Press Release: IMF Mission Reaches Staff-Level Agreement on Completion of the Fifth Review Under the Stand-By Arrangement with Jordan

IMF News, October 12, 2014

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Canonical URL: Press Release: IMF Mission Reaches Staff-Level Agreement on Completion of the Fifth Review Under the Stand-By Arrangement with Jordan

IMF mission visited Amman during September 9–21, 2014; discussions continued during the IMF-World Bank Annual Meetings in Washington, D.C.
The 36-month SBA is in the amount of SDR 1.364 billion (about US$2 billion, or 800 percent of Jordan’s quota at the IMF) and was approved by the Executive Board on August 3, 2012.
The third and fourth reviews under the SBA were approved by the Board on April 28, 2014, bringing total disbursements to SDR 852.50 million–about US$1.3 billion.
Staff reached a staff–level agreement on the fifth review and on reducing the number of remaining reviews under the program; outstanding disbursements will be distributed equally across those reviews.
Board approval is scheduled for discussion during the first half of November; Board approval would make available to Jordan SDR 85.25 million (about US$129 million).
The next review mission has been tentatively scheduled for the second half of February 2015.

Growth stood at 3 percent year-on-year in the first half of 2014, helped by a recovery in mining and better activity in the tourism and utilities sectors.
Headline inflation dropped to 2.7 percent year-on-year in September 2014, aided by a further slowdown in food prices.
The current account deficit continues to narrow significantly.
The banking sector remains robust and financial markets are stable.
International reserves have been over-performing and are foreseen to continue to do so.

Program performance is broadly on track.
The central government’s budget has been tightly managed; the fiscal deficit is expected to stay on target through the remainder of 2014.
Owing to shortfalls in gas flows from Egypt, the electricity company NEPCO incurred additional losses, which will be financed mostly from grants.
Reforms supporting growth and employment have gained traction: parliament recently adopted the Public-Private Partnership and investment laws, described as broadly in line with international standards.
Authorities designed a set of expenditure and revenue measures—most already implemented—that would deliver next year’s programmed adjustment in an equitable way while minimizing adverse impact on growth and without unduly burdening Jordan’s population.
Authorities are working with parliament on the draft income tax law aimed at achieving a more equitable distribution of the burden of adjustment in addition to raising revenue.
On the energy front, authorities are sustaining implementation of their medium–term strategy to diversify Jordan’s energy sources and return the electricity company to cost recovery while targeting electricity subsidies to those in need.
Monetary policy will remain focused on safeguarding macroeconomic stability and preserving reserve buffers.

Growth is projected to increase to 3.3 percent in 2014, and to 4.5 percent in the medium term.
Inflation is expected to decline to 2.9 percent at end-2014, and 2 percent in the medium term.
The current account deficit (including grants) is projected to continue to substantially improve to less than 4 percent of GDP in the outer years of the medium term, mostly reflecting a lower energy import bill.
Risks to the outlook remain high, mostly related to the Syria and Iraq conflicts.

Public sector consolidation will continue to return the still-rising debt on a downward trend.
Progress in structural reforms will continue, with Vision 2025—a strategy document currently under discussion—seen as an opportunity to embed sectoral reforms in an overarching framework focusing on labor market reforms and further improvements in the business climate.

Press Release No. 14/470, October 12, 2014. IMF Communications Department.