source: 1jorea2025001-print-pdf - 16.      Efforts   aimed   at   further   improving   governance   and   transparency   are*

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_Source: https://www.imf.org/-/media/files/publications/cr/2025/english/1jorea2025001-print-pdf.pdf_