IMF Staff Reach Staff Level Agreement with Jordan on the First Review under the Extended Fund Facility

IMF News, May 9, 2024

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Canonical URL: IMF Staff Reach Staff Level Agreement with Jordan on the First Review under the Extended Fund Facility

A staff team from the International Monetary Fund (IMF), led by Ron van Rooden, visited Amman during April 29–May 9, 2024, to conduct the first review under the arrangement under the IMF’s Extended Fund Facility (EFF), which was approved by the IMF’s Executive Board on January 10, 2024.
The IMF team and the Jordanian authorities reached a staff-level agreement on the first review of the authorities’ economic reform program supported by the EFF arrangement approved in January 2024.
The agreement is subject to approval by the IMF’s management and the Executive Board.
Completion of this review will make another SDR 97.784 million (about US$129 million) available, out of the previously approved program size of SDR 926.370 million (about US$1.2 billion).

Jordan’s economic program supported by the EFF is off to a strong start; all quantitative performance criteria and structural benchmarks for the first review were met.
Economic growth reached 2.6 percent in 2023.
The current account deficit narrowed to less than 4 percent of GDP in 2023.
Gross usable international reserves increased to over US$17 billion.
Inflation declined to 1.6 percent (year-on-year) in December 2023.
The Central Bank of Jordan (CBJ) raised its policy rates in tandem with the US Federal Reserve.
Jordan’s banking system remains liquid, profitable, and well-capitalized.
The central government’s primary deficit (excluding grants and transfers to the utility companies) was reduced to 2.7 percent of GDP in 2023, down from 3.6 percent of GDP in 2022.
The combined public sector primary deficit was reduced to 4.5 percent of GDP in 2023, from 4.8 percent of GDP in 2022.
Continued surpluses in the social security system resulted in an overall general government primary surplus (including grants) of 0.5 percent of GDP in 2023.
Public debt was contained at 89.5 percent of GDP by end-2023.

Growth is projected to moderate to 2.4 percent in 2024.
The current account deficit is expected to widen to about 5 percent of GDP in 2024.
Growth is expected to rebound in 2025, to almost 3 percent, contingent upon the war ending and its impact fading.
Inflation is projected to remain limited to about 2 percent in 2024.
The IMF notes high uncertainty due to the war in Gaza and regional tensions, and that continuation of the war and trade route disruptions in the Red Sea are affecting Jordan’s economy (sentiment, trade, and tourism).
Barring a significant regional escalation, Jordan should continue to be able to navigate these headwinds owing to the authorities’ commitment to sound macro-economic policies and structural reforms.

The authorities remain committed to continuing with sound macro-economic policies to maintain stability and advance structural reforms, as envisaged in their Economic Modernization Vision.
The CBJ’s monetary policy will continue to be underpinned by its firm commitment to the exchange rate peg to the US dollar and to maintain low inflation; the CBJ stands ready to undertake policy adjustments as necessary to credibly safeguard monetary and financial stability.
The authorities are continuing with gradual and equitable fiscal consolidation and improving the financial sustainability of public utilities, aiming to reduce public debt to below 80 percent of GDP by 2028.
The authorities are on track to reduce this year’s central government primary deficit (excluding grants and transfers to the utility companies) to 2.1 percent of GDP.
The combined public sector primary deficit is projected to be reduced to 4.0 percent of GDP in 2024, achieving an overall general government primary surplus (including grants) of 1.3 percent of GDP and reducing public debt to just over 89 percent of GDP by end-2024.
Strong and timely international support remains needed to help Jordan cope with the external headwinds and to continue to shoulder the cost of hosting a large number of Syrian refugees.

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; and other Ministers and senior government and CBJ officials.
The staff team expressed gratitude to the authorities for candid and constructive discussions.

Press Release No. 24/149, May 9, 2024.