Jordan is likely to receive a loan of $385m from the International Monetary Fund in April as part of a $2bn Stand-By Arrangement with the Washington-based organization to help the country boost its economy.
“We welcome the authorities’ strong commitment to implementing their national program despite an adverse external environment,” said Kristina Kostial, who led an IMF Mission that visited Jordan February 20-March 6.
“The authorities have been implementing strong macroeconomic policies to reduce external and fiscal imbalances. The Central Bank of Jordan has managed well temporary pressures on reserves in the fall of 2012. With sizeable grants from GCC countries and a successful US dollar-denominated domestic treasury bond issuance, international reserves now stand at a comfortable level.”
The second tranche of funds extended next month are part of an overall package negotiated with the IMF last August to help Jordan’s government counter shocks sustained to its economy from two years of protests that have swept the Arab world. The kingdom which has one of the smallest economies in the Arab world, imports almost all of its energy needs and relies on foreign grants, aid and remittances to finance its current account and budget deficits.
The regional upheaval has seen Jordan’s fiscal position deteriorate in the past two years. The revolution in Egypt which toppled Hosni Mubarak ended the gas supplies to the kingdom which caused the country’s public debt to soar. Jordan’s import bill for fuel accounts for about 20 percent of gross domestic product. The kingdom’s public debt rose 23.7 percent to 16.5bn dinars ($23bn) or about 75 percent of gross domestic product last year, according to government figures.
Jordan’s economy is forecast to expand more than 3 percent in this year on the back of increased government spending, higher domestic consumption, and a recovery in exports, according to the IMF. The economy grew about 2.8 percent last year.
Inflation is expected to decline to about 3.2 percent this year after it rose to 7.2 percent in 2012 following the liberalization of fuel prices, according to IMF estimates.
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