IMF approves $1.3 billion loan for Jordan, adjusts for coronavirus expenses

AMMAN (Reuters) - The International Monetary Fund said on Wednesday its board had approved a four-year, $1.3 billion loan program for Jordan, signaling confidence in the country’s reform agenda at a time it was taking measures to cushion its economy from the fallout of the coronavirus outbreak.

Jordanian police officers are seen at a checkpoint as people walk in the street after Jordan announced it would allow people to go on foot to buy groceries in neighborhood shops, amid concerns over the spread of coronavirus disease (COVID-19), in Amman, Jordan March 25, 2020. REUTERS/Muhammad Hamed

The extended fund facility program was anchored by Jordan’s commitments to make structural reforms designed to lower electricity costs for businesses and create incentives for them to hire more young people, the IMF said.

“The aim is to support stronger and more inclusive growth, create jobs, especially for women and young people, and reduce poverty,” the IMF said in a statement.

The program was designed before the coronavirus outbreak, but the IMF said changes were made to support unbudgeted spending covering emergency outlays and medical supplies and equipment.

“If the impact of the outbreak is deep enough to put at risk program objectives, the program will be adapted further to the changed circumstances, upon reaching understandings with the authorities,” the IMF said.

The IMF said the approval would immediately make available about $139.2 million for disbursement, with the remaining amounts phased over the life of the program, subject to eight reviews.

Jordanian Finance Minister Mohammad Al Ississ told Reuters earlier that the loan had been approved. He said in a statement that loan and associated reforms would help Jordan attract more donor and investment funds.

“It signals confidence in Jordan’s economic reform process, and support for our efforts to mitigate the impact of the virus on vulnerable economic sectors and individuals,” Al Ississ said.

Officials are worried the coronavirus crisis, which has hit the thriving tourist sector, will slash growth projections and deepen an economic downturn and a slowdown in domestic consumption. The tourist sector generates around $5 billion annually.

The monetary and fiscal authorities have taken a series of measures from injecting over $700 million in liquidity to reducing interest rates and delaying bank loan installments and customs and tax payments to help soften the negative impact.

The IMF’s approval of Jordan’s programme was testimony to the macroeconomic stability of a country where regional conflict in recent years has weighed on investor sentiment, Al Ississ said.

Al Ississ said late last year that a new IMF deal would help the country secure concessional grants and loans at preferential borrowing rates to ease annual debt servicing needed to reduce the debt to GDP ratio.

Public debt has shot up by almost a third in a decade to 30.1 billion dinars ($42.4 billion) in 2019, equivalent to 97% of GDP.

Reporting by Suleiman Al-Khalidi; Additional reporting by David Lawder and Andrea Shalal; Editing by Diane Craft and Leslie Adler