Press Release: IMF Reaches Staff-Level Agreement with Jordan on a Three-Year Extended Fund Facility
June 20, 2016
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.
June 20, 2016
The Jordanian authorities and a team of the International Monetary Fund (IMF) led by Martin Cerisola have reached a staff–level agreement on a request for a 36-month Extended Fund Facility (EFF). The proposed access to IMF credit under the arrangement will be determined in the coming weeks. This agreement is subject to completion of prior actions and approval of the IMF Executive Board, which is expected to consider Jordan’s request in July. The approval of the EFF is expected to help catalyze loans and grants from multilateral and bilateral sources during the program period, in support of the Jordan Compact, agreed in the London Conference on February 2016, where donors pledged considerable financial support for Jordan to address the impact of Syrian refugees. Jordan completed a three-year Stand-By Arrangement in the amount of about US$2 billion in August 2015. (See Press Release No. 12/288).
Following the conclusion of discussions, Mr. Cerisola made the following statement today in Washington DC:
“The EFF supports the authorities’ ambitious macroeconomic and structural reform agenda for the next three years, which is underpinned by Vision 2025, their first ten-year framework for economic and social policies. The authorities’ economic program aims at enhancing the conditions for more inclusive economic growth, particularly in light of the challenges posed by the regional conflicts on exports, investment, and the labor market. This goal will be achieved by sustaining macroeconomic stability, while advancing structural reforms in various areas to promote investment and employment. These reforms will be focused on the business environment, the energy and water sectors, the financial sector, and the labor market. The reforms will also focus on protecting the most vulnerable segments of the population and in supporting Jordan’s efforts in hosting the Syrian refugees.
“Anchored by Jordan’s currency peg, which has served the economy well, the authorities’ program aims at preserving macroeconomic stability, by keeping international reserves at adequate levels, while also putting public debt on a downward path. To do so, they are committed to implementing fiscal consolidation in a gradual and steady pace so that public debt is reduced from about 94 percent of GDP to about 77 percent of GDP by 2021, to minimize the impact on growth. The authorities’ fiscal program will address structural fiscal challenges, through broadening the tax base, maintaining a prudent growth of spending, enhancing tax administration, and addressing tax incentives and income taxation. The authorities strengthen the social safety net while undertaking these reforms, as their program would include an indicative floor on social spending to help cushion any potential impact from the fiscal consolidation on the most vulnerable segments of the population.
“The structural reform agenda will be implemented to promote jobs, reduce informality, enhance the business environment, ensure the sustainability in the energy and water sectors, preserve the resilience of the financial sector, and improve access to finance for small businesses, and enhance accountability and governance, through:
Enhancing the business environment , by reducing the costs of starting and operating a business, simplifying the procedures for new investors, streamlining inspections, and by facilitating collateral and cash-flow management for small and medium-sized firms. An export diversification strategy will assist in increasing the opportunities that will emerge with the proposed relaxation of EU rules of origin for Jordanian exports.
Ensuring sustainability in the energy and water sectors, with reforms aimed at achieving cost recovery for the National Electric Power Company (NEPCO) and the Water Authority of Jordan (WAJ).
Continuing reforms to preserve the banking system’s soundness and resilience and foster financial inclusion , by further strengthening the legislative and regulatory frameworks for banks, enhancing the Anti-Money Laundering and Counter Financing of Terrorism regime, by strengthening the supervisory frameworks for insurance and microfinance institutions, and by preparing a financial inclusion strategy.
Strengthening accountability and governance , by merging the Ombudsman Bureau and the Anti-Corruption Commission into a National Commission for Integrity and Anti-Corruption and by strengthening public procurement.
The implementation of these policies and reforms are expected to strengthen the resilience and performance of the Jordanian economy under a very challenging regional environment. The IMF stands ready to support Jordan in tackling the challenges it faces.”
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