IMF Staff Completes 2019 Article IV Mission to Jordan

IMF News, November 25, 2019

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An International Monetary Fund (IMF) mission, led by Mr. Chris Jarvis, visited Amman from November 11–20 to conduct the 2019 Article IV Consultation and review progress under Jordan’s extended arrangement under the Extended Fund Facility (EFF).
Discussions began on a new three-year program that could be supported by the IMF; staff made good progress toward agreement on the broad objectives of such a program and expect to return to Amman in late January to continue discussions.
Press contact: PRESS OFFICER: Wafa Amr; Phone: +1 202 623-7100; Email: MEDIA@IMF.org

The priorities for the coming years are to maintain economic stability, reduce fiscal imbalances, boost growth, create jobs, and strengthen social protection.
The authorities have taken important steps to improve the business climate, placing Jordan as one of the world’s top three improvers, according to the World Bank’s Doing Business Indicators.
IMF staff view: continue efforts to reduce vulnerabilities, increase economic resilience, and support stronger growth.

Real GDP growth has averaged only 2-2.5 percent since 2010.
Unemployment remains particularly high for youth and women.
Policy emphasis: pro-employment reforms are critical for inclusive growth and stability; recent amendments to the social security law are welcome.
On the new package of employment-based cash incentives designed to boost job creation and growth, IMF staff stress implementation must be transparent and take into account Jordan’s pressing fiscal constraints.

Monetary and exchange-rate policies remain appropriate, and foreign reserves are comfortable.
Recommendation: authorities should continue to adjust interest rates as needed to maintain continued stability and confidence in the currency.

Fiscal consolidation has been slower than envisaged; yields from efforts to broaden the tax base and mobilize revenues have fallen short of expectations.
Weaker revenues have led the authorities to cut back on public investment; slippages in 2019 were especially pronounced, and public debt remains very high.
Policy prescription: a combination of deep structural reforms with steady and gradual fiscal consolidation that credibly places public debt on a downward path over the medium term, while also improving social protection measures.
The fiscal strategy should be supported by continued efforts to strengthen tax and customs administration, and by measures to enhance public financial management, fiscal transparency, and governance.
IMF staff note that fiscal space will be limited, suggesting that further international assistance will be critical in allowing for continued growth-enhancing reform.

Electricity-sector reforms are vital.
The energy-sector roadmap is an essential first step in placing NEPCO’s finances on a firmer footing.
Complementary measures are needed to eliminate losses and to reduce tariffs for commercial consumers, which are undermining the competitiveness of Jordan’s businesses.

Authorities, with assistance from the World Bank and other partners, have outlined a concrete matrix of reforms to improve the business climate and boost competitiveness; swift implementation is critical.
Measures to support financial-sector development are key to inclusive growth.
Continued implementation of the authorities’ financial inclusion strategy will help broaden financial access, especially for women, the poor, and small and medium enterprises (SMEs).
IMF staff emphasize improving transparency and governance as part of the overall reform agenda.

Jordan can continue to maintain economic stability and enhance growth with a well-crafted and credible strategy, and with support from the international community.
The Fund remains committed to continue to support the authorities as they work to deliver stronger and more sustainable growth, reduce fiscal imbalances, strengthen the business environment, increase transparency, improve living standards, and ensure that Jordan’s most vulnerable people are protected.
IMF staff met with Prime Minister Omar Razzaz, Minister of Finance Mohamad Al-Ississ, Governor Ziad Fariz, other cabinet ministers, members of Parliament, and representatives from the private sector, civil society, and the international community.

IMF staff statement issued at the end of the mission (November 25, 2019).