## Jordan’s Fiscal Ownership

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**Canonical URL:** [Jordan’s Fiscal Ownership](https://www.imf.org/-/media/files/publications/fandd/article/2023/september/al-ississ-pov.pdf)

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### Background and context
- Author joined the Ministry of Finance in November 2019 and inherited a stagnating Extended Fund Facility (EFF) program and a difficult budget process.
- By March 2020, a new homegrown EFF program was adopted with different principles focused on widening the tax base and disciplining the primary deficit without sacrificing safety nets or growth.
- Jordan faced three consecutive "black swans": COVID-19, the Russia-Ukraine crisis, and global stagflation.
- Regional shocks amounted to 44 percent of Jordan’s GDP.
- Syrian refugees comprised 20 percent of Jordan’s population essentially overnight.
- Jordan’s April 2023 Eurobond issuance was six times oversubscribed.

### Policy approach and reforms
- Shift from packaged prognoses to country-specific evidence-based analysis undertaken in 2018 and 2019.
- Revenue-side strategy:
  - Widen the tax base by fighting tax evasion and avoidance rather than raising marginal tax rates.
  - Cut sales tax rates on essential goods in the 2020 budget to signal redirection.
  - Lowered and unified customs tariffs in 2022.
  - Closed tax loopholes via legislative changes such as transfer pricing.
  - Unified the tax administration throughout the country and cracked down on tax evasion.
  - Unified rates to limit arbitrage across multiple categories.
- Expenditure-side strategy:
  - Sharpened targeting while expanding safety nets.
  - Attempted to pay back arrears.
  - Boosted capital expenditure for the first time in years.
- Program design:
  - IMF program included adaptive features such as a built-in COVID adjustor.
  - Emphasis on progressive, pro-growth, countercyclical reforms tailored to Jordan’s circumstances.

### Results, indicators, and outcomes
- Revenue mobilization outcomes:
  - In 2022, Jordan had met its income tax target for the year by August.
  - In the first quarter of 2023, domestic revenue rose 9.1 percent year over year, driven mainly by taxes on income and profits.
- Fiscal discipline:
  - Jordan’s fiscal discipline in 2022 yielded a primary deficit that outperformed the IMF program target.
- Program implementation:
  - Jordan achieved its EFF program targets ahead of schedule, in June 2023.
- Social and political outcomes:
  - Measures prioritized ensuring that those who could afford to pay taxes paid their fair share, producing tangible revenue benefits and greater social stability.

### Ongoing challenges
- Rising global interest rates mean gains on income tax revenue are partly absorbed by the rising cost of servicing debt instead of improving public services.
- Surviving in the global financial system is not the same as thriving; Jordan continues to face significant challenges despite progress.

### Recommendations for the IMF and international financial institutions
- Add preventive tools to the IMF’s roster to enable preemptive risk navigation rather than reactive support after shocks.
  - Example: Jordan’s investment in better wheat storage facilities and reserve buffers helped avert food-supply repercussions at the onset of the pandemic.
  - Embed adjustors for unforeseen expenditures (for example, pandemic-related) systematically in IMF programs.
- Provide buffers against globalization’s challenges and mobilize resources in ways that balance need and availability.
- Promote household-level stability proactively (for example, remedy rising home mortgages) rather than expanding social safety nets only after crises.
- Serve as the world’s apolitical institutional memory to remind the global community of unresolved challenges as governments and headlines shift.
  - Example: Do not abandon Syrian refugees residing in Jordan as global attention wanes.
- Empower countries’ ownership of their reform agenda, enabling equitable, progressive fiscal policies that are fiscally viable and favor national over individual private interests.
- Quote: "The IMF must empower countries' ownership of their reform agenda."

*Mohamad Al-Ississ is minister of finance of Jordan.*

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_Source: https://www.imf.org/-/media/files/publications/fandd/article/2023/september/al-ississ-pov.pdf_