IMF Executive Board Approves US$723 million Extended Arrangement Under the Extended Fund Facility for Jordan
IMF News, August 25, 2016
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- Published: August 25, 2016
Approval and financing
- Executive Board approved a three-year extended arrangement under the Extended Fund Facility (EFF) for Jordan for an amount equivalent to SDR 514.65 million (about US$723 million, or 150 percent of Jordan’s quota).
- Following the Board’s decision, an amount equivalent to SDR 51.465 million (about US$72.3 million) is made available for immediate disbursement.
- The remaining amount will be phased in over the duration of the program, subject to six reviews.
Program aims and overall design
- Program aims:
- Advance fiscal consolidation to lower public debt.
- Implement broad structural reforms to enhance conditions for more inclusive growth.
- Program design features:
- Flexible approach pursuing gradual and steady fiscal consolidation to bring debt down while protecting the poor.
- Room for capital spending and preservation of social spending.
- Phased disbursements linked to reviews.
Key policy measures and structural reforms
- Fiscal measures:
- Reduce the general sales tax and customs duty exemptions.
- Amend the income tax law.
- Strengthen public financial management to enhance fiscal transparency and reduce fiscal risks.
- Consolidate Water Authority of Jordan’s finances.
- NEPCO needs to reach operational cost recovery.
- Monetary and financial sector measures:
- Maintain exchange rate peg and focus on preserving an adequate level of reserves.
- Adopt amendments to the central bank law; expedite amendments to commercial banking law and secured lending and insolvency laws.
- Strengthen regulatory framework, enhance AML/CFT regime, and promote better supervision of insurance and microfinance sectors.
- Structural policies for growth and inclusion:
- Increase labor force participation, particularly for women and youth.
- Reduce informality.
- Improve the business environment.
- Ensure sustainability in the energy and water sectors.
- Preserve social spending and improve public accountability and good governance.
- Tackle SME challenges in access to finance.
- Continued donor support:
- Continued donor support through sufficient grants and concessional financing as stated in the Jordan Compact is noted as important to support program goals.
Remarks by Mr. David Lipton (First Deputy Managing Director, Acting Chair)
- Jordan maintained macroeconomic stability despite a difficult external environment and hosting a large number of Syrian refugees.
- Economic performance remains below potential; refugees weigh on the economy and public finances.
- Authorities developed a comprehensive economic reform program; early and decisive actions expected to provide new economic opportunities, job creation, and bolster confidence.
- Authorities’ strong commitment and ownership of the program is welcomed.
Recent economic developments (summary)
- Under the Stand-By Arrangement (SBA) that expired in August 2015, Jordan maintained macroeconomic stability and undertook significant policy reforms.
- Remaining challenges:
- Economic growth remains below potential.
- Unemployment remains high especially among the young and women.
- Gross public debt has risen to 93 percent of GDP.
- Refugee crisis is weighing on the economy and public finances.
- Current account deficit is high.
- Program underpinned by Jordan’s ten-year framework for economic and social policies (Vision 2025).
Target and quantitative commitments
- Fiscal consolidation objective:
- Lower public debt to about 77 percent of GDP by 2021.
- IMF membership and quota:
- Jordan became a member of the IMF on August 29, 1952, and has an IMF quota of SDR 343.10 million.
Selected economic indicators and projections (2014–21; figures preserved as presented)
- Real GDP at market prices (% change): 2014: 3.1; 2015: 2.9; 2016: 2.4; 2017: 2.8; 2018: 3.3; 2019: 3.8; 2020: 4.0; 2021: (not listed).
- GDP deflator at market prices (% change): 2014: 3.4; 2015: 3.5; 2016: 2.3; 2017: 2.2; 2018: 2.5.
- Nominal GDP at market prices (% change): 2014: 6.6; 2015: 6.5; 2016: 4.7; 2017: 5.0; 2018: 5.7; 2019: 6.3.
- Nominal GDP at market prices (JD millions): 2014: 25,437; 2015: 27,091; 2016: 26,637; 2017: 27,972; 2018: 29,560; 2019: 31,435; 2020: 33,510; 2021: 35,721; 38,079 (note: table shows a sequence through 2021 with multiple entries).
- Nominal GDP at market prices ($ millions): 2014: 35,878; 2015: 38,210; 2016: 37,570; 2017: 39,453; 2018: 41,692; 2019: 44,337; 2020: 47,263; 2021: 50,383; 53,708.
- Consumer price inflation (annual average): 2014: 0.2; 2015: -0.9; 2016: -0.5.
- Consumer price inflation (end of period): 2014: 1.7; 2015: 1.9; 2016: -1.6; 2017: 1.2.
- Unemployment rate (period average, percent): 2014: 11.9; 2015: ...; 2016: 13.1.
- National accounts (percent of GDP) — Consumption: 2014: 106.5; 2015: 103.3; 2016: 104.9; 2017: 103.0; 2018: 101.1; 2019: 98.7; 2020: 96.3; 2021: 95.2; 94.6.
- Government (percent of GDP): 2014: 16.0; 2015: 15.2; 2016: 15.5; 2017: 15.8; 2018: 14.2; 2019: 12.3; 2020: 10.7.
- Gross domestic investment (percent of GDP): 2014: 21.2; 2015: 20.3; 2016: 19.2; 2017: 19.5; 2018: 20.1; 2019: 20.8; 2020: 21.7; 2021: 21.8.
- Gross national savings (percent of GDP): 2014: 14.4; 2015: 12.9; 2016: 10.2; 2017: 10.4; 2018: 11.2; 2019: 13.4.
- Savings-investment balance (percent of GDP): 2014: -6.8; 2015: -7.4; 2016: -9.0; 2017: -8.9; 2018: -7.5; 2019: -6.2.
- Fiscal operations (percent of GDP) — Revenue and grants: 2014: 27.9; 2015: 26.1; 2016: 25.0; 2017: 25.8; 2018: 26.3; 2019: 26.2; 2020: 25.9; 2021: 25.6; 25.7.
- Of which: grants (percent of GDP): 2014: 4.9; 2015: 3.2.
- Expenditure (percent of GDP): 2014: 38.0; 2015: 29.1; 2016: 30.1; 2017: 29.6; 2018: 30.3; 2019: 30.4; 2020: 29.9; 2021: 29.7; 29.8.
- Overall fiscal balance (percent of GDP): 2014: -10.3; 2015: -5.4; 2016: 0.4.
- Primary government balance, excl. grants, NEPCO, and WAJ (percent of GDP): 2014: -4.5; 2015: -2.1; 2016: -5.2; 2017: -3.7; 2018: -2.5; 2019: 0.9; 2020: 1.1.
- NEPCO operating balance (percent of GDP): 2014: -4.6; 2015: -1.4.
- WAJ overall balance (percent of GDP): 2015: …; 2016: -1.1; 2017: -1.3; 2018: -1.2.
- Combined public sector balance (percent of GDP): 2014: -10.2; 2015: -7.2; 2016: -5.0; 2017: -0.3; 2018: 0.1.
- Government and government-guaranteed gross debt (percent of GDP): 2014: 89.0; 2015: 90.0; 2016: 93.4; 2017: 94.4; 2018: 94.0; 2019: 91.0; 2020: 86.3; 2021: 81.7; 77.3.
- Of which: external debt (percent of GDP): 2014: 31.2; 2015: 34.5; 2016: 35.2; 2017: 36.9; 2018: 37.5; 2019: 37.6; 2020: 37.3; 2021: 37.0.
- External sector — Exports of goods, f.o.b. ($ billions): 2014: 8.4; 2015: 8.1; 2016: 7.8; 2017: 7.5; 2018: 7.9; 2019: 8.5; 2020: 9.1; 2021: 9.7; 10.3.
- Imports of goods, f.o.b. ($ billions): 2014: 20.2; 2015: 18.2; 2016: 18.1; 2017: 17.7; 2018: 18.7; 2019: 19.4; 2020: 21.3.
- Oil and oil products ($ billions): 2014: 3.6; 2015: 2.7; 2016: 3.0.
- Current account balance (excluding grants, percent of GDP): 2014: -12.1; 2015: -10.9; 2016: -12.0; 2017: -12.5; 2018: -11.8; 2019: -8.8.
- Private capital inflows (net, percent of GDP): 2014: 5.3; 2015: 5.6.
- Monetary sector (percentage change) — Broad money: 2014: 6.9; 2015: 8.2; 2016: 7.6.
- Net foreign assets (percentage change): 2014: 15.4; 2015: 7.4.
- Net domestic assets (percentage change): 2014: 9.8; 2015: 8.3.
- Credit to private sector (percentage change): 2014: 6.0.
- Credit to central government (percentage change): 2014: -1.8.
- Memorandum items:
- Gross usable international reserves ($ millions): 2014: 14,973; 2015: 15,367; 2016: 15,678; 2017: 15,888; 2018: 15,829; 2019: 16,854; 2020: 18,038; 2021: 19,160; 20,202.
- In months of prospective imports: 2014: 8.0; 2015: 8.6.
- In percent of reserve adequacy metric: 2014: 135.3; 2015: 142.3; 2016: 135.8; 2017: 130.0; 2018: 122.4; 2019: 123.0; 2020: 123.6; 2021: 124.8; 126.2.
- Net international reserves ($ millions): 2014: 13,374; 2015: 14,091; 2016: 13,589; 2017: 13,894; 2018: 14,040; 2019: 15,360; 2020: 16,867; 2021: 18,188; 19,303.
- Population (millions): 2014: 7.42; 2015: 7.59; 2016: 7.75; 2017: 7.88; 2018: 7.99; 2019: 8.08; 2020: 8.17; 2021: 8.25.
- Nominal per capita GDP ($): 2014: 4,838; 2015: 4,947; 2016: 5,092; 2017: 5,293; 2018: 5,553; 2019: 5,849; 2020: 6,169; 2021: 6,513.
- Real effective exchange rate (end of period, 2010=100): 2014: 112.8; 2015: 118.1.
IMF Press Release No. 16/381 — August 25, 2016.