IMF Executive Board Concludes Second Review Under Jordan’s Extended Arrangement and Request for Augmentation of Access to Address the Impact of COVID-19

IMF News, July 1, 2021

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IMF Executive Board Concludes Second Review Under Jordan’s Extended Arrangement and Request for Augmentation of Access to Address the Impact of COVID-19

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Bibliographic details

• Published: July 1, 2021

Key outcomes and financing

• The Executive Board completed the second review of Jordan’s program supported by the Extended Fund Facility (EFF) on June 30.
• SDR 144.1 million (about US$206 million) will be made immediately available following completion of the review.
• Total IMF disbursements to Jordan since the start of 2020 amount to SDR 641.51 million (around US$900 million), including an SDR 291.55 million (about US$400 million) purchase in May 2020 under the Rapid Financing Instrument.
• The Executive Board approved the authorities’ request to increase access under the EFF arrangement by about US$200 million.
• Jordan’s four-year EFF totals SDR 926.37 million (about US$1.3 billion, equivalent to 270 percent of Jordan’s quota in the IMF), approved on March 25, 2020.

Macroeconomic and social impact

• The authorities’ timely and effective policy response helped protect jobs and the vulnerable while preserving macroeconomic and financial stability.
• COVID-19 has caused:
  • unemployment rising to a record high,
  • widening fiscal and external deficits,
  • a sharp decline in tourism,
  • a delayed economic recovery.
• Jordan is hosting some 1.3 million Syrian refugees, increasing the country’s social and fiscal burden.

Policy assessment and recommendations (from Mr. Mitsuhiro Furusawa, Deputy Managing Director and Acting Chair)

• Near-term priority: manage the fallout from the pandemic.
• Revised fiscal targets for 2021 aim to accommodate higher spending on critical health, social protection, and job-supporting schemes.
• Authorities remain committed to implementing a gradual, growth-friendly, and equitable fiscal consolidation as the recovery becomes entrenched to bolster public debt sustainability and ensure inclusive growth.
• Tax policy and administration:
  • Advanced key reforms to close tax loopholes,
  • Broaden the tax base,
  • Strengthen tax administration capacity.
• Public finance management:
  • Continued high-quality reforms needed to enhance the efficiency and transparency of public finances.
• Monetary policy:
  • Has been appropriately accommodative while supporting the peg.
  • Moving forward, monetary policy should remain flexible and data driven, balancing recovery entrenchment and monetary and financial stability.
• Financial sector:
  • Remains sound, but continued vigilance is warranted given possible delayed impacts on banks’ asset quality.

Structural reforms and competitiveness

• Continued progress on structural reforms is essential for a durable and inclusive recovery.
• Priority reform areas highlighted:
  • Electricity sector reforms to address high electricity costs for businesses (crucial for job-rich growth and competitiveness).
  • Improving the business environment.
  • Reducing unemployment, particularly among women and youth.
  • Strengthening governance.
• The recent review of the most significant power purchase agreement was noted as an important step.

Donor support and external financing needs

• The pandemic has significantly increased Jordan’s external financing needs.
• Stepped-up support from donors and development partners is critical to help Jordan cope with the impact of the pandemic and the burden of hosting refugees.
• The IMF’s financial support is expected to:
  • Help Jordan navigate current challenges,
  • Strengthen its balance of payments,
  • Catalyze support from other development partners.

Key statistics (exact figures from the review)

• SDR 144.1 million
• about US$206 million
• SDR 641.51 million
• around US$900 million
• SDR 291.55 million
• about US$400 million
• about US$200 million
• SDR 926.37 million
• about US$1.3 billion
• 270 percent
• March 25, 2020
• June 30
• 2021
• 2020
• 1.3 million

IMF Executive Board Concludes Second Review Under Jordan’s Extended Arrangement and Request for Augmentation of Access to Address the Impact of COVID-19 — Press Release No. 21/203

References

• Mitsuhiro Furusawa
• Jordan and the IMF
• Special Drawing Rights (SDRs) -- A Factsheet
• Press Releases
• PRESS CENTER
• (see Press Release No. 20/107).
• https://www.imf.org/en/home