Jordan — IMF Staff Conclude Article IV Discussions and Reach Staff Level Agreement on the Second Review under the Extended Fund Facility

IMF News, October 10, 2024

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Canonical URL: Jordan — IMF Staff Conclude Article IV Discussions and Reach Staff Level Agreement on the Second Review under the Extended Fund Facility

A staff team from the International Monetary Fund (IMF), led by Ron van Rooden, visited Amman during September 30–October 10, 2024, for discussions on the 2024 Article IV consultation and the second review under the arrangement under the IMF’s Extended Fund Facility (EFF).
The EFF arrangement was approved by the IMF’s Executive Board on January 10, 2024.
IMF staff and the Jordanian authorities reached a staff-level agreement on the second review under the EFF.
All quantitative performance criteria and structural benchmarks for the second review were met.
The agreement is subject to approval by the IMF’s management and the Executive Board.

Completion of the second review will make another SDR 97.784 million (about US$131 million) available.
This disbursement is out of the previously approved program size of SDR 926.370 million (about US$1.2 billion).

Jordan’s economy is expected to grow by 2.3 percent in 2024 and 2.5 percent in 2025.
Inflation remains low, at 2 percent.
The financial sector is described as healthy and well capitalized.
Current account projections:
- Current account deficit projected to narrow to 4.4 percent of GDP in 2024.
- Current account deficit projected to widen slightly to 4.7 percent of GDP in 2025.
Public debt and fiscal projections:
- Overall general government primary deficit (excluding grants) expected to remain broadly unchanged in 2024, at 1.3 percent of GDP, compared to 1.4 percent in 2023.
- Public debt expected to be contained at just over 90 percent of GDP by end-2024.

Government revenues have been adversely affected in 2024 by weaker domestic demand and a sharper-than-expected drop in the prices of key export commodities.
Authorities have taken strong actions to offset the revenue shortfall to contain the 2024 central government budget deficit.
Central government primary deficit (excluding grants and transfers to public utilities):
- Committed to limit to 2.9 percent of GDP in 2024, up slightly from 2.7 percent of GDP in 2023.
- Targeted to limit to 2 percent of GDP in 2025 as part of gradual fiscal consolidation.
Fiscal sustainability objective:
- Fiscal policy aims to reduce public debt to 80 percent of GDP by 2028.
With further efforts on public utilities and continued social security surpluses:
- Overall general government primary deficit (excluding grants) expected to be reduced by 1.1 percent of GDP to 0.2 percent of GDP.

The Central Bank of Jordan’s (CBJ) firm commitment to monetary stability and safeguarding the exchange rate peg underpins low inflation.
The CBJ stands ready to undertake policy adjustments as necessary to credibly safeguard monetary and financial stability.
Narrowing of the current account deficit in 2024 is expected to help further build the CBJ’s reserve buffers.

Bringing the economy onto a higher growth trajectory is essential to create more jobs and raise prosperity.
Authorities are determined to step up the pace of structural reforms to achieve stronger growth and generate more jobs, noting persistent high unemployment, particularly among youth and women.
Reform priorities include:
- Improving the business environment to attract more investment.
- Enhancing competition and labor market flexibility.
- Further strengthening the social safety net.
- Streamlining regulation and digitalization of government services, including tax and customs administration.
- Improving the finances of public utilities.

The intensifying conflict in the region is causing larger-than-anticipated impacts on Jordan’s economy.
Strong and timely international support remains important to help Jordan face external headwinds and to continue to shoulder the cost of hosting a large number of Syrian refugees.

The IMF staff team met with Prime Minister Hassan; Minister of Finance Shibli; Minister of Planning and International Cooperation Toukan; Minister of Economic Affairs Shehadeh; Governor of the Central Bank of Jordan Al-Sharkas; and other Ministers and senior government and CBJ officials.
The staff team expressed gratitude for candid and constructive discussions.

IMF staff statement issued at the conclusion of the mission (October 10, 2024).