## IMF Executive Board Completes Second Review Under the Extended Fund Facility for Jordan

_IMF News, May 6, 2019_

## Source details

**Canonical URL:** [IMF Executive Board Completes Second Review Under the Extended Fund Facility for Jordan](https://www.imf.org/en/news/articles/2019/05/06/pr19144-jordan-imf-executive-board-completes-second-review-under-the-eff-for-jordan)

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## Bibliographic details
- Published: May 6, 2019

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### Review outcome and program financing
- The Executive Board completed the second review of Jordan’s economic performance under the Extended Arrangement under the Extended Fund Facility (EFF).
- Completion of the second review enables the disbursement of SDR 120.085 million (about US$166.4 million), bringing total disbursements under the program to SDR 223.015 million (about US$309. million).
- The Executive Board approved:
  - a waiver of non-observance of performance criterion on the Net International Reserves of the Central Bank of Jordan (CBJ),
  - an extension of the arrangement to March 2020,
  - and the rephasing of access.
- Background: 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).

### Executive Board assessment — macroeconomic stance and challenges
- The authorities are commended for:
  - preserving macroeconomic stability,
  - maintaining a prudent monetary policy,
  - ensuring a sound financial system.
- Jordan faces a challenging environment: low economic growth, high unemployment, and elevated public debt.
- Policy priorities identified:
  - Swift implementation of policies and reforms to bring public debt on a downward path,
  - Boost investment and productivity,
  - Enhance inclusive growth.

### Fiscal policy, tax reform, and debt sustainability
- The authorities should continue gradual and steady fiscal consolidation, with due regard to social protection needs.
- Recent income-tax law amendments are described as encouraging and key to securing a fairer and more sustainable fiscal framework.
- Required accompanying measures:
  - Resolute implementation of the new law,
  - Ongoing measures to enhance tax administration,
  - Measures to reduce tax evasion.
- These fiscal reforms are crucial to:
  - preserve macroeconomic and external stability,
  - place public finances on a sounder foundation,
  - lessen risks to debt sustainability.
- Note: A number of key fiscal reforms have been delayed, underscoring the need for resolute implementation.

### Monetary policy and financial sector
- Jordan’s monetary policy stance is appropriate.
- Authorities should remain ready to adjust interest rates as needed to maintain an adequate reserve buffer.
- Banks remain sound and well-capitalized.
- Steps to improve financial sector oversight and supervision are welcomed.

### Structural reforms, business environment, and labor market
- Recent enacted reforms include:
  - the secured-transactions law,
  - the bankruptcy law,
  - the business-inspections law.
- Complementary reforms and measures highlighted:
  - promote labor-market flexibility, particularly for youth and women,
  - publication of a financial-inclusion action plan,
  - measures to support credit to SMEs.
- Continued implementation of these reforms is vital to set the stage for high-quality, inclusive growth.
- Priority should be given to measures to reduce business costs and boost employment.

### Energy sector reform and social protection
- The authorities’ roadmap to restructure the energy company to reduce high electricity costs for businesses is welcome.
- Specific measures under the plan to be implemented swiftly:
  - elimination of large cross subsidies,
  - implementation of the new tariff-adjustment mechanism.
- These measures should be complemented by a well-targeted social protection scheme to safeguard low-income and vulnerable households.

### External support and refugee-related assistance
- The recent London Initiative is noted as timely and demonstrates the international community’s ongoing determination to support Jordan.
- Continued donor assistance is key to help Jordan cope with the refugee crisis and support the authorities’ policy and reform efforts.
- The IMF calls for greater donor support to help Jordan cope with the Syrian refugee crisis.

*Press Release No. 19/144, May 6, 2019.*

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## References

- [https://www.imf.org/-/media/images/imf/bios/imfboard.jpg](https://www.imf.org/-/media/images/imf/bios/imfboard.jpg)
- [The Executive Board](https://www.imf.org/external/np/sec/memdir/eds.aspx)
- [Jordan and the IMF](http://www.imf.org/external/country/JOR/index.htm)
- [Special Drawing Rights (SDRs) -- A Factsheet](https://www.imf.org/en/about/factsheets/sheets/2023/special-drawing-rights-sdr)
- [Press Releases](https://www.imf.org/en/news/searchnews)
- [PRESS CENTER](http://presscenter.imf.org/)
- [Press Release No. 16/381](https://www.imf.org/en/News/Articles/2016/08/25/PR16381-Jordan-IMF-Executive-Board-Approves-US-723-million-Extended-Arrangement)
- [http://www.imf.org/external/np/sec/misc/qualifiers.htm](http://www.imf.org/external/np/sec/misc/qualifiers.htm)
- [https://www.imf.org/en/home](https://www.imf.org/en/home)

_Source: https://www.imf.org/en/news/articles/2019/05/06/pr19144-jordan-imf-executive-board-completes-second-review-under-the-eff-for-jordan_