The IMF greenlights $1.2 billion loan to Jordan for economic reforms.

The Executive Board of the International Monetary Fund (IMF) approved today a four-year arrangement under the Extended Fund Facility (EFF) with Jordan, for an amount equivalent to SDR 926.37 million (about US$1.2 billion and equivalent to 270 percent of Jordan’s quota), to support the country’s economic and financial reform program. The new arrangement replaces and succeeds the previous EFF arrangement that was approved in March 2020 and that was set to expire in March 2024.

Sound policy making and support from international partners have helped Jordan to withstand well a series of shocks over the past few years and to maintain macro-stability, broad-based economic growth, and market access, and strengthen social safety nets. The new EFF arrangement will continue to support the authorities’ efforts toward maintaining macro-stability and further building resilience, including by continuing with a gradual fiscal consolidation to place public debt on a steady downward path, while protecting social and capital spending and improving the financial viability and efficiency of the electricity sector; and by safeguarding the exchange rate peg with appropriate monetary policies. Moreover, the authorities’ efforts will also continue to be focused on accelerating structural reforms to achieve stronger growth and job creation, notably by further improving the business environment, access to finance, labor market flexibility, and public administration. The new arrangement builds on Jordan’s strong performance under the previous arrangement; six reviews were completed on time under the previous arrangement and all commitments that had been set for the seventh review were met.

Today’s approval of the new IMF-supported program by the Board provides Jordan with immediate access to SDR 144.102 million (about US$190 million); the remaining amount will be phased over the duration of the program, subject to eight program reviews.

Following the Executive Board’s discussion on Jordan, Mr. Kenji Okamura, Deputy Managing Director and Acting Chair, issued the following statement:

“Jordan has weathered well a series of shocks over the past few years, maintaining macro-stability and moderate economic growth thanks to adept policy making and sizable international support. 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.

“Going forward, supported by the new EFF arrangement, policies are focused on maintaining macro-stability and further building resilience, and accelerating structural reforms to achieve stronger, more inclusive growth and job creation, to tackle high unemployment.

“Building on progress made in recent years, the authorities will continue with a gradual fiscal consolidation—supported by measures to broaden the tax base and improve tax compliance and spending efficiency—to place public debt on a steady downward path, while creating space for priority social and capital spending. The planned expansion of social assistance, with further improvements in targeting, will be key to ensuring adequate protection of vulnerable households. Improving the efficiency and viability of public utilities also remains crucial for preserving the sustainability of public finances, while ensuring the delivery of essential services.

“The Central Bank of Jordan maintained its prudent policies, which have safeguarded the peg to the U.S. dollar and provided financial stability. The peg has served Jordan well and helped keeping inflation low. Monetary policy should continue to focus on preserving monetary and financial stability, by adjusting policy rates as needed to support the peg. The banking sector remains healthy, while solid progress in strengthening financial integrity allowed Jordan to be removed from FATF’s grey list. Implementation of the recommendations of the 2023 IMF-World Bank Financial System Stability Assessment will be important to further strengthen financial sector oversight.

“Further progress in implementing structural reforms to improve the business environment and attract private investment is crucial to create a dynamic private sector, foster job-rich growth, and achieve the objectives of Jordan’s Economic Modernization Vision. In this regard, strengthening competition, further reducing red tape, and pressing ahead with labor market reforms to increase flexibility, lower youth unemployment, and enhance female labor participation are critical. Donor support remains essential to help Jordan navigate the challenging external environment, host the large number of refugees, and maintain the reform momentum.”

Jordan: Selected Economic Indicators, 2022–28
		2022	2023	2024	2025	2026	2027	2028
			Est.	Proj.	Proj.	Proj.	Proj.	Proj.
Output
Real GDP growth (in percent)		2.4	2.6	2.6	3.0	3.0	3.0	3.0
Employment (in percent)
Unemployment		22.9	…	…	…	…	…	…
Prices
Inflation (in percent) 1/		4.2	2.2	2.7	2.4	2.5	2.5	2.5
Government Finances (in percent of GDP)
Central government fiscal operations
Revenue and grants 2/		25.8	26.2	26.8	27.1	27.3	27.7	27.7
Of which: grants		2.3	2.1	1.9	1.6	1.6	1.5	1.5
Expenditures 2/		31.6	31.5	32.4	32.3	32.0	30.9	30.1
Overall central government balance		-5.8	-5.3	-5.5	-5.2	-4.7	-3.2	-2.4
Primary government balance (exc. grants, NEPCO and WAJ)		-3.6	-2.8	-2.1	-1.4	-0.7	0.0	0.7
Combined public sector balance 3/		-4.8	-4.6	-4.1	-3.1	-2.2	-1.4	-0.7
Government gross debt		111.3	111.5	112.7	112.9	112.5	110.4	108.2
Government gross debt, net of SSC holdings of government debt 4/		88.8	88.7	88.3	87.1	85.3	82.0	78.6
Money and Credit
Broad money (percent change)		5.5	5.6	5.6	5.6	5.6	5.6	5.6
Credit to the private sector (percent change)		8.0	4.0	5.0	6.0	6.2	6.5	6.7
Balance of payments
Current account including grants (in percent of GDP)		-7.9	-7.0	-6.3	-4.5	-4.1	-4.0	-4.5
Gross reserves (in months of imports)		6.8	6.6	6.6	6.6	6.8	7.2	7.0
In percent of Reserve Adequacy Metric		102	94	91	91	95	101	101
Public external debt (in percent of GDP)		47.7	42.2	44.3	44.8	43.4	42.2	39.5
Sources: Jordanian authorities; and Fund staff estimates and projections. 1/ Consumer Price Index (annual average). 2/ Includes the programmed amount of fiscal measures that are needed to meet fiscal targets. 3/ Sum of the primary central government balance (exc. grants and net transfers to NEPCO-electricity company and WAJ-water company) and the net loss of NEPCO, WAJ and water sector distribution companies. 4/ Government’s direct and guaranteed debt (including NEPCO and WAJ debt). SSC stands for Social Security Corporation.