IMF Reaches Staff Level Agreement with Jordan on a new US$ 1.2 billion 4-Year Arrangement under the Extended Fund Facility

IMF News, November 9, 2023

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Canonical URL: IMF Reaches Staff Level Agreement with Jordan on a new US$ 1.2 billion 4-Year Arrangement under the Extended Fund Facility

IMF staff and the Jordanian authorities reached a staff-level agreement on a program of economic and structural reforms, supported by a new 4-year Extended Fund Facility (EFF) arrangement, in the amount of about US$ 1.2 billion.
The agreement is subject to IMF management approval and consideration by the Executive Board, which are expected in early January 2024.
Upon Board approval, Jordan would have immediate access to SDR 144.102 million (about US$ 190 million).
The staff team visited Amman during October 30 – November 9, 2023. Jordan expressed interest in a new program in June 2023; discussions were launched during the authorities’ visit to Washington DC in July 2023.
Press Release No. 23/386; statement issued November 9, 2023.

Arrangement length: 4-year EFF.
Total amount: about US$ 1.2 billion.
Access: 270 percent of quota, equivalent to SDR 926.374 million, or about US$ 1.2 billion at current exchange rates.
Immediate access upon Board approval: SDR 144.102 million (about US$ 190 million).

Recent performance: Jordan’s authorities’ performance under the existing EFF arrangement was consistently strong.
2023 growth: Jordan’s economy is still expected to grow by 2.6 percent in 2023, with strong performance across all sectors in the first three quarters.
Inflation: Inflation declined to just over 1 percent in September 2023.
Current account 2023: The current account deficit is expected to improve in 2023, to just over 7 percent of GDP.
Reserves: International reserves are strong; with sound economic policies and strong international support, reserves are projected to remain strong.
2024 outlook: Growth is projected to be held back by the impact of the conflict, not exceeding 2.6 percent in 2024; the current account is expected to narrow less than expected earlier, to 6.5 percent of GDP.
Risk scenario: The outlook would worsen in the event of an intensification of the conflict in Gaza and Israel.

Main objectives:
- Continue fiscal consolidation to place public debt on a steady downward path.
- Safeguard monetary and financial stability.
- Accelerate structural reforms to support growth and enhance job creation.
- Rebuild fiscal and reserve buffers and create a more dynamic private sector to address persistent high unemployment.
Fiscal anchor:
- Aim to bring public debt to below 80 percent of GDP by 2028.
- Continue sound fiscal policies and reforms aimed at balancing fiscal consolidation with bolstering social assistance and supporting growth, including further broadening the tax base and enhancing spending efficiency.
Monetary and financial policy:
- CBJ policies will continue to preserve monetary and financial stability.
- Monetary policy will continue to be underpinned by the CBJ’s firm commitment to the peg to the US dollar.
- Under CBJ’s prudent supervision, the banking sector remains resilient, liquid and well capitalized; Jordan successfully exited the FATF grey list.
Structural reforms:
- Accelerate reforms to create a more dynamic private sector and achieve a meaningful reduction in unemployment, especially among women and youth.
- Improve the business environment: make it easier to start and operate a business, enhance competition and access to finance, and reform labor markets.
- Advance utilities sector reform to ensure financial viability and improve delivery of essential services.

The new EFF arrangement will replace the existing arrangement that was set to expire in early 2024 and builds on strong performance under the existing program.
The external environment remains challenging: global and regional tensions are high, interest rates are expected to remain higher for longer, and global growth is unevenly distributed.
The conflict in Gaza and Israel poses an additional regional risk that could adversely affect Jordan’s economy; barring significant escalation, strong international support and the new EFF arrangement will help Jordan maintain stability.

IMF staff team led by Ron van Rooden.
The staff team met with Prime Minister Khasawneh; Deputy Prime Minister Shraideh; Minister of Finance Al-Ississ; Minister of Planning and International Cooperation Toukan; Governor of the Central Bank of Jordan Al-Sharkas; other Ministers and senior government and CBJ officials; members of parliament; the private sector; civil society organizations; and development partners.

IMF Press Release No. 23/386