Jordan—IMF Executive Board Concludes 2024 Article IV Consultation and Second Review Under the Extended Fund Facility
IMF News, December 13, 2024
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- Published: December 13, 2024
Program status and financing
- Jordan’s EFF-supported program, approved in January 2024, remains on track.
- The completion of the second program review makes another SDR 97.784 million (about US$131 million) available to Jordan, out of the previously approved program size of SDR 926.370 million (about US$1.2 billion).
- Total disbursements under this arrangement to date: SDR 339.67 million (about US$453 million).
- The four-year arrangement amounts to SDR 926.37 million (about US$1.2 billion, equivalent to 270 percent of Jordan’s quota in the IMF) and was approved by the IMF’s Board on January 10, 2024.
Macroeconomic assessment and outlook
- Resilience and stability
- Jordan continues to show resilience and maintain macro-economic stability, despite the headwinds caused by the regional conflict and the heightened uncertainty.
- This resilience reflects the authorities’ continued implementation of sound macro-economic policies and reform progress, as well as sizable international support.
- Performance under Jordan’s IMF-supported program remains strong: all quantitative performance criteria and structural benchmarks for the second program review were met.
- Growth and inflation
- Growth is projected to moderate to 2.3 percent in 2024, from 2.7 percent in 2023.
- Growth is projected at 2.5 percent in 2025, with a pickup expected in following years assuming a resolution of the conflict and continued reforms.
- Inflation is projected to remain low, at about 2 percent, reflecting the Central Bank of Jordan’s firm commitment to monetary stability and the exchange rate peg.
- Labor market
- Unemployment remains high at 21 percent; moderate growth has limited progress in reducing unemployment.
- External sector and reserves
- The current account deficit is projected to widen slightly to just under 5 percent of GDP in 2024 and 2025, from under 4 percent of GDP in 2023, driven by lower tourism receipts and lower prices for key exports.
- The CBJ’s international reserves remain at comfortable levels.
- Fiscal position
- 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 2024’s central government budget deficit and will continue a gradual fiscal consolidation in 2025 to reduce public debt and ensure medium-term fiscal sustainability.
- Financial sector
- The financial sector remains healthy and well-capitalized.
Executive Board assessment — key messages
- Directors commended the authorities for resilience owing to sound macroeconomic policies and reform implementation despite regional conflict challenges.
- Directors encouraged maintaining the reform momentum to safeguard macroeconomic stability and foster stronger, more inclusive growth.
- Directors underscored the importance of sustained donor support to help Jordan address financing needs from hosting a large number of refugees and to meet development objectives.
- Fiscal stance
- Directors supported the recalibration of the fiscal adjustment path given the regional conflict’s impact.
- They welcomed the authorities’ commitment to resume gradual fiscal consolidation to place public debt on a steady downward path while creating space for social and capital spending.
- Directors stressed the need for further broadening the revenue base and looked forward to the authorities’ Medium Term Revenue Strategy.
- They underscored the critical need to sustainably ensure the financial viability and efficiency of public utilities to ensure adequate and affordable energy and water supplies and to help reduce public debt.
- Monetary and financial policies
- Directors commended the Central Bank of Jordan (CBJ) for prudent policies that have safeguarded monetary and financial stability.
- They emphasized that the CBJ should continue to adjust its policy rates as needed to support the exchange rate peg and maintain an appropriate level of international reserves.
- While the banking system remains sound, Directors advised continued monitoring of banks’ financial health and further strengthening financial sector oversight in line with the recommendations of the 2023 Financial System Stability Assessment.
- Structural reforms and social policy
- Directors encouraged accelerating structural reforms to foster a more dynamic private sector capable of creating more jobs and improving living standards.
- Priority areas include reducing impediments to doing business, enhancing competition and labor market flexibility (particularly to increase female labor force participation), and continuing to strengthen the social safety net.
- Directors noted authorities’ climate adaptation and mitigation efforts and efforts to enhance pandemic preparedness; they noted interest in support under the Resilience and Sustainability Facility.
Risks and contingencies
- Risks to the outlook remain high, driven by the ongoing regional conflict and heightened uncertainty.
- The conflict’s widening impact has dampened economic growth and affected government finances more than anticipated at the program’s outset.
- Continued strong and timely international support is crucial to help Jordan navigate external headwinds while shouldering the costs of hosting a large number of Syrian refugees.
Key economic indicators (selected, 2023–25)
- Output and Prices
- Real GDP growth: 2023 — 2.7; 2024 Est. — 2.3; 2025 Proj. — 2.5
- GDP deflator: 2023 — 1.8; 2024 Est. — 2.1; 2025 Proj. — 3.3
- Nominal GDP (JD billions): 2023 — 36.2; 2024 Est. — 37.8; 2025 Proj. — 39.7
- Inflation (Consumer Price Index, annual average) 1/: 2023 — 1.7; 2024 Est. — 2.2; 2025 Proj. — (not listed)
- Unemployment: 2023 — 22.0; 2024 — 21 percent (noted in text)
- Government Finances (in percent of GDP)
- Central government fiscal operations — Revenue and grants 2/: 2023 — 25.3; 2024 Est. — 24.4; 2025 Proj. — 25.6
- Of which: grants: 2023 — 2.0; 2024 Est. — 1.9
- Expenditures 2/: 2023 — 30.4; 2024 Est. — 31.0; 2025 Proj. — 31.3
- Overall central government balance: 2023 — -5.1; 2024 Est. — -6.5; 2025 Proj. — -5.7
- Central government primary balance (exc. grants, NEPCO and WAJ): 2023 — -2.7; 2024 Est. — -2.9; 2025 Proj. — -2.0
- Combined public sector balance 3/: 2023 — -4.5; 2024 Est. — -4.8; 2025 Proj. — -3.6
- Government gross debt 4/: 2023 — 113.8; 2024 Est. — 115.0; 2025 Proj. — 116.1
- Government gross debt, net of SSC holdings of government debt 4/: 2023 — 89.2; 2024 Est. — 90.5; 2025 Proj. — 89.9
- Money and Credit
- Broad money (percent change): 2023 — 4.4; 2024 Est. — 4.9; 2025 Proj. — (not listed)
- Credit to the private sector (percent change): 2023 — 3.4; 2024 Est. — 4.8; 2025 Proj. — (not listed)
- Balance of payments
- Current account (in percent of GDP): 2023 — -3.7; 2024 Est. — -4.3; 2025 Proj. — (implied just under -5 percent)
- FDI (in percent of GDP): 2023 — 1.5; 2024 Est. — (not listed)
- Gross reserves (in months of imports): 2023 — 7.2; 2024 Est. — 6.8
- In percent of Reserve Adequacy Metric: 2023 — 104; 2024 Est. — 103; 2025 Proj. — 101
Source: IMF press release, December 13, 2024.
