Macroeconomic situation remains stable in spite of high vulnerabilities, regional turmoil — finance minister

AMMAN — The Kingdom's macroeconomic situation has remained relatively stable despite regional instability, high vulnerability, and other challenges that threaten the economy, Minister of Finance Omar Malhas said Tuesday.

At the opening of the 5th Euromoney Jordan Conference, which attracted more than 200 financiers, donors, investors, business leaders, entrepreneurs, policymakers and government officials, the minister referred to the country's national reform programme and the Jordan Economic Growth Plan 2018-2022, which he said are key components for sustainable growth. 

In his address, the minister also referred to a $700 million Extended Fund Facility (EFF) Jordan reached with the International Monetary Fund (IMF) in 2016, noting that the national reform programme in cooperation with the IMF is aimed at preserving macroeconomic stability, building up the country's resilience and strengthening the conditions necessary for more inclusive economic growth through sustained fiscal adjustment to reduce debt to safer levels and structural reforms aimed at boosting jobs and growth, enhancing competitiveness and fostering equity, fairness and good governance.

"The programme did not front-load measures but proceeded with a steady pace of fiscal consolidation aiming at, among other things, bolstering inclusive economic growth," said the minister.

Malhas added that it is evident that fiscal consolidation is moving at a faster pace than economic growth. 

"This slow transition is negatively affecting the fiscal consolidation efforts… The challenge here is how to recalibrate a programme that balances between steady pace fiscal consolidation and faster inclusive economic growth," said the minister.

"We are aiming at striking a balance between successful fiscal consolidation and improving economic growth," he added.

Referring to the Jordan Economic Growth Plan 2018-2022 that aims to revive growth momentum and recapture Jordan's development potential, he said the growth plan is comprised of economic, sector-based and fiscal strategies that outline the vision and policies pertaining to each sector.

 "A successful implementation of the national reform plan and the economic growth plan should put Jordan on a sustainable growth path and ensure its resilience in the face of economic challenges and regional turmoil," the minister explained.

Central Bank of Jordan (CBJ) Governor Ziad Fariz said that Jordan's banking sector remained stable in the face of regional turmoil.

He stressed that the banking sector is well-managed, well-regulated and adopts prudent banking policies.

"Maintaining this sector's health is essential for development," Fariz added.

The Central Bank governor referred to the pegging of the Jordanian dinar to the dollar, saying there were "no questions about the benefits".

"The benefits of pegging to the dollar are numerous… we will continue to adhere to this policy," Fariz added.

"We cannot afford changing this system, which is a very valuable system that has been positive to the financial sector and the economy at large," Fariz said.

Referring to technologies and developments in the financial sector, Fariz noted that the CBJ supports the latest technologies in the field including blockchain, which is being used around the world.

Blockchain, he said, would help enhance financial inclusion efforts.

With regard to cryptocurrencies such as Bitcoin, he noted that banks were banned from dealing with such currencies, adding that the CBJ repeatedly warned against the use of virtual currencies, including Bitcoin.