Via IMF (Den Internationale Valutafond)

IMF Staff and Jordan Reach Staff-Level Agreement on the First Review Under the Extended Fund Facility







October 28, 2020







End-of-Mission press releases include statements of IMF staff teams that convey preliminary findings after a visit to a country. The views expressed in this statement are those of the IMF staff and do not necessarily represent the views of the IMF’s Executive Board. Based on the preliminary findings of this mission, staff will prepare a report that, subject to management approval, will be presented to the IMF’s Executive Board for discussion and decision.





  • Timely containment and stimulus measures helped save lives and livelihoods during the first COVID-19 wave. However, the health and economic effects of the second COVID wave are still unfolding.
  • The program provides for flexibility to accommodate higher-than-expected COVID-related spending and aims to protect the most vulnerable.
  • Concessional financing from Jordan’s international partners in line with commitments, including to support Syrian refugees, remains critical. Staff is proposing to bring forward some IMF disbursements into 2021.

Washington, DC:
An International Monetary Fund (IMF) team led by S. Ali Abbas, concluded
virtual discussions with the Jordanian authorities and reached a
staff-level agreement on the first review of the authorities’ economic
reform program supported by the Extended Fund Facility (EFF) arrangement.
This agreement is subject to approval of the IMF’s Executive Board.
Completion of the review by the IMF Board would release an amount of around
US$146 million, bringing total IMF disbursements to Jordan in 2020 to
US$687 million.

At the conclusion of the discussions, Mr. Abbas issued the following
statement:

“Timely containment of the COVID-19 pandemic during the first half of the
year, and the authorities’ robust policy stimulus response has helped to
protect lives and livelihoods. Still, the crisis has taken a toll on the
economy. Unemployment has surged, tourism and remittances have declined,
and revenues of the central government and of other public sector entities
have dropped. Despite these difficult circumstances, the authorities showed
policy discipline, including institutionalizing the drive against tax
evasion and strengthening tax administration; and maintained external
market access.

“With the COVID crisis still unfolding, there is considerable uncertainty
around the economic forecast: staff’s central scenario is for real GDP to
decline by 3 percent in 2020; and increase by 2.5 percent in 2021,
reflecting a gradual recovery as the pandemic abates.

“The 2020 fiscal targets have been relaxed to support the authorities’
efforts to protect lives and jobs. Agreement has also been reached on the
fiscal targets for 2021, which seek to support the recovery, while
arresting the rise in public debt. The EFF provides for flexibility to
accommodate higher-than-expected COVID-related spending and aims to protect
the most vulnerable.

“The authorities’ fiscal strategy is anchored in equitable tax reforms,
aimed at tackling evasion, closing loopholes, and broadening the tax base.
Public expenditure reforms will aim to create space for social spending and
deliver a more efficient and transparent public sector. Contingent
liabilities from the broader public sector bear close monitoring, and a
Fiscal Transparency Evaluation early next year will help identify reform
priorities in this area.

“The liquidity and credit support extended to the financial system and
businesses, especially SMEs, was timely and appropriate, and is designed to
be gradually unwound as the recovery becomes entrenched. The peg to the US
dollar, which has continued to serve Jordan’s economy well, provides a
credible anchor for monetary policy. International reserves are projected
to remain adequate over 2020-21, at above 100 percent of the IMF’s reserve
adequacy metric. The banking system is healthy, and the authorities should
remain vigilant to a possible increase in non-performing loans.

“Structural reforms remain critical, notably in the electricity sector,
where pressures have increased in the aftermath of the pandemic. The
authorities are also prioritizing reforms aimed at facilitating female
labor participation and youth employment; reducing the cost of doing
business and ensuring an even playing field for firms; and strengthening
the anti-corruption framework to increase public trust.

“The COVID pandemic has significantly increased Jordan’s financing needs
and robust financial support from multilateral and official bilateral
lenders will be critical in the period ahead and may need to be stepped up
in the event of a more protracted downturn.

“Staff is also proposing to bring forward into 2021 a part of IMF credit
that was expected to be disbursed in the outer years of the program. Total
IMF disbursements, including the amount drawn under the Rapid Financing
Instrument, over 2020-24 are expected to amount to SDR 1217.91 million (or
around US$1.7 billion).

“The mission would like to thank our counterparts for a candid and
productive dialogue. A wide-ranging set of meetings was held with the
deputy prime minister for economic affairs, the minister of finance, the
central bank governor, other senior cabinet ministers and officials,
donors, and representatives from the private sector, women, and civil
society.”


IMF Communications Department
MEDIA RELATIONS

PRESS OFFICER: Wafa Amr

Phone: +1 202 623-7100Email: MEDIA@IMF.org

@IMFSpokesperson








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