IMF Executive Board Concludes 2020 Article IV Consultation with Jordan
IMF News, April 16, 2020
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- Published: April 16, 2020
Background and recent economic performance
- The following assessments and projections predate the ongoing COVID-19 outbreak; the near-term outlook is subject to significant risks stemming from the outbreak.
- Growth has averaged only 2 percent since 2016.
- Per capita income in 2019 was about 10 percent below its 2010 level.
- Consumer price inflation:
- rose to 3.5 percent during 2017–18 (primarily reflecting fiscal measures),
- decreased to about 0.5 percent in 2019 (due to subdued food and imports prices, including fuel).
- Unemployment rate (excluding foreign labor) reached 19 percent in 2019, up from 18.5 percent in 2017.
- Current account deficit (excluding grants) narrowed from an average of 12 percent of GDP during 2017–18 to a projected 6 percent in 2019.
- Central Bank of Jordan (CBJ) continued adjusting its policy interest rate in line with the United States.
- Reserve buffers: 7 months of imports in 2019 (partly recouped after mid-2018 reserve losses).
- Fiscal consolidation progress in 2016–17 was significant but proved difficult to maintain during 2018–19 due to tax administration weaknesses, some policy reversals, and delays in implementation of fiscal measures.
Outlook and projections (baseline)
- Growth projections:
- 2.1 percent in 2020,
- gradually increasing to 3.3 percent over the medium term.
- Baseline scenario assumptions:
- Fiscal consolidation of about 4 percent of GDP during 2020–24 to place public debt on a downward path.
- A strengthened growth agenda, including reduced business costs (particularly on electricity and labor) and measures to increase employment for youth and women, while enhancing Jordan’s social safety net.
- Inflation expected to gradually reach 2.5 percent over the medium term.
- Current account deficit (excluding grants) projected to continue narrowing to about 5 percent of GDP over the medium term.
- Reserves buffers expected to remain adequate at 8 months of imports.
Executive Board assessment and recommendations
- Executive Directors commended authorities for preserving macroeconomic stability and improving the business climate amid challenging external conditions.
- Key concerns highlighted:
- Disappointing growth outcomes,
- High unemployment,
- Rising public debt,
- Significant challenges related to the COVID-19 pandemic and the large population of Syrian refugees.
- Directors supported the new financing arrangement with the Fund, its focus on fiscal consolidation and growth-promoting reforms, while noting that continued expansion of the COVID-19 outbreak could put program objectives at risk.
- Directors welcomed authorities’ early measures to mitigate the outbreak's impact and saw scope to adjust program modalities going forward given rapidly changing circumstances.
- Calls for greater donor support to help Jordan achieve program objectives and protect refugees.
- Fiscal policy guidance:
- Encourage steady fiscal consolidation using both revenue and expenditure measures to bring public debt on a downward path.
- Focus on broadening the tax base.
- Mitigate fiscal pressures from state-owned electricity and water sectors.
- Improve public financial management.
- Ensure better targeted social safety nets to protect the most vulnerable.
- Some Directors expressed concerns about the imposition of a customs service fee on imports from the EU and called for considering other revenue measures.
- Monetary and financial sector guidance:
- Monetary policy appropriately focused on supporting the peg and the economy.
- Welcome overall soundness of Jordan’s financial sector; encourage continued efforts to preserve stability and promote financial inclusion.
- Structural reforms:
- Support for an ambitious structural agenda to remove impediments to growth and reduce unemployment, particularly among women and youth.
- Encourage efforts to improve the business environment and enhance competitiveness, including through energy sector reform.
- Stress that improvements in economic governance are essential to enhance public sector transparency and accountability.
Key statistics and macroeconomic indicators (selected, Act./Proj., 2018–25)
- Real GDP at market prices (percentage change):
- 2018: 1.9
- 2019: 2.0
- 2020: 2.1
- 2021: 2.3
- 2022: 2.6
- 2023: 2.9
- 2024: 3.1
- 2025: 3.3
- Nominal GDP at market prices (percentage change):
- 2018: 3.7
- 2019: 3.6
- 2020: 4.0
- 2021: 4.9
- 2022: 5.2
- 2023: 5.5
- 2024: 5.7
- 2025: 5.9
- Nominal GDP at market prices (JD millions):
- 2018: 29,984
- 2019: 31,058
- 2020: 32,313
- 2021: 33,882
- 2022: 35,632
- 2023: 37,582
- 2024: 39,716
- 2025: 42,052
- Nominal GDP at market prices ($ millions):
- 2018: 42,291
- 2019: 43,805
- 2020: 45,575
- 2021: 47,789
- 2022: 50,257
- 2023: 53,008
- 2024: 56,017
- 2025: 59,312
- Consumer price inflation (annual average):
- 2018: 4.5
- 2019: 0.3
- 2020: 1.5
- 2021: 1.7
- Unemployment rate (period average, percent) 1/: 18.3 (2018)
- Fiscal operations (percent of GDP):
- Revenue and grants:
- 2018: 26.1
- 2019: 24.7
- 2020: 27.0
- 2021: 26.0
- 2022: 25.5
- 2023: 24.5
- 2024: 24.3
- 2025: 24.0
- Of which: grants:
- 2018: 3.0
- 2019: 3.2
- 2020: 2.2
- 2021: 1.0
- 2022: 0.9
- Expenditure 2/:
- 2018: 29.8
- 2019: 29.7
- 2020: 30.0
- 2021: 29.9
- 2022: 29.6
- 2023: 29.3
- 2024: 29.1
- Unidentified measures 3/:
- 2019: 0.6
- 2020: 1.2
- 2021: 2.4
- Overall fiscal balance 4/:
- 2018: -3.3
- 2019: -5.0
- 2020: -3.0
- 2021: -3.4
- 2022: -3.1
- 2023: -2.6
- 2024: -1.6
- Primary government balance (excluding grants):
- 2018: -3.8
- 2019: -2.3
- 2020: -1.6
- 2021: -1.0
- 2022: -0.3
- 2023: 0.4
- Combined public sector balance 5/:
- 2018: -4.2
- 2019: -5.1
- 2020: -4.0
- 2021: -3.2
- 2022: -2.4
- 2023: -1.7
- Government and guaranteed gross debt 6/ (% of GDP):
- 2018: 94.4
- 2019: 99.1
- 2020: 100.4
- 2021: 100.7
- 2022: 100.2
- 2023: 99.6
- 2024: 98.0
- 2025: 96.1
- Government and guaranteed gross debt, net of SSC's holdings 6/ (% of GDP):
- 2018: 76.3
- 2019: 79.4
- 2020: 79.9
- 2021: 79.7
- 2022: 78.7
- 2023: 77.8
- 2024: 75.8
- 2025: 73.6
- External sector:
- Current account balance (including grants), of which:
- 2018: -7.0
- 2019: -2.9
- 2020: -3.6
- 2021: -2.8
- Current account balance (excluding grants):
- 2018: -10.6
- 2019: -6.1
- 2020: -6.9
- 2021: -6.4
- 2022: -5.6
- 2023: -4.5
- Exports of goods, f.o.b. ($ billions):
- 2018: 7.8
- 2019: 8.4
- 2020: 8.7
- 2021: 9.2
- 2022: 9.7
- 2023: 10.3
- 2024: 11.0
- 2025: 11.6
- Imports of goods, f.o.b. ($ billions):
- 2018: 18.1
- 2019: 17.4
- 2020: 18.4
- 2021: 19.1
- 2022: 19.8
- 2023: 20.5
- 2024: 21.3
- Oil and oil products ($ billions): 3.8 (2018)
- Private capital inflows (net):
- 2018: 2.8
- 2019: 3.5
- 2020: 4.1
- Monetary sector (percentage change):
- Broad money:
- 2018: 1.3
- 2019: 6.8
- 2020: 7.5
- Net foreign assets:
- 2018: -19.3
- 2019: 23.5
- Net domestic assets:
- 2018: 9.1
- 2019: 8.2
- Credit to private sector:
- 2018: 4.7
- 2019: 5.6
- Credit to central government:
- 2018: 14.1
- Memorandum items:
- Gross usable international reserves ($ millions):
- 2018: 12,513
- 2019: 13,513
- 2020: 15,307
- 2021: 16,991
- 2022: 17,860
- 2023: 17,885
- 2024: 18,612
- 2025: 19,401
- In months of prospective imports:
- 2018: 6.7
- 2019: 7.0
- 2020: 7.7
- 2021: 8.3
- 2022: 8.1
- 2023: 8.0
- In percent of reserve adequacy metric:
- 2018: 97
- 2019: 98
- 2020: 104
- 2021: 111
- 2022: 106
- 2023: 107
- Net international reserves ($ millions):
- 2018: 11,430
- 2019: 12,756
- 2020: 14,462
- 2021: 15,879
- 2022: 16,485
- 2023: 16,259
- 2024: 16,907
- 2025: 17,809
- Population (millions) 7/:
- 2018: 9.9
- 2019: 10.1
- 2020: 10.2
- 2021: 10.4
- 2022: 10.5
- Nominal per capita GDP ($):
- 2018: 4,270
- 2019: 4,350
- 2020: 4,464
- 2021: 4,631
- 2022: 4,830
- 2023: 5,061
- 2024: 5,315
- 2025: 5,627
- Real effective exchange rate (end of period, 2010=100) 8/:
- 2018: 117.7
Source: IMF Press Release No. 20/146 — Executive Board Concludes 2020 Article IV Consultation with Jordan.
