Jordan—IMF Executive Board Concludes 2024 Article IV Consultation and Second Review Under the Extended Fund Facility
IMF News, December 13, 2024
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- Published: December 13, 2024
Program status and disbursement
- Jordan’s EFF-supported program, approved in January 2024, remains on track.
- The completion of the second program review makes another SDR 97.784 million (about US$131 million) available to Jordan, out of the previously approved program size of SDR 926.370 million (about US$1.2 billion).
- Jordan’s four-year arrangement amounts to SDR 926.37 million (about US$1.2 billion, equivalent to 270 percent of Jordan’s quota in the IMF) and was approved by the IMF’s Board on January 10, 2024.
- The completion of the second review brings total disbursements under this arrangement to SDR 339.67 million (about US$453 million).
- All quantitative performance criteria and structural benchmarks for the second program review were met.
Macroeconomic performance and outlook
- Jordan continues to show resilience and maintain macro-economic stability, despite headwinds from the regional conflict and heightened uncertainty.
- Growth:
- 2023 growth: 2.7 percent.
- Projected 2024 growth: 2.3 percent.
- Projected 2025 growth: 2.5 percent.
- Growth is projected to pick up in the following years, assuming a resolution of the conflict and continued sound macro-economic policies and further progress in reform implementation.
- Inflation:
- Projected to remain low, at about 2 percent, reflecting the Central Bank of Jordan’s firm commitment to monetary stability and the exchange rate peg.
- External position:
- Current account deficit projected to widen slightly to just under 5 percent of GDP this year and next, from under 4 percent of GDP in 2023.
- Central Bank of Jordan’s international reserves remain at comfortable levels.
- Labor market:
- Unemployment rate remains high at 21 percent.
- With moderate growth rates, progress in reducing unemployment has been limited.
- Composition of growth:
- Stronger net exports are offsetting weaker domestic demand.
- Risks:
- Risks to the outlook remain high due to the ongoing regional conflict and its wider-than-anticipated impact on Jordan’s economy.
Fiscal policy and public finances
- Government revenues have been adversely affected this year by weaker domestic demand and a sharper-than-expected drop in the prices of key export commodities.
- Authorities have taken strong actions to offset the revenue shortfall to contain this year’s central government budget deficit.
- Policy stance:
- Authorities will continue with a gradual fiscal consolidation in 2025 to reduce public debt and ensure medium-term fiscal sustainability.
- Recommendations emphasize enhancing revenue mobilization and spending efficiency to keep public debt on a steady downward path, while protecting priority social and capital spending.
- Efforts should continue to improve the efficiency and viability of the public utilities to preserve the sustainability of public finances, while ensuring the delivery of better services.
Monetary and financial sector
- Monetary policy:
- Remains appropriately focused on safeguarding monetary and financial stability, and supporting the exchange rate peg that has helped keep inflation low.
- Financial sector health:
- Jordan's banking sector remains healthy and well-capitalized.
- Solid progress has been made in implementing the recommendations of the 2023 Financial System Stability Assessment.
Structural reforms and policy recommendations
- Priority actions to raise growth and create jobs:
- Accelerate structural reforms to improve the business environment, promote competition, and attract private investment.
- Enhance competition, reduce red tape, and increase labor market flexibility.
- International support:
- Strong and timely donor support remains essential to help Jordan navigate the challenging external environment, host the large number of refugees, and meet Jordan’s development objectives, including addressing the impact of climate change.
- Objective:
- Bringing the Jordanian economy onto a higher growth trajectory is essential to create more jobs and raise prosperity; this requires accelerating structural reforms while maintaining macro economic stability.
Executive Board / Acting Chair statement highlights
- Statement by Mr. Okamura, Acting Chair and Deputy Managing Director:
- Commends Jordan’s resilience thanks to adept policy making and international support.
- Notes prudent fiscal and monetary policies have maintained macro-economic stability, strengthened reserve buffers, preserved financial stability, and maintained market confidence.
- Emphasizes continued efforts to enhance revenue mobilization, spending efficiency, and public utilities’ efficiency and viability.
- Reiterates the need to sustain structural reforms to achieve Jordan’s Economic Modernization Vision and foster job-rich growth.
- Calls for strong and timely donor support to help Jordan shoulder costs of hosting a large number of Syrian refugees and address climate change impacts.
IMF Press Release No. 24/467 — December 12, 2024
