By Massoud A. Derhally
Credit line of $6.2bn approved for Morocco over two year period, Jordan to receive $2.06bn
The International Monetary Fund approved over the weekend loans to Morocco and Jordan whose economies face mounting pressures from rising oil prices and regional political instability, while the Washington-based organisation extended a two-year loan to Iraq by seven months to give the country time to get policy measures on track under the Stand-By Arrangement programme.
The IMF approved a $6.2bn line of credit for Morocco over two years that "will allow the authorities to continue with their home-grown reform agenda aimed at achieving rapid and inclusive economic growth, while providing them with a useful insurance against external shocks."
"The Moroccan authorities have stated that they intend to treat the arrangement as precautionary and do not intend to draw on the line, unless Morocco experiences actual balance of payments needs from a deterioration of external conditions," the IMF said in a statement.
The organisation also approved a $2.06bn loan to Jordan, which imports almost all of its energy needs and has one of the smallest economies in the Arab world, and relies on foreign aid and grants to finance its current and fiscal deficits.
"Jordan is facing external and fiscal challenges stemming largely from exogenous shocks to its energy sector," IMF Managing Director Christine Lagarde said in a statement. "These shocks have put pressure on the external accounts and increased the deficits of the central government and the public electricity company."
Jordan's fiscal deficit could rise to JD2.93bn ($4bn) this year if economic conditions in the country do not improve, the Jordan Times reported in May, citing Minister of Finance Suleiman Hafiz. The kingdom's fiscal deficit would be JD2.06bn after the receipt of foreign aid and grants, the Amman-based newspaper reported, citing Hafez. The kingdom's debt would rise to JRD17.5bn by the end of the year from JRD14.3bn.
The overall budget deficit increased to about 6 percent of GDP in 2011 as a result of commodity subsidies, and other social spending and borrowing by the government on behalf of Jordan’s National Electric Power Company to cover more costly imported fuel oil used during extensive periods of interrupted natural gas supply when saboteurs attacked pipelines in Egypt.
The IMF also granted an extension on a two-year$3.6bn loan to Iraq by seven months February 23 to give the country time to get policy measures on track under the Stand-By Arrangement program.
"The extension will, in particular, provide time for discussions on fiscal policies for the remainder of 2012 and on measures to improve the functioning of the exchange regime," it said.
The loan to Iraq originally approved in Feb. 2010 had been scheduled to expire on July 23. The IMF granted the loan to help sustain Iraq's macroeconomic stability after oil prices plummeted the year before and help advance structural reforms.