IMF lauds Jordan’s commitment to meeting medium-term economic reform objectives

Jordanian policymakers remain committed to the country’s medium-term economic reform objectives, the International Monetary Fund said.

The fund, which completed its first review of the country’s performance under the IMF Extended Fund Facility, called on international donors to step up efforts to help the country cope with the effects of Covid-19.

It said Jordanian authorities had taken steps to preserve macroeconomic stability, create job- rich and inclusive growth and rebuild policy buffers through gradual and growth-friendly fiscal consolidation.

“The impact of Covid-19 on the Jordanian economy has been sizeable, but the authorities have responded with timely and targeted measures to protect lives and livelihoods, while also preserving debt sustainability and market access,” said Mitsuhiro Furusawa, deputy managing director and acting chairman of the fund’s executive board.

“The authorities remain committed to gradually rebuilding policy buffers and arresting the rise in public debt; preserving the credibility of the peg; accelerating electricity sector reforms; and enhancing labour market, business climate and governance reforms to promote higher and more inclusive growth.”

The IMF entered into a threeyear Extended Fund Facility agreement with Jordan in 2017, which was extended last March when the lender approved a four-year, $1.3 billion fund.

With the release of the latest tranche of $146 million, the fund’s total disbursements to Jordan stand at $687m.

The lender also agreed to extend $ 396m in emergency assistance in April last year to help the country deal with the economic fallout from the Covid-19 pandemic.

It said it had enhanced a built-in flexibility in Jordan’s programme to accommodate greater spending needs to help prevent, detect, control, treat and contain the spread of Covid-19.

Jordan’s real gross domestic product rate is expected to grow by 2.5 per cent this year after contracting by about 3 per cent in 2020, the IMF said.

Unemployment in the country has surged to record levels while tourism revenue and remittances have declined.

A fall in other government income has propelled public sector debt to 90 per cent of GDP. However, in the short term, Jordan’s fiscal policy continues to focus on supporting the economy, backed by the IMF programme. However, debt will need to be brought under control eventually.

“High quality fiscal measures should underpin a gradual fiscal consolidation as the recovery takes hold,” said Mr Furusawa. “Monetary policy should remain supportive given the still- fragile economy, while safeguarding the [ currency] peg.”