IMF Executive Board Completes First Review Under the Extended Fund Facility for Jordan

IMF News, June 21, 2017

Source details

Canonical URL: IMF Executive Board Completes First Review Under the Extended Fund Facility for Jordan

The Executive Board completed the first review of Jordan’s economic performance under the Extended Arrangement under the Extended Fund Facility (EFF).
Completion of the first review enables the disbursement of SDR 51.465 million (about US$71 million).
Total disbursements under the program after this review amount to SDR 102.93 million (about US$141.9 million).
On August 24, 2016, the Executive Board approved a three-year extended arrangement under the EFF for Jordan for an amount equivalent to SDR 514.65 million (about US$723 million at the time of approval of the arrangement, or 150 percent of Jordan’s quota).
The Executive Board approved the authorities’ requests for:
- A waiver of non-observance of the performance criterion on the NIR of the Central Bank of Jordan (CBJ).
- The rephrasing of access.

The Jordanian economy has performed favorably under a difficult external environment.
Macroeconomic stability and external viability have been maintained thanks to a prudent monetary policy and progress in reducing the fiscal deficit.
Challenges noted:
- Below-potential economic growth.
- High unemployment.
- Difficult social conditions.
The program aims at advancing fiscal consolidation to gradually lower public debt and broad structural reforms to enhance the conditions for more social-friendly inclusive growth.

Authorities are committed to continue with a gradual and steady fiscal consolidation to bring public debt toward more sustainable levels.
Specific fiscal and structural reform measures highlighted:
- Continued removal of exemptions on the general sales tax and custom duties over the program period.
- Reforms to tackle tax evasion.
- Rationalization of expenditures.
- Containment of contingent liabilities.
- Improvements in the financial condition of the energy and water sectors.

The Central Bank of Jordan has tightened its monetary policy stance since November 2016.
The CBJ stands ready to increase the policy interest rates further to support the peg.
The banking system is described as well capitalized and profitable.
The gradual adoption of Basel III, complemented by an additional capital buffer decided by the authorities, is expected to provide important resilience to shocks and help preserve financial stability.
Efforts to promote financial inclusion and facilitate access to credit and to improve the business environment are expected to support investment, productivity, and inclusive growth.

IMF Directors saw the critical need to advance reforms to lower the formal cost of labor to promote greater employment opportunities, especially for the youth and women.
Further reforms to reduce the cost of formal jobs are deemed critical to address high unemployment, particularly for young people and women.

IMF calls for greater donor support through budget grants to help Jordan cope with the Syrian refugee crisis.
Continued donor support through sufficient budget grants and concessional financing is emphasized as important to help Jordan cope with the refugee crisis and support the authorities’ program goals.

“The authorities are committed to continue with a gradual and steady fiscal consolidation to bring public debt toward more sustainable levels- IMF’s Furusawa”

IMF Communications Department, Press Release No. 17/237, June 21, 2017