| Two of the performance criteria
for end-December 2000 incorporated in
the program were not met, namely on net
bank credit to government and submission
to parliament of amendments to the income
tax law. As described in the MEFP, fiscal
performance in 2000 was adversely affected
by developments in nontax revenue that
were largely beyond our control, while
a substantial improvement in the fiscal
position is programmed for this year.
Moreover, the reform of the income tax
has already been approved by parliament,
and the delay in submitting it for parliamentary
consideration was due to a constitutional
provision that does not permit tax legislation
to be submitted while the annual budget
law is being discussed. On this basis,
we request waivers for the two related
performance criteria.
The MEFP specifies indicative targets for end-June and quantitative performance criteria for end-September and end-December 2001. In the absence of end-March and end-June performance criteria, we propose that the purchases under the extended arrangement that would have become available as of May 15 and August 15, 2001, be rephased and distributed evenly over the remaining purchases.
We stand ready to take, in consultation with the Fund staff, any additional measures that may be required to achieve the program's objectives. We will also continue to provide the Fund staff with any information that may be necessary for the assessment of policy implementation and performance under the program.
Very truly yours,
/s/
Michel Marto
Minister of Finance
Ministry of Finance
|
|
/s/
Umayya Toukan
Governor
Central Bank of Jordan |
JORDAN
Memorandum
on Economic and Financial Policies, 2001
1. This memorandum reviews developments under the 2000 macroeconomic program and implementation of structural policies over the past year, updates the government's economic objectives for the medium term, and describes the corresponding macroeconomic and structural policies that are being implemented during 2001. It also discusses issues related to the monitoring of economic performance in the context of the extended arrangement with the International Monetary Fund.
I. Developments Under the 2000 Macroeconomic Program
2. Jordan's economic performance in 2000 continued to strengthen, and was characterized by a pick-up in economic growth, continued very low inflation, a further increase in official international reserves to a comfortable level, and a substantial reduction in the net public debt. Real GDP growth accelerated from 3.1 percent in 1999 to 3.9 percent in 2000, despite the adverse effect of the renewed conflict in the West Bank and Gaza. CPI inflation amounted to less than 1 percent during 2000.
3. Regarding fiscal policy, developments in 2000 were in many respects consistent with our program, with budgetary expenditure held in line with the target and tax revenue generally performing well. However, the recorded budget deficit (7.4 percent of GDP before grants, and 3.2 percent of GDP after grants) exceeded our target, mainly because of shortfalls in nontax revenues. In particular, as a result of the substantially higher cost of imported oil (by 56 percent), the oil surplus was less than expected and almost 3 percent of GDP lower than in 1999. Other shortfalls included receipts from land sales and royalties from the Jordan Phosphate Mining Company (JPMC), which experienced difficulties last year. As measured under the program, the budget deficit in 2000 includes debt for development spending of JD 25 million (on the basis of which foreign creditors reduced Jordan's foreign debt by the equivalent of about JD 40 million), and excludes JD 15 million in profits from the Central Bank of Jordan (CBJ) that were received after the end of the year. Hence, on this basis, the budget deficit amounted to 8.1 percent of GDP before grants (3.9 percent of GDP after grants). It should be noted that, for 2000, net privatization receipts amounting to over 7 percent of GDP (notably from the sale of shares in the Jordan Telecommunications Company) were treated as financing rather than revenue, and thus did not contribute to lowering the recorded budget deficit.
4. The overall fiscal deficit, which includes the change in nontreasury accounts and spending out of privatization proceeds, amounted to 8.9 percent of GDP. While spending out of privatization proceeds was lower than envisaged, there was a drawdown in nontreasury accounts following the buildup in 1999. With budgetary grants broadly as expected, the overall fiscal deficit after grants was lower, at 4.7 percent of GDP, but still more than targeted. Hence, the reduction in net bank credit to government was smaller than programmed. Nevertheless, net government and government guaranteed debt, both domestic and external, declined markedly in relation to GDP during 2000, on account of a buildup of privatization-related government deposits with the CBJ and the government's proactive external debt reduction policy.
5. Monetary developments in 2000 reflected growing confidence in the national economy. The growth in broad money exceeded 10 percent, while credit to the private sector grew by about 4½ percent. The net foreign assets of the banking system rose sharply, in part as a result of substantial privatization receipts. Similar trends were apparent at the level of the central bank, and all end-September and end-December monetary performance criteria were met comfortably. Despite the rise in interest rates in the United States, the CBJ was able to keep the yield on certificates of deposit at about 6 percent through the year and reduce reserve requirements substantially, while retail interest rates continued to fall.
6. The external current account remained in surplus during 2000, despite some widening of the trade deficit as imports grew quite quickly in response to the positive trends in the economy and oil import prices rose sharply. Large inflows of UN compensation payments to those affected by the Gulf war, and higher workers' remittances, contributed to the continued strength of the current account. Private capital inflows, which included large privatization receipts and other foreign direct investment, were substantial in 2000. As a result, official foreign exchange reserves rose from US$2 billion at the start of the year to close to US$2.8 billion, equivalent to 8 months of imports, or one-third of Jordanian dinar broad money.
II. Implementation of Structural Policies
7. Over the last year, we made substantial further progress in implementing our structural reform agenda. In the fiscal area, parliament passed the Second Stage General Sales Tax (GST) law, effectively converting the GST into a VAT, which became operational on January 1, 2001. More recently, parliament approved two additional important laws reforming, respectively, the income tax system and the regime governing the public debt. Regarding financial sector reform, the new Banking Law and a Deposit Insurance Law were enacted; the deposit insurance agency has been established; the CBJ issued a new regulation relating commercial banks' maximum foreign currency positions to their capital; and, from January 2001, the criterion for classifying loans as doubtful has been tightened from 150 days past due to 120 days past due.
8. On privatization, following the successful sale of shares in JTC in early 2000, a consortium has been selected to build and operate a power plant as Jordan's first independent power producer. Also, the duty free, flight training, and catering subsidiaries of the Royal Jordanian (RJ) airline have been sold. During 2000 and early 2001, the Jordan Investment Corporation sold its shares in several additional companies. The design of a pricing formula for the electricity industry to be implemented prior to the privatization of the state-owned generation and distribution companies is now at an advanced stage, and we have begun the process of selecting consultants to advise on the privatization of the generation and distribution companies.
III. Medium-Term Framework and Policies for 2001
A. Medium-Term Framework
9. Building on the progress over the last two years, the government envisions a further strengthening of macroeconomic performance over the medium term. Real GDP growth is projected to rise to 6 percent per year by 2005, even though economic activity may be adversely affected by tensions in the region in the short term. Inflation is expected to remain low in coming years. Continued progress with fiscal consolidation is envisaged to reduce the overall fiscal deficit before grants to 3.0 percent of GDP, and to eliminate the deficit after grants by 2005. Consequently, gross government debt would decline from 101 percent of GDP at end-2000 to under 65 percent of GDP by end-2006, with external government debt expected to fall from 81 percent of GDP to about 50 percent of GDP over the same period. Gross domestic investment would rise gradually, and although gross national savings are expected to decline in 2001 (associated with the tapering off of UN compensation payments), they would increase again in subsequent years. While these trends would initially be reflected in a small current account deficit, the current account is expected to return to broad balance over the medium term. Despite higher payments on external debt following the expiration of the current Paris Club arrangement in April 2002, official foreign exchange reserves should remain at about the current comfortable level.
B. Macroeconomic Policies for 2001
10. The government's macroeconomic objectives for 2001 are to sustain economic growth in the face of a difficult regional situation, maintain low inflation, keep official foreign exchange reserves at broadly their current comfortable level, and achieve further reductions in overall and external government debt. Prior to the recent increase in tensions between Palestinians and Israelis, which have affected tourism and some areas of manufacturing in Jordan, we had envisaged a further significant increase in economic growth in 2001. While we now hope that it will be possible to hold real GDP growth at 4 percent, the situation remains uncertain and we have formulated our economic program for 2001 on the somewhat more conservative assumption of a 3.5 percent growth rate. Despite the impact of the implementation of the VAT system, and the adjustments in petroleum product prices, CPI inflation will remain low in 2001 (around 1½ percent). Achievement of these objectives will be supported by a reduction in the fiscal deficit, prudent monetary policy, and further progress on structural reforms. In this context, the balance of payments position will remain comfortable.
Fiscal policy
11. The government is targeting a budgetary deficit of JD 390 million (6.3 percent of GDP) in 2001. In addition, we intend to undertake spending out of privatization funds amounting to JD 35 million (about ½ percent of GDP). The overall deficit before grants (including privatization spending) is projected at JD 424 million (6.8 percent of GDP), with the deficit after grants at JD 179 million (2.9 percent of GDP), which will allow for a further reduction in the ratio of government debt to GDP. Achievement of these targets will require, in relation to the 2000 outcome, a substantial fiscal effort. On the revenue side, adjustments in the prices of petroleum products will contribute 0.3 percent of GDP in revenue. In addition, revenue will be enhanced by the recent reform of the GST (the record keeping requirements of which will also strengthen income tax administration), increased profit transfers by the Jordan Investment Corporation, the resumption in royalty payments by the JPMC, and higher fees. Government expenditure is to be held to 34.1 percent of GDP by limiting capital expenditure to 5.5 percent of GDP, an increase of 0.6 percent of GDP over 2000. The capital budget includes debt for development spending of JD 35 million (0.6 percent of GDP). The government stands ready to take additional measures to protect the fiscal targets if necessary by, for example, deferring some of the planned increase in capital expenditure. Concerning the domestic financing of the fiscal deficit after grants, the new public debt law enables the government to rely exclusively on the auctioning of government securities; planned auction proceeds in excess of the government financing needs will be allocated to reducing the balance in the overdraft account and to the further retirement of interest-free advances obtained in the past from the CBJ.
12. Adequate provision of social services and alleviation of poverty and unemployment constitute major concerns of the government. Total expenditure on health, education and social programs amounted to about one quarter of total budgetary expenditure, or more than 8 percent of GDP, in 1999 and 2000. This is a comparatively high proportion by international standards, and it reflects the government's emphasis on investing in human capital and social infrastructure. Despite the large targeted reduction in the budget deficit, the government is determined to protect social spending in the current budget. While expenditure on health and education accounts for the bulk of social outlays, the activities of the National Aid Fund (NAF) and the Social Productivity Program (SPP), which have been expanding, are central to the government's anti-poverty effort. The NAF represents the government's main arm for reaching chronically poor households through targeted monthly cash assistance to unemployable poor households lacking a source of income. Spending by NAF rose from JD 22 million in 1999 to JD 26 million in 2000, and the government has allocated JD 30 million to the Fund in 2001, for the purpose of broadening the base of beneficiaries. In addition, the government launched the SPP in 1998 as a national program to enhance the overall social productivity of the nation with a focus on poor households. Besides restructuring and expanding the NAF, the SPP seeks to improve the social and living conditions of the poor through community infrastructure projects, promote small and micro enterprises; and generate productive employment through training and employment support. SPP outlays increased from JD 6 million in 1999 to JD 25 million in 2000 and, are budgeted to increase to about JD 45 million in 2001.
Monetary and exchange rate policy
13. In 2001, the CBJ will continue to target exchange rate stability, consistent with its objective of keeping inflation low and providing a stable financial environment conducive to economic growth. As in the past, the CBJ is ready to adjust interest rates on monetary instruments as needed to ensure achievement of the program's objective for international reserves. Since those reserves are at a comfortable level, we expect to maintain them close to the present level (US$2.6 billion) for the remainder of the year; this is consistent with keeping the CBJ's net international reserves above JD 1,471 million (US$2,075 million). While the objective of exchange rate stability will largely determine the course of monetary policy, the CBJ will adopt, as an additional safeguard, a ceiling of JD 220 million on the change in its net domestic assets. The monetary program has been designed on the assumption of some further decline in the velocity of broad money, and allows for ample credit to the private sector to finance investment and business activity.
C. Structural Policies for 2001
Budget and public sector reforms
14. We intend to sustain the pace of structural reforms following the considerable advances of the last two years. In the tax reform area, the government will focus on ensuring successful implementation of the VAT system, and have requested Fund technical assistance to strengthen its administration. In the area of budgetary financing, the just approved new public debt law provides for greater flexibility in the issuance of government securities (combined with prudent limits on external and total public debt) , which will contribute to more efficient debt management and to the development of the capital market.
15. Developments over the last year have underscored the need to establish a closer link between the domestic prices of petroleum products and the associated import cost, so as to promote efficient energy use and to insulate the budget from large fluctuations in petroleum-related revenue. Accordingly, following the adjustments already made, the government will review the domestic prices of petroleum products every three months, beginning in September 2001, and will adjust them as needed to protect the associated revenue.
16. The net cost of the public pension system, as it is presently structured, is projected to place an increasing burden on the budget over the medium term, and the government attaches high priority to introducing reforms that will put the pension system on a sounder financial footing. The government has recently established a high-level working group and a technical group to design a reform strategy, and intends to adopt such a strategy by the end of the year. We have requested technical assistance from the Fund for this purpose.
17. The government has initiated a program of modernization of the public sector, and in particular of the public administration. Progress has already been made in such areas as simplification of government work procedures; improving client access to government services; introducing electronic-based procedures; revising civil service by-laws; and improving the functioning of the judicial system. Proposals to modernize budget formulation, financial management in government and the audit function are also under consideration. The government is benefiting from financial assistance from the World Bank in support of these reforms, and the first of three annual Public Sector Reform Loans, which was approved recently, is expected to be disbursed shortly.
Financial sector reform
18. The CBJ has made considerable progress in promoting the efficiency of Jordan's financial system, and continues to monitor closely developments in the banking sector and indicators of banking system soundness. Following the enactment last August of the new Banking Law, the CBJ has issued revised bank regulations relating notably to loan provisioning and credit concentration; the latter has eliminated the CBJ's discretion to approve loans in excess of the limit stipulated under the previous regulations. Other regulations are being revised in light of the new law, including those pertaining to bank ownership of equity in financial and nonfinancial enterprises and to the principles governing the establishment of bank branches domestically and abroad. Additional efforts to promote bank soundness include working with banks on upgrading their internal control systems. Moreover, to improve efficiency, the CBJ is exploring with banks the steps that will be required to broaden electronic banking services.
Privatization
19. The focus of the privatization program in the period ahead is on the power sector. The government expects in the immediate future to finalize the power pricing formulas, and fully separate the activities of the generation, transmission, and distribution companies created in 1999. We are also in the process of setting up an effective regulatory body for the industry. These actions will set the stage for privatizing the generation company and the main electricity distribution company, and selling the government's majority shareholding in a regional distribution company in the course of 2002. The next step in this process is the selection of a consortium of legal, technical, and financial consultants to help map out a strategy and procedures; request for proposals have already been sent to a short list of six candidates, and replies are expected shortly. Meanwhile, the government is actively seeking a strategic partner for the Royal Jordanian airline, which has been fully prepared for privatization, and intends to complete the sale of the non-core subsidiaries in the course of this year. We also intend to continue disposing of the minority shareholdings of the Jordan Investment Corporation as market conditions permit.
IV. Program Monitoring
20. Purchases under the extended arrangement will continue to be subject to the observance of performance criteria, completion of program reviews, and a continuous performance criterion on the non-accumulation of new external payments arrears. In addition, the government will not impose restrictions on payments and transfers for current international transactions, introduce multiple currency practices, conclude bilateral payment arrangements that are inconsistent with Article VIII of the Fund's Articles of Agreement, or impose import restrictions for balance of payments reasons.
21. Quantitative performance
criteria have been established for end-September
and end-December 2001 (Table 1).
The performance criteria will apply to
changes in net international reserves
and net domestic assets of the CBJ; the
overall fiscal deficit before grants;
the stock of government and government-guaranteed
short-term external debt; and the contracting
of nonconcessional medium- and long-term
government and government-guaranteed
external debt. We will consult with Fund
staff regarding developments that may
affect external financing and grants,
and any significant deviation from programmed
levels will be a subject of the next
program review.
22. Consistent with the discussion in Section III, cabinet approval of a reform strategy for the public pension system will constitute a structural benchmark for end-December 2001. Progress in the areas of pension reform and petroleum product pricing will be a subject of the next program review. Given the paramount importance of the former, it is expected that, at the time and the next review, we will have made substantial progress in specifying suitable objectives and the main elements of the reform strategy to be adopted by the end of the year. The final review under the arrangement, in addition to covering these two areas, would also focus on the budget for 2002.
Table 1. Jordan:
Quantitative Performance Criteria and
Indicative Targets
Under the Extended Arrangement, 2001
|
|
|
End-June1
|
End-September
|
End-December
|
|
|
|
(Cumulative
flows from January 1,
in millions of Jordanian dinars) |
| Performance
criteria |
|
|
|
| Net
international reserves of the CBJ2
|
-231 |
-252 |
-256 |
| Net
domestic assets of the CBJ3,4
|
75 |
112 |
220 |
Overall
deficit before grants of the general
budgetary
government5 |
255 |
330 |
424 |
|
|
|
|
|
|
|
(In
millions of U.S. dollars) |
| Outstanding
stock of government and government-
guaranteed short-term
external debt |
25 |
25 |
25 |
| Contraction
of new nonconcessional medium- and long-term
government and government-guaranteed
external debt |
250 |
350 |
450 |
| Of
which: with maturity of up to and
including five years |
150 |
250 |
250 |
|
|
|
|
|
|
|
(Cumulative flows from January 1,
in millions of Jordanian dinars) |
| Memorandum
items |
|
|
|
| Programmed
sum of foreign grants, net external financing
of the budget (excluding project loans)
and privatization proceeds from abroad
|
102 |
256 |
269 |
| Programmed
expenditure associated with debt swaps
with official bilateral creditors
|
10 |
15 |
35 |
| Maximum
downward adjustment to the ceiling on
the overall deficit
of the general budgetary government before
grants due a shortfall
in expenditure associated with debt swaps
Source: Quarterly macroeconomic
program. |
6 |
13 |
20 |
1End-June targets
are indicative.
2These floors will be adjusted
upward (downward) by the extent to which
the sum of foreign grants, net external
financing of the budget (excluding project
loans), and privatization proceeds from
abroad (net of the direct foreign costs
of privatization) exceeds (falls short
of) the levels specified above.
3These ceilings will be adjusted
downward (upward) by the amount that
the floor on net international reserves
are adjusted upward (downward) due to
an excess (shortfall) in the sum of foreign
grants, net external financing of the
budget (excluding project loans), and
privatization proceeds from abroad (net
of the direct foreign costs of privatization).
4These ceilings will be adjusted
downward (upward) by the extent to which
the CBJ decreases (increases) reserve
requirements on Jordanian dinar deposits
of the banking system. The adjustment
will equal the change in the required
reserve ratio multiplied by the stock
of deposits at licensed banks at the
start of the month when the new reserve
requirement ratio applies that are: (i)
denominated in Jordanian dinars; and
(ii) subject to reserve requirements.
5These ceilings will be adjusted
downward by the extent to which excpenditure
associated with debt swaps with official
bilateral creditors falls short of the
amount specified above, up to the maximum
specified above. |
JORDAN
Technical
Memorandum of Understanding
1. Under the extended arrangement,
the Government of Jordan is committed
to implementing a financial program and
a set of structural reforms. Progress
in implementing the financial program
will be monitored on the basis of quantitative
performance criteria and indicative targets
as set out in this memorandum, which
is organized as follows: Section I
specifies the quantitative performance
criteria, indicative targets, and applicable
adjusters. Section II specifies
the content and frequency of the data
to be provided for monitoring the program.
Definitions of the principal concepts
and financial variables are provided
in Section III.
I. Quantitative
Performance Criteria and Indicative Targets
2. The quantitative performance criteria
will consist of quarterly ceilings or
floors on the following variables: (a) cumulative
change (from December 31, 2000)
in the net international reserves (NIR)
of the Central Bank of Jordan (CBJ);
(b) cumulative change (from December 31, 2000)
in the net domestic assets (NDA) of the
CBJ; (c) overall deficit before
grants of the central government (as
defined in Section III); (d) outstanding
stock of government and government-guaranteed
short-term external debt; and (e) the
contracting (from January 1, 2001)
of new nonconcessional medium- and long-term
government and government-guaranteed
external debt with an initial maturity
of more than one year, with a subceiling
on debt with an initial maturity of up
to and including five years. The floors
and the ceilings applicable to the preceding
variables will be monitored on the basis
of the magnitudes specified in Table 1
of the Memorandum on Economic and Financial
Policies (MEFP).
Adjusters to the performance criteria
3. The performance criteria specified
above will be adjusted as follows:
- The ceilings on the overall
deficit before grants of the central
government will be adjusted downward
by the extent to which expenditure associated
with debt swaps with official bilateral
creditors falls short of the amounts
specified in Table 1 of the MEFP,
up to the maximum downward adjustment
specified therein.
- The floors on the net international
reserves of the CBJ will be adjusted
upward (downward) by the extent to which
the sum of foreign grants, net external
financing of the central government (excluding
project-related loans), and privatization
proceeds from abroad (net of identified
direct costs of privatization) received
during 2001 exceeds (falls short of)
the levels specified in Table 1
of the MEFP.
- The ceilings on the net domestic
assets of the CBJ will be adjusted upward
(downward) by the extent to which the
floors on the net international reserves
of the CBJ are adjusted downward (upward)
due to shortfalls (excesses) in the sum
of foreign grants, net external financing
of the central government (excluding
project-related loans), and privatization
proceeds from abroad (net of identified
direct foreign costs of privatization)
received during 2001.
- The ceilings on the net domestic
assets of the CBJ will be adjusted downward
(upward) by the extent to which the CBJ
decreases (increases) reserve requirements
on Jordanian dinar deposits of the banking
system. The adjustment will equal the
change in the required reserve ratio
multiplied by the stock of deposits with
licensed banks at the start of the first
month when the new reserve requirement
ratio applies that are: (i) denominated
in Jordanian dinars and; (ii) subject
to reserve requirements.
II. Provision of
Information to the Fund Staff
4. To permit the monitoring of developments
under the program, the government will
provide to Division B of the Middle Eastern
Department the information specified
below:
- CBJ's foreign exchange reserves
(weekly).
- Data on CD auctions (following
each auction).
- Monetary statistics; interest
rates and consumer prices; and exports
and imports (monthly).
- Summary budget operations,
revenues, expenditures (including net
advances), net domestic financing, balances
in the government accounts with the CBJ
and commercial banks (including privatization
accounts), swaps with official bilateral
creditors and associated expenditure,
the gross cost of debt buybacks and the
proceeds from the sale of any collateral
released (with accrued interest payments
and receipts identified separately),
and the receipt and use of privatization
proceeds (monthly).
- Detailed foreign grants and
loans received by the central government;
amortization and interest (including
separately, cash payments, rescheduled
and overdue amounts, excluding deferred
debt service payments to the Arab development
funds); any put or call options, collateral
guarantees, warrants or similar derivative
arrangements entered into by the government;
and the onlending operations of the government
(monthly).
- Balance of payments (current
and capital accounts) and external debt
developments (quarterly).
- List of short-, medium- and
long-term public or publicly guaranteed
external loans contracted during each
quarter, identifying, for each loan:
the creditor, the borrower, the amount
and currency, the maturity and grace
period, and interest rate arrangements
(quarterly).
- New external arrears (if any)
and total outstanding amount of arrears
(quarterly), excluding deferred debt
service payments to the Arab development
funds.
- National accounts statistics
(quarterly).
5. Weekly data and data on CD auctions
should be sent to the Fund with a lag
of no more than one week. Monthly and
quarterly data should be sent within
a period of no more than six weeks (for
the monetary and fiscal variables), and
within a period of no more than eight
weeks for other data (three months for
national accounts statistics). Any revisions
to previously reported data should be
communicated to the staff in the context
of the regular updates.
III. Definitions
of the Principal Concepts and Variables
6. The net international reserves
of the CBJ consist of foreign exchange
(foreign currency cash, deposits with
foreign correspondents, and holding of
foreign securities, excluding any assets
that are pledged or used as collateral),
gold, IMF reserve position, and SDRs,
less the foreign liabilities of
the CBJ (including to the Fund), commercial
banks' foreign currency deposits with
the CBJ, and any change in the CBJ's
net foreign currency swap and forward
position from December 31, 2000.
In addition, deposits received from foreign
central banks or governments will be
treated as liabilities in NIR, irrespective
of maturity. Alternatively, the NIR is
equivalent to the NFA of the CBJ adjusted
for outstanding purchases from the Fund
and the bilateral accounts (net).1
Gold will be valued at the average price
of JD 175.25 per fine troy ounce.
The U.S. dollar value of foreign assets
and liabilities will be converted into
Jordanian dinars at the exchange rate
of JD 1 = US$1.4104.
7. Reserve money is defined
as the sum of: (i) currency in circulation
(currency outside banks and commercial
banks' cash in vaults); and (ii) nonremunerated
deposits of licensed banks in Jordanian
dinars.
8. The net domestic assets of the
CBJ are defined as reserve money
less the sum of net international reserves
and bilateral accounts. They include:
(i) net claims on the central government;
(ii) net claims on autonomous agencies
with their own budgets; (iii) net
claims on the social security corporation;
(iv) net claims on municipalities
and local governments; (v) net claims
on nonfinancial public enterprises; (vi) claims
on licensed banks; (vii) claims
on other financial institutions net of
deposits; and (viii) other items
(net); less: (ix) JD-denominated
CDs; and (x) remunerated deposits
of licensed banks in Jordanian dinars;
and (xi) other remunerated deposits
with the CBJ.
9. The central government is
defined as the budgetary central government
that is covered by the annual General
Budgetary Law (GBL). It excludes the
budgets of the 27 autonomous agencies
but includes all ministries and government
departments which operate in the context
of the central authority system of the
state.
10. Net external financing of
the central government is defined
as cash external debt disbursements,
less scheduled external debt repayments
(excluding deferred amortization payments
to the Arab development funds); less
the gross cash payment made in relation
to buy-backs of debt and/or swaps of
debt to official creditors net of: (i) accrued
interest paid and (ii) the market value
of any collateral released, excluding
accrued interest receipts; plus
exceptional external financing (rescheduled
principal and interest plus accumulation
of external arrears if any). The debts
covered are debts of the central government
(excluding off-budget military debts)
and any foreign debts that are channeled
through the central government to finance
operations of the rest of the public
sector.
11. Net bank financing of the
central government is defined as
the change in the banking system's claims
in Jordanian dinars and in foreign currency
on the central government (excluding
holdings of Brady bonds), and net of
the balances on government accounts with
the CBJ and commercial banks (including
balances reflecting privatization receipts,
but excluding deposits of UN compensation
funds relating to damages incurred in
the context of the Gulf war). Foreign
currency claims will be converted into
Jordanian dinars at the exchange rate
of JD 1 = US$1.4104.
12. Net domestic nonbank financing
of the central government is defined
as central government borrowing from,
less repayments to, the nonbank sector
(including the nonfinancial public sector
not covered by the general budget, and,
specifically, the Social Security Corporation),
and the cumulative change (from December 31, 2000)
in the stocks of government securities
held by nonbanks and in the float. Float
consists of the value of checks issued
by the government but not yet cashed
by the beneficiaries.
13. The overall deficit before
grants of the central government
is defined as the sum of: (i) net
external financing of the central government
(including exceptional financing, i.e.,
rescheduled principal and interest payments,
but excluding deferred debt service payments
to the Arab development funds); (ii) privatization
receipts (net of identified direct costs
of privatization) received during the
relevant period; (iii) net domestic
bank financing of the central government;
(iv) net domestic nonbank financing
of the central government; and (v) grants
received from abroad by the central government
(excluding off-budget military grants).
14. Government and government-guaranteed
external debt covers all external
debts incurred or guaranteed by government.
"Debt" has the meaning set
forth in point No. 9 of the Guidelines
on Performance Criteria with Respect
to Foreign Debt (Decision No. 12274-(00/85),
adopted August 24, 2000) and
includes loans, bonds, suppliers credits,
leases, and other liabilities as further
defined in the guidelines. Excluded are
leases of real property by Jordanian
embassies or other foreign representations,
and any other lease from a nonresident
for which the present value of all payments
contracted during the period of the lease
does not exceed JD 1 million.
For program purposes, "government"
includes the central government defined
in paragraph 9 above, and government
departments and official agencies which
do not seek profit and whose budgets
are issued independent of the GBL. The
external debt will be expressed in U.S.
dollar terms, with debts in currencies
other than the U.S. dollar converted
into U.S. dollars at the market rates
of the respective currencies prevailing
on December 31, 2000 as published
in IFS.
15. Government and government-guaranteed
short-term debt covers external debt
defined in paragraph 14 above with
an original maturity of up to and including
one year, with the exception of normal
import-related financing and instruments
contracted after December 31, 2000,
with put dates that occur within one-year
of the original contracting date.
16. The performance criterion on contracting
or guaranteeing of nonconcessional government
and government-guaranteed external debt
applies not only to debt as defined in
paragraph 14 above, but also to commitments
contracted or guaranteed by government
for which value has not been received.
The performance criterion covers the
contracting or guaranteeing by government
or the CBJ of debt as defined in paragraph
14 above with an original maturity of
more than one year and a grant element
of less than 35 percent, using currency-specific
discount rates based on the commercial
interest rates reported by the OECD (CIRRs).
Discount rates for assessing the conditionality
of loans with a maturity of at least
15 years will be based on the average
CIRRs over the last 10 years. The assessment
of conditionality for loans with maturities
of less than 15 years will be based on
the average CIRRs of the preceding six-month
period.2
Aircraft leases contracted by Royal Jordanian
airline are excluded.
17. Any variable that is mentioned
herein for the purpose of monitoring
a performance criterion and that is not
explicitly defined, is defined in accordance
with the Fund's standard statistical
methodology, such as the Government Financial
Statistics. For variables that are omitted
from the TMU but that are relevant for
program targets, the authorities of Jordan
shall consult with the staff on the appropriate
treatment based on the Fund's standard
statistical methodology and program purposes.
|
List of Reporting
Tables
|
|
Table |
Source
|
|
| Fiscal
Data |
|
|
F1.
|
Government Domestic
Revenues |
Ministry of Finance
|
|
F2.
|
Government Expenditure
and Net Lending |
Ministry of Finance
|
|
F3.
|
Summary Fiscal Operations
|
Ministry of Finance
|
|
F4.
|
Balances of Government
Accounts with the Banking System |
Ministry of Finance
|
|
F5.
|
Foreign grants (Quarterly)
|
Ministry of Finance
|
|
F6.
|
Foreign loans (Quarterly)
|
Ministry of Finance
|
|
F7.
|
Net Lending to Public
Entities |
Ministry of Finance
|
|
F8.
|
Receipt and Use pf
Privatization Proceeds Fund |
Ministry of Finance
|
| F9. |
Budgetary Expenditure
Related to Debt Swaps with Official Creditors
|
Ministry of Finance
|
| |
|
|
| Monetary
Data |
|
|
M1.
|
Monetary Survey |
Central Bank of Jordan
|
|
M2.
|
Balance Sheet of the
Central Bank |
Central Bank of Jordan
|
|
M3.
|
Consolidated Balance
Sheet of Deposit Money Banks |
Central Bank of Jordan
|
|
M4.
|
Selected Bi-Weekly
Statistics |
Central Bank of Jordan
|
|
M5.
|
Foreign Assets and
Liabilities of the Central Bank of Jordan
|
Central Bank of Jordan
|
| |
|
|
| External
Sector Data |
|
|
E1.
|
Quarterly Data on
the Balance of Payments |
Central Bank of Jordan
|
|
E2.
|
Quarterly Data on
External Financing |
Central Bank of Jordan
|
|
E3.
|
Monthly Data on Exports
and Imports |
Central Bank of Jordan
|
|
E4.
|
Monthly Data on Export
and Import Prices and Volumes |
Central Bank of Jordan
|
|
E5.
|
Quarterly Data on
External Debt Service |
Ministry of Finance
|
| E6. |
Quarterly Data on
Outstanding and Newly Contracted
External Debt |
Ministry
of Finance |
|
E7.
|
Quarterly Data on
Private Capital Flows |
Central Bank of Jordan
|
|
1The definition of NIR implies
that, for program monitoring purposes,
disbursements and/or purchases from the
Fund are to be recorded in the monetary
accounts as external liabilities of the
CBJ, rather than deposits of the government.
Furthermore, commercial banks' foreign
currency deposits with the CBJ are treated
as foreign liabilities in the calculation
of NFA.
2Margins will be added to CIRRs
as follows: 75 basis points for loans
with maturity of less than 15 years;
100 basis points for loans with maturity
of at least 15 years and less than 20 years;
115 basis points for loans with maturity
of at least 20 years and less than 30
years; and 125 basis points for loans
with maturity of at least 30 years.
|
