{
  "title": "IMF Survey : Jordan’s Economy Sees Progress Despite Series of Shocks",
  "publication": "IMF News, August 5, 2015",
  "sourceUrl": "https://www.imf.org/en/news/articles/2015/09/28/04/53/soint080515a",
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  "summary": "Jordan has made good headway toward stabilizing its economy in the face of a series of severe external shocks.",
  "publishDate": "2015-08-05",
  "sections": [
    {
      "heading": "External shocks and context",
      "content": "- Jordan was hit by a series of exogenous shocks prior to and during the program:\n  - Disruption of gas supply from Egypt due to repeated sabotages of the Arab Gas Pipeline, requiring substitution with expensive fuel and producing large losses for the electricity company amounting to 5 percent of GDP in 2011.\n  - The “Arab Spring” in 2011 prompted increased current spending including higher subsidies and wages, contributing to a central government fiscal deficit increase by 5 percent of GDP.\n  - Combined public sector deficit (central government deficit plus losses of the electricity company) expanded by about 10 percent of GDP in one year.\n  - The Syrian refugee crisis: authorities estimate there are more than one million refugees, or about 20 percent of Jordan’s population.\n  - Emergence of ISIS and regional instability disrupted exports and tourism; Iraq is Jordan’s largest trading partner and the destination of some 20 percent of its exports."
    },
    {
      "heading": "IMF program details and flexibility",
      "content": "- IMF Executive Board approved on July 31 the final review under the $2 billion Stand-By Arrangement agreed in 2012.\n- Final disbursement of about $400 million was approved, making Jordan the first Arab country in transition to successfully complete an IMF-backed program.\n- IMF showed flexibility during the program in:\n  - Fiscal targets, in light of unanticipated government outlays related to refugees and gas disruptions.\n  - Timing of program policies to allow authorities sufficient time to consult stakeholders and implement a medium-term energy strategy.\n  - Additional grants from the international community enabled flexibility."
    },
    {
      "heading": "Achievements of the program",
      "content": "- Program had three main objectives: maintaining macroeconomic stability; ensuring fairer, more equitable policies; and increasing growth prospects.\n- Macroeconomic stability:\n  - Gradual reduction of the combined public sector deficit by some 5.3 percent of GDP over the past three years, attributed to energy sector reform and central government measures.\n  - Public debt was 71 percent of GDP at the end of 2011 (pre-program baseline).\n- Equity and redistribution:\n  - Abolished general subsidies on fuel pump prices and replaced them with targeted cash transfers to some 70 percent of the population (provided when the oil price is above $100 per barrel).\n  - Limited reform to income taxes: less than 3 percent of the population are paying income taxes.\n- Structural and business environment reforms:\n  - New investment and private-public partnership laws put in place.\n  - Improvements in the public investment framework and progress on improving access to finance."
    },
    {
      "heading": "Fiscal position and financing needs",
      "content": "- Current public debt reported at 90 percent of GDP.\n- Authorities should bring the electricity company back to cost recovery and consider further central government measures, including widening the income tax base.\n- Financing needs expected to remain high for the next couple of years.\n- IMF view: reforms needed to reduce debt from the current 90 percent to the authorities’ target of about 70 percent by 2020, regarded as a safe threshold for an emerging economy.\n- Sustained donor support is essential given the expense of hosting Syrian refugees; international assistance remains indispensable."
    },
    {
      "heading": "Labor market, social outcomes, and inclusiveness",
      "content": "- Unemployment rates:\n  - 13 percent overall.\n  - 20 percent for women.\n  - 30 percent for the youth.\n- Labor force participation and female employment:\n  - Low overall workforce participation; many people are giving up seeking work.\n  - Female labor force participation particularly problematic: only 10 percent of the women of working age are actually working.\n- IMF assessment: creating jobs remains an area where reform has fallen short; structural unemployment persists even during periods of higher growth.\n- Barriers to access to finance noted: absence of a robust law for collateral, insolvency, or bankruptcy inhibits lending."
    },
    {
      "heading": "Growth performance and prospects",
      "content": "- Historical and recent growth:\n  - Average growth of 6.5 percent from 2000 to 2009.\n  - Growth “has hovered at about 3 percent” more recently.\n  - IMF hopes Jordan can return to its medium-term target potential of 4.5 percent growth.\n- Employment implications:\n  - IMF calculations indicate Jordan needs a growth rate of some 6 percent just to absorb new entrants into the labor force.\n- Conclusion: structural reforms are needed to raise potential growth, translate growth into higher employment, and attract prospective investors despite regional uncertainty."
    },
    {
      "heading": "Policy recommendations and priorities",
      "content": "- Continue energy sector reforms and ensure the electricity company returns to cost recovery.\n- Widen the income tax base to increase revenue and fiscal sustainability.\n- Advance labor market reforms to raise workforce participation and reduce structural unemployment, with a focus on female participation.\n- Strengthen laws and frameworks to improve access to finance: collateral, insolvency, and bankruptcy legislation.\n- Improve the business environment and facilitate investment (including through private-public partnership frameworks).\n- Maintain engagement with international donors to secure sustained support for refugee-related and fiscal needs.\n\nSource: IMF Survey, August 5, 2015.\n\n---\n\n Content in this bundle\n\n- Int080515aapdf (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\n References\n\n- https://www.imf.org/en/News/country-focus\n- PRESS CENTER\n- IMF Survey Interview\n- IMF Country Focus\n- Press release\n- Read the report\n- Jordan gets IMF loan\n- Jordan and the IMF\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2015/09/28/04/53/soint080515a"
    }
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    "Published: August 5, 2015",
    "Jordan was hit by a series of exogenous shocks prior to and during the program:",
    "IMF Executive Board approved on July 31 the final review under the $2 billion Stand-By Arrangement agreed in 2012.",
    "Final disbursement of about $400 million was approved, making Jordan the first Arab country in transition to successfully complete an IMF-backed program.",
    "IMF showed flexibility during the program in:",
    "Program had three main objectives: maintaining macroeconomic stability; ensuring fairer, more equitable policies; and increasing growth prospects.",
    "Macroeconomic stability:",
    "Equity and redistribution:",
    "Structural and business environment reforms:",
    "Current public debt reported at 90 percent of GDP.",
    "Authorities should bring the electricity company back to cost recovery and consider further central government measures, including widening the income tax base.",
    "Financing needs expected to remain high for the next couple of years.",
    "IMF view: reforms needed to reduce debt from the current 90 percent to the authorities’ target of about 70 percent by 2020, regarded as a safe threshold for an emerging economy.",
    "Sustained donor support is essential given the expense of hosting Syrian refugees; international assistance remains indispensable.",
    "Unemployment rates:",
    "Labor force participation and female employment:",
    "IMF assessment: creating jobs remains an area where reform has fallen short; structural unemployment persists even during periods of higher growth.",
    "Barriers to access to finance noted: absence of a robust law for collateral, insolvency, or bankruptcy inhibits lending.",
    "Historical and recent growth:",
    "Employment implications:",
    "Conclusion: structural reforms are needed to raise potential growth, translate growth into higher employment, and attract prospective investors despite regional uncertainty.",
    "Continue energy sector reforms and ensure the electricity company returns to cost recovery.",
    "Widen the income tax base to increase revenue and fiscal sustainability.",
    "Advance labor market reforms to raise workforce participation and reduce structural unemployment, with a focus on female participation.",
    "Strengthen laws and frameworks to improve access to finance: collateral, insolvency, and bankruptcy legislation.",
    "Improve the business environment and facilitate investment (including through private-public partnership frameworks).",
    "Maintain engagement with international donors to secure sustained support for refugee-related and fiscal needs.",
    "[Int080515aapdf (PDF)](/-/media/websites/imf/imported/external/arabic/pubs/ft/survey/so/2015/int080515aapdf.pdf){rel=\"external\" type=\"application/pdf\"}",
    "[https://www.imf.org/en/News/country-focus](https://www.imf.org/en/News/country-focus)",
    "[PRESS CENTER](http://presscenter.imf.org/)",
    "[IMF Survey Interview](https://www.imf.org/en/news/search)",
    "[IMF Country Focus](https://www.imf.org/en/news/country-focus)",
    "[Press release](http://www.imf.org/external/np/sec/pr/2015/pr15366.htm)",
    "[Read the report](http://www.imf.org/external/pubs/cat/longres.aspx?sk=43176)",
    "[Jordan gets IMF loan](http://www.imf.org/external/pubs/ft/survey/so/2012/int080312a.htm)",
    "[Jordan and the IMF](http://www.imf.org/external/country/JOR/index.htm)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
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