IMF team reaches staff-level agreement with Jordan on 6th review under EFF

AMMAN — An International Monetary Fund (IMF) mission led by Ron van Rooden visited Amman during May 3-17, 2023, to conduct the sixth review of Jordan’s economic reform programme supported by the IMF’s Extended Fund Facility (EFF), according to a statement from the IMF. 

At the end of the visit van Rooden issued the following statement. 

“We are pleased to announce that the IMF team and the Jordanian authorities reached a staff-level agreement on the sixth review of the authorities’ economic reform programme supported by the EFF arrangement. The completion of this review will bring the total IMF disbursements since the start of the programme in 2020 to SDR 1300 million (around $1750 million). This agreement is subject to approval by the IMF’s management and the Executive Board. 

“Despite a challenging global and regional environment, Jordan has maintained macroeconomic stability and access to international capital markets through prudent monetary and fiscal policies. As a result, the programme remains firmly on track, with key programme targets met and continued strong progress on structural benchmarks. The central government reduced its primary deficit (excluding grants) by 0.8 per cent of GDP in 2022, to 3.7 per cent of GDP, by taking timely measures to offset the higher cost of subsidies. Meanwhile, the CBJ has successfully maintained monetary and financial stability. It remains committed to the peg and has raised policy rates in line with the US Federal Reserve. As a result, inflation has been relatively moderate and has started to decline. The banking system remains well-capitalised and liquid, as also confirmed by the recent Financial System Sustainability Assessment. 

“The post-pandemic recovery continues, with real GDP expected to grow by 2.6 per cent in 2023. Inflation is on track to moderate to 2.7 per cent in 2023, due to an appropriately monetary policy stance. Medium-term growth is projected to increase to 3 per cent, although uncertainty surrounding the global outlook is high. 

“Moving forward, continued prudent policies remain critical to preserving macro-economic stability. The government aims to further reduce the central government primary deficit to 2.9 per cent of GDP in 2023, with a view to gradually reducing public debt to 80 per cent of GDP by 2028, through continued efforts to broaden the tax base, and by improving the efficiency of public spending. Continued efforts to tackle the deficits in the electricity sector are also essential to safeguarding fiscal sustainability. Monetary policy will need to continue prioritising safeguarding the peg, backed by adequate international reserves. 

“With unemployment still high, at 22.9 per cent, and particularly among the youth and women, structural reforms are essential for achieving strong and inclusive growth and creating more jobs. This includes enhancing the ease of doing business, and reducing the cost of doing business, promoting competition, increasing labour market flexibility, and enhancing governance and transparency. While progress has been made in these areas, more is needed to create a more dynamic private sector, attract more investment, and create job-rich economic growth. Continued concessional support from donors is crucial, particularly to assist Jordan in continuing to host refugees. 

“The mission would like to thank our counterparts for an open and collaborative dialogue. The mission met with the Prime Minister, the Deputy Prime Minister for Economic Affairs, the Minister of Finance, the Minister of Planning and International Cooperation, the Minister of Energy and Mineral Resources, the Minister of Industry and Trade and Labour, the Governor of the Central Bank of Jordan, Members of Parliament, other Cabinet ministers and officials, donors, and representatives of the private sector and civil society.”