Jordan: Fifth Review Under the Extended Arrangement Under the Extended Fund Facility and Request for Modification of Performance Criteria-Press Release; Staff Report; and Statement by the Executive Director for Jordan

IMF Staff Country Reports, January 26, 2023

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Jordan: Fifth Review Under the Extended Arrangement Under the Extended Fund Facility and Request for Modification of Performance Criteria-Press Release; Staff Report; and Statement by the Executive Director for Jordan

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Bibliographic details

• Published: January 26, 2023
• Series: IMF Staff Country Reports
• DOI: https://doi.org/10.5089/9798400231957.002

Overview and recent developments

• Jordan has continued a broad-based recovery amid a challenging external environment, credited to the authorities’ effective policy response.
• Financial challenges in the electricity sector are exacerbating fiscal pressures.
• Food subsidies have increased considerably on the back of high international prices.
• As agreed in the fourth review, the authorities have eliminated the subsidies on gasoline and diesel.
• The 2022 and 2023 fiscal targets are being relaxed slightly to accommodate higher food-related spending.
• The authorities remain committed to reducing public debt/gross domestic product to 80 percent by 2027.
• IMF expects the implications for the program to be manageable, given the authorities’ ownership and commitment to program objectives and Jordan’s continued ability to attract development partner support.

Structural benchmarks and reforms met

• Introduction of goods and services tax place of taxation rules.
• Strengthening the governance of fiscal incentives.
• Improving the competition framework.
• Removing legal impediments to female employment.
• Implementing a foreign direct investment survey.
• Rolling out e-procurement.

Fiscal and programmatic considerations

• Electricity sector financial pressures are a key source of fiscal strain.
• Rising international food prices have led to considerably higher food subsidies, prompting modest relaxations of fiscal targets for 2022 and 2023.
• Commitment to a public debt/GDP target of 80 percent by 2027 remains central to program objectives.
• Fund assessment: program implications are expected to be manageable due to authorities’ ownership and external partner support.

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