IMF Reaches a Staff-Level Agreement with Jordan on a Four-Year Extended Fund Facility

IMF News, January 30, 2020

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Staff-level agreement reached between the Jordanian authorities and an IMF team led by Chris Jarvis on a 48-month arrangement under the Extended Fund Facility (EFF) for around $1.3 billion.
Agreement is subject to IMF management approval and Executive Board consideration, which is expected in March, following the completion of agreed prior actions.
Press Release No. 20/26; statement delivered following conclusion of discussions in Amman.

Program centered on increasing growth and stimulating job creation, strengthening external and fiscal stability, increasing transparency, and improving social spending.
Structural reform agenda designed to improve the investment climate and reduce costs to businesses, while protecting Jordan’s poor and most vulnerable.
Program underpinned by the authorities’ five-year reform framework, which attracted significant support from the international community at the London Initiative in 2019.

Fiscal and monetary policies to safeguard macroeconomic stability and reduce fiscal and external vulnerabilities in an equitable, growth-friendly, and inclusive manner.
Fiscal approach: gradual and steady fiscal consolidation and reform to help bring down public debt over the program period while allowing sufficient space for social and capital spending.
Monetary policy: continue to be anchored by the exchange rate peg; international reserves to be maintained at comfortable levels.
Tax measures: improve tax administration and reduce tax evasion.
Public investment: more effective public-sector investment.
Business environment: reduced business costs, including reduced electricity prices for businesses to improve competitiveness; development of a plan to reduce production costs.
Social protection: direct households’ subsidies only to those who need it.
Labor market and inclusion: introduce measures to help young people and women enter the labor force.
Governance and transparency: reform the Illicit Gains Law to improve Jordan’s asset-declaration system for public officials to improve accountability and raise public trust.

Financing support from Jordan’s international partners will be critical to support the government’s reform efforts.
Donor support for hosting Syrian refugees and for the program continues to be essential.

GDP growth projected to reach 2.1 percent in 2020 and to increase gradually in the coming years; reaching 3.3 percent over the medium term and reinforced by the program’s structural-reform timetable.
Inflation projected to remain subdued in 2020, at under 1 percent (y/y), and is expected to converge to 2.5 percent over the next few years.
External imbalances have narrowed; current account deficit fell from 7 percent of GDP to 2.9 percent and is expected to remain moderate over the medium term.

Views expressed in the end-of-mission statement are those of IMF staff and do not necessarily represent the views of the IMF’s Executive Board.
IMF mission held wide-ranging meetings with the prime minister, the minister of finance, the minister of planning and international cooperation, the central bank governor, other senior cabinet ministers and officials, members of parliament, donors, key business leaders, and representatives from civil society.
Statement by Mr. Jarvis emphasized the program’s reinforcement of the authorities’ ambitious macroeconomic and structural reform agenda for the next four years.

Source: IMF press release, January 30, 2020.