The Executive Board of the International Monetary Fund (IMF) today
completed the first review of Jordan’s economic performance under the
Extended Arrangement under the Extended Fund Facility (EFF). The completion
of the first review enables the disbursement of SDR 51.465 million (about
US$71 million), bringing total disbursements under the program to SDR
102.93 million (about US$141.9 million).
The Executive Board also approved the authorities’ requests for waiver of
non-observance of performance criterion on the NIR of the Central Bank of
Jordan (CBJ) and the rephrasing of access.
On August 24, 2016, the Executive Board approved a three-year extended
arrangement under the EFF for Jordan for an amount equivalent to SDR 514.65
million (about US$723 million at the time of approval of the arrangement,
or 150 percent of Jordan’s quota) to support the country’s economic
financial reform program. This program aims at advancing fiscal
consolidation to gradually lower public debt and broad structural reforms
to enhance the conditions for more social-friendly inclusive growth.
Following the Executive Board’s discussion on Jordan, Mr. Mitsuhiro
Furusawa, Deputy Managing Director and Acting Chair, said:
“The Jordanian economy has performed favorably under a difficult external
environment. Macroeconomic stability and external viability have been
maintained thanks to a prudent monetary policy and progress in reducing the
fiscal deficit. However, with below-potential economic growth, high
unemployment, and difficult social conditions, steadfast implementation of
reforms is critical to preserve these achievements and enhance inclusive
growth.
“The authorities are committed to continue with a gradual and steady fiscal
consolidation to bring public debt toward more sustainable levels. To help
public finances rest on a sounder foundation, the removal of exemptions on
the general sales tax and custom duties will continue over the program
period. These reforms are being complemented by others to tackle tax
evasion, rationalize expenditures, contain contingent liabilities, and
improve the financial condition of the energy and water sectors.
“The Central Bank of Jordan has tightened its monetary policy stance since
November 2016 and stands ready to increase the policy interest rates
further to support the peg. The banking system is well capitalized and
profitable. The gradual adoption of Basel III, and the authorities’
decision to complement it with an additional capital buffer, provide
important resilience to shocks and will help preserve financial stability.
“Efforts to promote financial inclusion and facilitate access to credit and
improve the business environment should help support investment and
productivity, and enhance inclusive growth. Further reforms to reduce the
cost of formal jobs are critical to address high unemployment, particularly
for young people and women.
“Continued donor support through sufficient budget grants and concessional
financing will be important to help Jordan cope with the refugee crisis and
support the authorities’ program goals.”
