Press Release No. 23/156

IMF Staff Reach Staff-Level Agreement with Jordan on the Sixth Review Under the Extended Fund Facility

May 17, 2023

• The IMF-supported program remains firmly on track, with all key quantitative targets met and strong performance on structural benchmarks.
• Continued prudent fiscal and monetary policies remain critical to preserving macroeconomic stability against the backdrop of slowing global economic growth and increased volatility in international financial markets.
• Accelerating structural reforms to reduce the cost of doing business and improve public service delivery would support a more dynamic private sector and job-rich growth.

Amman, Jordan:An International Monetary Fund (IMF) mission led by Ron van Rooden visited Amman during May 3–17, 2023, to conduct the sixth review of Jordan’s economic reform program supported by the IMF’s Extended Fund Facility (EFF). At the end of the visit Mr. van Rooden issued the following statement.

“We are pleased to announce that the IMF team and the Jordanian authorities reached a staff-level agreement on the sixth review of the authorities’ economic reform program supported by the EFF arrangement . The completion of this review will bring the total IMF disbursements since the start of the program in 2020 to SDR 1300 million (around US$1750 million). This agreement is subject to approval by the IMF’s management and the Executive Board.

“Despite a challenging global and regional environment, Jordan has maintained macroeconomic stability and access to international capital markets through prudent monetary and fiscal policies. As a result, the program remains firmly on track, with key program targets met and continued strong progress on structural benchmarks. The central government reduced its primary deficit (excluding grants) by 0.8 percent of GDP in 2022, to 3.7 percent of GDP, by taking timely measures to offset the higher cost of subsidies. Meanwhile, the CBJ has successfully maintained monetary and financial stability. It remains committed to the peg and has raised policy rates in line with the U.S. Federal Reserve. As a result, inflation has been relatively moderate and has started to decline. The banking system remains well-capitalized and liquid, as also confirmed by the recent Financial System Sustainability Assessment.

“The post-pandemic recovery continues, with real GDP expected to grow by 2.6 percent in 2023. Inflation is on track to moderate to 2.7 percent in 2023, due to an appropriately monetary policy stance. Medium-term growth is projected to increase to 3 percent, although uncertainty surrounding the global outlook is high.

“Moving forward, continued prudent policies remain critical to preserving macro-economic stability. The government aims to further reduce the central government primary deficit to 2.9 percent of GDP in 2023, with a view to gradually reducing public debt to 80 percent of GDP by 2028, through continued efforts to broaden the tax base, and by improving the efficiency of public spending. Continued efforts to tackle the deficits in the electricity sector are also essential to safeguarding fiscal sustainability. Monetary policy will need to continue prioritizing safeguarding the peg, backed by adequate international reserves.

“With unemployment still high, at 22.9 percent, and particularly among the youth and women, structural reforms are essential for achieving strong and inclusive growth and creating more jobs. This includes enhancing the ease of doing business, and reducing the cost of doing business, promoting competition, increasing labor market flexibility, and enhancing governance and transparency. While progress has been made in these areas, more is needed to create a more dynamic private sector, attract more investment, and create job-rich economic growth. Continued concessional support from donors is crucial, particularly to assist Jordan in continuing to host refugees.

“The mission would like to thank our counterparts for an open and collaborative dialogue. The mission met with the Prime Minister, the Deputy Prime Minister for Economic Affairs, the Minister of Finance, the Minister of Planning and International Cooperation, the Minister of Energy and Mineral Resources, the Minister of Industry and Trade and Labor, the Governor of the Central Bank of Jordan, Members of Parliament, other cabinet ministers and officials, donors, and representatives of the private sector and civil society.”