{ "title": "Jordan — Financial Sector Assessment Program and Financial System Stability Assessment", "publication": "IMF News, April 20, 2023", "sourceUrl": "https://www.imf.org/en/news/articles/2023/04/20/pr23124-jordan-financial-sector-assessment-program-and-financial-system-stability-assessment", "canonical": "https://www.imf.org/en/news/articles/2023/04/20/pr23124-jordan-financial-sector-assessment-program-and-financial-system-stability-assessment", "overlayPath": "/en/news/articles/2023/04/20/pr23124-jordan-financial-sector-assessment-program-and-financial-system-stability-assessment/index.md", "summary": "Jordan’s financial sector, dominated by banks, has withstood several large external shocks (Global Financial Crisis, Arab Spring, war in Syria and influx of refugees, and COVID-19) since the latest FSAP that was conducted in 2008-09 in part thanks to measures implemented by the authorities to enhance the system’s resilience and oversight. At the current juncture, global growth headwinds, high energy and food prices, and higher interest rates are putting pressure on corporate and household sector balance sheets.", "publishDate": "2023-04-20", "sections": [ { "heading": "Executive summary and context", "content": "- Press Release No. PR23/124; IMF Press center; April 20, 2023.\n- The Executive Board of the International Monetary Fund (IMF) concluded the Financial Sector Assessment Program (FSAP) with Jordan on March 17, 2023 without convening formal discussions.\n- The Financial System Stability Assessment (FSSA) report was completed on February 23, 2023.\n- The report is based on the work of joint IMF/World Bank FSAP missions to Jordan during June and October 2022.\n- Jordan’s financial sector is dominated by banks and has withstood several large external shocks since the latest FSAP in 2008-09, including:\n - Global Financial Crisis\n - Arab Spring\n - war in Syria and influx of refugees\n - COVID-19\n- Current external pressures highlighted: global growth headwinds, high energy and food prices, and higher interest rates, which put pressure on corporate and household sector balance sheets." }, { "heading": "Systemic risk analysis: key findings", "content": "- The FSAP’s systemic risk analysis found that Jordan’s banking sector appeared broadly resilient.\n- Specific findings:\n - Banks would be able to withstand a large global stagflationary shock, if it were to occur, given high levels of systemwide regulatory capital and robust earnings.\n - Contagion risk among banks is limited.\n - Credit concentration risk is substantial.\n - Banks’ exposures to the sovereign are large.\n - Nonfinancial corporations’ debt at risk could increase significantly in an adverse scenario.\n - Banks have ample liquidity and can manage significant liquidity pressures." }, { "heading": "Regulatory and supervisory strengths and shortfalls", "content": "- Authorities have introduced key elements of:\n - Basel III\n - IFRS 9\n - domestic systemically important bank (D-SIB) frameworks\n- Financial integrity framework has been upgraded.\n- Recommended supervisory enhancements:\n - Make the banking supervision approach more risk-based and forward-looking.\n - Develop Pillar 2 supervisory assessments for more risk-sensitive capital requirements.\n - Improve Risk-based Anti-Money Laundering/Combatting the Financing of Terrorism (AML/CFT) supervision." }, { "heading": "Macroprudential framework and data needs", "content": "- The macroprudential framework needs:\n - Stronger decision-making\n - A more refined strategy\n- Data gaps to be filled to enable:\n - Implementation of stress tests on a globally consolidated basis\n - Systemic foreign currency liquidity analyses\n - More granular analyses of household and corporate sector vulnerabilities to guide calibration of borrower-based macroprudential tools" }, { "heading": "Sovereign-bank nexus and resolution framework", "content": "- The sovereign-bank nexus needs further analysis.\n- Consideration should be given to related prudential policies for enhancing system resilience.\n- Resolution framework improvements recommended, including:\n - Creating a multi-agency crisis management committee" }, { "heading": "Background on FSAP", "content": "- The Financial Sector Assessment Program (FSAP), established in 1999, is a comprehensive and in-depth assessment of a country’s financial sector.\n- FSAPs provide input for Article IV consultations and thus enhance Fund surveillance.\n- FSAPs are mandatory for the 47 jurisdictions with systemically important financial sectors and otherwise conducted upon request from member countries.\n- The key findings of an FSAP are summarized in a Financial System Stability Assessment (FSSA).\n- The Executive Board takes decisions under its lapse-of-time procedure when the Board agrees that a proposal can be considered without convening formal discussions.\n\nSource: Jordan — Financial Sector Assessment Program and Financial System Stability Assessment; Press Release No. PR23/124; April 20, 2023.\n\n---\n\n\n References\n\n- PRESS CENTER\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2023/04/20/pr23124-jordan-financial-sector-assessment-program-and-financial-system-stability-assessment" } ], "bullets": [ "[Markdown version](/en/news/articles/2023/04/20/pr23124-jordan-financial-sector-assessment-program-and-financial-system-stability-assessment/index.md)", "[Structured JSON version](/en/news/articles/2023/04/20/pr23124-jordan-financial-sector-assessment-program-and-financial-system-stability-assessment/index.json)", "[Bundle manifest](/en/news/articles/2023/04/20/pr23124-jordan-financial-sector-assessment-program-and-financial-system-stability-assessment/bundle-manifest.json)", "Published: April 20, 2023", "Press Release No. PR23/124; IMF Press center; April 20, 2023.", "The Executive Board of the International Monetary Fund (IMF) concluded the Financial Sector Assessment Program (FSAP) with Jordan on March 17, 2023 without convening formal discussions.", "The Financial System Stability Assessment (FSSA) report was completed on February 23, 2023.", "The report is based on the work of joint IMF/World Bank FSAP missions to Jordan during June and October 2022.", "Jordan’s financial sector is dominated by banks and has withstood several large external shocks since the latest FSAP in 2008-09, including:", "Current external pressures highlighted: global growth headwinds, high energy and food prices, and higher interest rates, which put pressure on corporate and household sector balance sheets.", "The FSAP’s systemic risk analysis found that Jordan’s banking sector appeared broadly resilient.", "Specific findings:", "Authorities have introduced key elements of:", "Financial integrity framework has been upgraded.", "Recommended supervisory enhancements:", "The macroprudential framework needs:", "Data gaps to be filled to enable:", "The sovereign-bank nexus needs further analysis.", "Consideration should be given to related prudential policies for enhancing system resilience.", "Resolution framework improvements recommended, including:", "The Financial Sector Assessment Program (FSAP), established in 1999, is a comprehensive and in-depth assessment of a country’s financial sector.", "FSAPs provide input for Article IV consultations and thus enhance Fund surveillance.", "FSAPs are mandatory for the 47 jurisdictions with systemically important financial sectors and otherwise conducted upon request from member countries.", "The key findings of an FSAP are summarized in a Financial System Stability Assessment (FSSA).", "The Executive Board takes decisions under its lapse-of-time procedure when the Board agrees that a proposal can be considered without convening formal discussions.", "[PRESS CENTER](http://presscenter.imf.org/)", "[https://www.imf.org/en/home](https://www.imf.org/en/home)" ], "alternates": { "markdown": "/en/news/articles/2023/04/20/pr23124-jordan-financial-sector-assessment-program-and-financial-system-stability-assessment/index.md", "json": "/en/news/articles/2023/04/20/pr23124-jordan-financial-sector-assessment-program-and-financial-system-stability-assessment/index.json", "bundleManifest": "/en/news/articles/2023/04/20/pr23124-jordan-financial-sector-assessment-program-and-financial-system-stability-assessment/bundle-manifest.json" }, "generatedAtUtc": "2026-09-26T02:00:27.662Z" }