IMF approves $206m for Jordan to help it overcome economic challenges

Disbursements made to the country since last year now total $900m

FILE PHOTO: The International Monetary Fund (IMF) headquarters building is seen ahead of the IMF/World Bank spring meetings in Washington, U.S., April 8, 2019. REUTERS/Yuri Gripas/File Photo
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The International Monetary Fund (IMF) completed a second review of Jordan's economic reform programme, leading to a further $206 million being released under the lender's Extended Fund Facility.

This brings the total disbursements made to Jordan since the start of 2020 to $900m, according to a statement from the Washington-based lender on Thursday.

The fund’s financial support will “strengthen its balance of payments and catalyse support from other development partners, which will be critical to enable Jordan deal with the economic and social impact of the Covid shock, while hosting some 1.3 million Syrian refugees”, the IMF said.

The country had recorded more than 751,937 infections, 9,756 deaths and more than 700,000 recoveries as of Friday, according to Worldometer, which tracks the pandemic.

Its economic output shrunk by 2 per cent last year, the fund said. Jordan is carrying out an IMF-backed programme to support its economy.

Despite the pandemic, “the authorities have successfully maintained macroeconomic stability, notably by meeting all key fiscal and reserve targets, and made very strong progress on a large number of critical structural reforms”, Mitsuhiro Furusawa, deputy managing director of the IMF, said.

“The authorities remain committed to implementing a gradual, growth-friendly, and equitable fiscal consolidation as the recovery becomes entrenched, in order to bolster public debt sustainability and ensure inclusive growth.”

Moving forward, “monetary policy needs to remain flexible and data driven, balancing the need to entrench the recovery and maintain monetary and financial stability”, Mr Furusawa said.

“While the financial sector remains sound, continued vigilance is warranted given that it will likely take time for the full effects of the pandemic to be reflected in banks’ asset quality.”

Reforms in the electricity sector, where the authorities are working to address the high energy costs for businesses, remains crucial for fostering job-rich growth and enhancing competitiveness, according to the IMF.

Other reforms should also focus on improving the business environment, reducing unemployment, particularly among women and youth, and strengthening governance, the lender added.

Jordan’s four-year extended fund facility amounting to $1.3 billion was approved by the IMF’s board on March 25 last year.

Updated: July 03, 2021, 9:05 PM