Jordan will receive $166.4 million as the second disbursement of the $700-million Extended Fund Facility following the International Monetary Fund’s (IMF) endorsement on Monday of the second review of the Kingdom’s economy, the fund said on Tuesday.
The second payment brings total disbursements under the programme to about $309 million, the IMF said, calling for greater donor support to help Jordan cope with the Syrian refugee crisis.
The IMF Executive Board, which announced the completion of the second review of the country’s economy late on Monday, also approved Jordan’s request for a waiver of non-observance of performance criteria on the net international reserves of the Central Bank of Jordan, extending the arrangement till March 2020, and rephasing access.
Jordan and the IMF signed the 36-month programme in 2016, under which the two sides agreed on six conditions that aim at reducing public debt to safe levels and stimulating the economy.
The IMF’s deputy managing director and acting chair at IMF, Tao Zhang, said that the Jordanian authorities are to be commended for preserving macroeconomic stability, maintaining a prudent monetary policy and ensuring a sound financial system.
“Jordan faces a challenging environment, including low economic growth, high unemployment and elevated public debt,” Zhang said in a statement to The Jordan Times, underscoring the importance of swiftly implementing policies and reforms to bring public debt on a downward path, boost investment and productivity and enhance inclusive growth.
The IMF representative said the recently held London initiative, which was hosted by the UK, has been most timely, and has demonstrated the international community’s ongoing determination to support Jordan.
“Continued donor assistance is key to helping Jordan cope with the refugee crisis and support the authorities’ policy and reform efforts,” said Zhang.
Moving forward, Jordan should continue on a path of gradual and steady fiscal consolidation, with due regard of social protection needs, he added.
“Although a number of key fiscal reforms have been delayed, recent amendments to the Income Tax Law are encouraging and will be key in helping Jordan secure a fairer and more sustainable fiscal framework. Resolute implementation of the new law is needed, as well as ongoing measures to enhance tax administration and reduce tax evasion,” the IMF official noted.
Jordan’s monetary policy stance is appropriate, and the authorities should remain ready to adjust interest rates as needed to continue to maintain an adequate reserve buffer, the statement stressed, adding that the Kingdom’s banks remain sound and well-capitalised, and steps taken to improve financial sector oversight and supervision are welcome.
Zhang said the enactment of long-needed, growth-enhancing reforms is encouraging, including the secured transactions law the bankruptcy law, and the business inspections law.
“Together with reforms to promote labour-market flexibility, particularly for the youth and women, and publication of a financial-inclusion action plan along with measures to support credit to SMEs, much has been done to set the stage for high-quality, inclusive growth,” he indicated.
“These efforts should continue, including measures to improve labour market conditions and strengthen the social safety net. Steadfast implementation of these reforms will be vital… priority should be given to measures to reduce business costs and boost employment,” said Zhang.
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