IMF applauds Jordan's progress on economic reforms

3 minute read

International Monetary Fund logo is seen outside the headquarters building during the IMF/World Bank spring meeting in Washington, U.S., April 20, 2018. REUTERS/Yuri Gripas/File Photo

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  • IMF executive board to consider fourth review next month
  • Jordan seen getting $550 million in 2022 through programme
  • Economic growth forecast for 2022 cut to 2.4% from 2.7%

AMMAN, May 24 (Reuters) - The International Monetary Fund said on Wednesday that Jordan has made strong progress on major economic reforms to spur growth despite higher fuel and grain prices resulting from the Ukraine conflict.

The IMF's executive board will meet at the end of June to consider the fourth review of an original $1.3 billion Extended Fund Facility programme begun in March 2020 and expanded several times by at least $1 billion to help the country's recovery from the COVID-19 pandemic and maintain its macro-economic stability.

Ali Abbas, who headed an IMF mission that concluded a staff agreement on the fourth review of the programme, said it is recommended that Jordan receive an extra $165 million, raising the funding disbursed this year to $550 million.

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The IMF's executive board is likely to approve the recommendation.

"We have been very encouraged with Jordan's performance both on the quantitative side and the structural reform side. We stand fully with Jordan as it embarks on its next phase," Abbas said.

Jordan has met most of the fiscal and monetary targets since the IMF programme began in March 2020, closing tax loopholes and widening the tax base and maintaining healthy foreign currency reserves that will help act as a buffer, he added.

An unprecedented clamp-down on tax evasion has pushed the kingdom's domestic revenues beyond IMF targets for the first time in many years.

"Jordan's reform momentum has been established. What is needed is that it needs to be maintained and accelerated over the coming years," Abbas said in a news briefing.

Jordan is expected to meet a 3.4% of GDP primary deficit target this year, he added.

The IMF official said the oil importing country had partially mitigated the impact of higher fuel and commodities prices with long-term energy deals and a healthy stockpile of wheat purchased before the Ukraine crisis.

Both a rebound in tourism, remittances and higher exports of fertiliser also have helped cushion the economy.

Inflation was expected to rise to 3.8% this year, compared to a previous forecast of 2.8%, Abbas said.

"Overall, Jordan has contained inflation much better than other countries," he said.

The IMF has slightly downgraded its economic growth forecast for Jordan this year to 2.4% from 2.7%. Higher growth is seen as key to easing the country's high unemployment, which stands at around 23%.

Growth should be in the "3%-4% range if the country wants to uplift itself to a more prosperous position," Abbas said.

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Reporting by Suleiman Al-Khalidi; Editing by Paul Simao

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