A team from the International Monetary Fund (IMF) led by Martin Cerisola
visited Amman from March 5-9 to take stock of recent economic developments
and discuss with the authorities their planned economic policies for 2017
and beyond.
At the end of the visit, Mr. Cerisola issued the following statement:
“Jordan continues to face a difficult external environment. The conflicts
in Syria and Iraq continue to weigh on its economy, with growth expected at
around 2.0 percent in 2016 and unemployment increasing to 15.3 percent.
Inflation has accelerated to 2.5 percent (year-on- year (y/y) in January
and to 4.6 percent (y/y) in February, reflecting higher global food prices
and the one-off impact of the fiscal measures. The overall fiscal deficit
is estimated at 3.6 percent of GDP in 2016 and is projected to decline to
less than 3 percent in 2017 in light of fiscal measures underpinning the
2017 budget.
“The current account deficit is expected to reach 9.5 percent of GDP in
2016 compared to 9.1 percent in 2015. Recent data suggest a recovery in
remittances and tourism, which could contribute to reduce the current
account deficit in 2017. Credit to the private sector accelerated further,
increasing by around 10 percent y-o-y in December 2016. The recent steps by
the Central Bank of Jordan in raising key monetary policy rates has helped
to preserve the attractiveness of the Jordanian dinar and keeping
international reserves at adequate levels. Due to challenging external
environment, growth is expected to pick up modestly in 2017, driven by some
rebound in exports, tourism, and remittances.
“Against this backdrop, the authorities have reiterated their commitment to
sound policies that reduce vulnerabilities and support growth. Discussions
with the Jordanian authorities were constructive and focused on taking
stock of recent developments and exploring changes to the macroeconomic
framework. The discussions also focused on the authorities’ plans for
policies and reforms to preserve Jordan’s macroeconomic stability and to
enhance growth and employment prospects in a difficult environment, where
the pressure from refugees on the economy merits the continued support from
the international community. It was agreed that discussions will continue
during the Spring Meetings in Washington, DC, with a view to complete the
review of the Extended Fund Facility. The IMF is committed to maintaining
its dialogue with the authorities and supporting Jordan’s national program
of economic reforms.”
