IMF: ‘Healthy policies’ drawn by Jordan help maintain economic stability | Money and business | zad jordan news

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The International Monetary Fund said on Tuesday that the “sound policies” drawn up by Jordan had helped maintain macroeconomic stability, despite the “difficult conditions” due to the Corona pandemic, and expected real GDP growth will reach about 2.4% per year.

In a statement following the completion of its fourth review of the performance of the Jordanian economy, the Fund stated: “Fiscal and monetary policy, in the short term, should continue to support recovery and maintain macroeconomic stability, amid of a challenging external environment characterized by increasing and tightening global financial conditions, and high An increase in commodity prices.

He pointed out that the comprehensive fund facilitation program, supported by the fund, “continues to move in the right direction at a steady pace, with a remarkably strong performance in mobilizing domestic revenue,” noting that Jordan “the great economic challenges associated with the outbreak of the Corona pandemic, simultaneously protecting social and health spending, and implementing basic structural reforms.

The measures taken by Jordan have “aided the severity of the effects of the Corona pandemic on the economy, which is currently experiencing a state of recovery, through the reopening of economic sectors, and supported by targeted financial and monetary measures,” “according to the fund.

It expected real GDP growth to reach around 2.4% in 2022, with a tendency to rise by more than 3% in the medium term, according to the fund, which said that “unemployment is still at very high levels, especially among young people. “

Inflation, which was “limited” during 2021, “rose slightly” this year and reached 3.6% at the end of April.

The Fund estimated that the current account deficit would “narrow” from 8.8% of GDP in 2021 to 6.5% of GDP in 2022, taking into account the “impact of high fuel prices and oil imports”. derivatives “with” support of The recovery in tourism revenue and exports, which was above expectation.

The Jordanian government was able to “reduce its primary deficit (excluding grants) by 1.2% of GDP, to reach 4.5% of GDP, by 2021,” according to the fund, which said that “the level of revenue collection has remained strong, solid, and focused on effort. ” Institutionalizing the expansion of the tax base by tackling tax evasion and improving tax compliance.

He pointed out that Jordan was “on track to reach the target balance for the primary balance for 2022 (excluding grants), at 3.4% of GDP.” At the same time, “international reserves (of foreign currencies) are sufficient”, and Jordan is aided by “prudent monetary policy, a resilient banking system in the face of crises, in addition to strong external financing.”

The Fund believes that the application of the new electricity tariff in early April “will reduce the cost of doing business and thus improve the competitiveness of business activities in Jordan.”

He spoke of “Jordan is in a better position than many emerging markets in the face of rising food and fuel prices worldwide, due to the long-term contracts that Jordan has concluded at fixed prices to import gas needed for electric power. to generate, and to hedge the strategic stock of wheat built to rise at rising prices “worldwide”. However, the Fund considered that “it is important to limit the cost of untargeted support for oil derivatives, while targeting targeted transfers to protect the most vulnerable groups.”

The Fund emphasized that Jordan “is committed to a fiscal strategy that will put public debt levels on a sustainable downward path to reach 80% of GDP in the medium term.”

The Fund called for “the continuation of monetary policy based on the maintenance of the fixed exchange rate system (of the dinar against the dollar), which has served the economy well, in line with the Central Bank of Jordan’s commitment to monetary stability, ”Emphasizes that“ international reserves will remain comfortable in the medium term, providing an important buffer stock in the face of an external environment characterized by uncertainty.

In this regard, the Fund said: “The banking system enjoys a good abundance of capital and cash liquidity, with the default rate remaining at low levels,” explaining: “Good progress has been made in terms of strengthening the anti-money laundering and terrorist financing system (Jordan) should continue to work to ensure effective implementation of the FATF recommendations.

A load that is not in proportion to capacity

The fund indicated that Jordan “continues to bear the burden of housing and supporting 1.3 million Syrian refugees, in a manner inconsistent with its capabilities and capabilities.

He noted that “strongly facilitated donor support remains critical, especially at a time when global risks are rising.”

It is proposed to improve the IMF’s disbursement to Jordan this year by about $ 165 million, including increasing the program’s funding by about $ 100 million, “given the high external funding needs arising from global conditions, “according to the fund.

This “brings the total amounts disbursed and disbursed by the International Monetary Fund to Jordan, during the period 2020-2024, to exceed (1,438) Special Drawing Units (or approximately $ 2 billion), including the amount allocated under the Rapid Funding program withdrawn. ”

In addition to “329 million special drawing units (or 469 million US dollars) allocated to Jordan as part of the general drawing framework of special drawing rights granted by the International Monetary Fund to its members in August 2021,” the fund explained .

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