IMF approves $1.2bn financing support for Jordan after ‘significant progress’

The International Monetary Fund’s executive board approved a new $1.2 billion fouryear extended fund facility (EFF) for Jordan to aid its economic reform programmes.

The arrangement replaces the EFF approved in March 2020 and that was set to expire in March this year.

The approval provides Jordan with immediate access to about $190 million, with the remaining amount to be issued in phases throughout the programme, the fund said.

“Jordan has weathered well a series of shocks over the past few years, maintaining macrostability and moderate economic growth thanks to adept policy-making and sizeable international support,” said Kenji Okamura, deputy managing director and acting chairman of the IMF’s executive board.

“Prudent fiscal and monetary policies have reduced deficits, strengthened reserve buffers, preserved financial stability and maintained market confidence in a challenging global and regional environment.

“Significant progress has also been made in implementing structural reforms.”

The IMF estimates that Jordan’s real gross domestic product will expand by 2.6 per cent this year, the same as last year.

The government’s gross debt is estimated to rise to 112.7 per cent of its GDP this year, from 111.5 per cent last year.

Public external debt is projected to increase to 44.3 per cent of its GDP this year, up from 42.2 per cent in 2023. It is expected to rise next year before reducing steadily to 39.5 per cent by 2028, the IMF said.

The latest funding will support the authorities’ efforts towards a gradual fiscal consolidation to place public debt on a “steady downward path” by adopting measures to broaden the tax base and improve tax compliance.

“The planned expansion of social assistance, with further improvements in targeting, will be key to ensuring adequate protection of vulnerable households,” Mr Okamura said.

The Central Bank of Jordan maintained its prudent policies, which have supported the peg of the kingdom’s currency to the US dollar.

“The peg has served Jordan well and helped keep inflation low,” he said.

Inflation is projected to rise to 2.7 per cent this year, from an estimated 2.2 per cent in 2023.

The EEF builds on Jordan’s “strong performance” under the previous arrangement, the fund said.