Press Release No. 24/473

Jordan—IMF Executive Board Concludes 2024 Article IV Consultation and Second Review Under the Extended Fund Facility

December 13, 2024

• Jordan’s EFF-supported program, approved in January 2024, remains on track. The completion of the second program review makes another SDR 97.784 million (about US$131 million) available to Jordan, out of the previously approved program size of SDR 926.370 million (about US$1.2 billion).
• Jordan continues to show resilience and maintain macro-economic stability, despite the headwinds caused by the regional conflict. This resilience reflects the authorities’ continued implementation of sound macro-economic policies and reform progress.
• Bringing the Jordanian economy onto a higher growth trajectory is essential to create more jobs and raise prosperity. This requires accelerating structural reforms, while maintaining macro economic stability. Strong and timely international support also remains crucial to help Jordan navigate through the external headwinds, while shouldering the costs of hosting a large number of Syrian refugees.

Washington, DC: On December 12, the Executive Board of the International Monetary Fund (IMF) completed the 2024 Article IV consultation^[1] with Jordan and the second review under the arrangement under the Extended Fund Facility (EFF) (see Press Release No. 24/467). Jordan’s four-year arrangement, amounting to SDR 926.37 million (about US$1.2 billion, equivalent to 270 percent of Jordan’s quota in the IMF), was approved by the IMF’s Board on January 10, 2024 (see Press Release No. 24/004). The completion of the second review makes another SDR 97.784 million (about US$130 million) available to Jordan, bringing total disbursements under this arrangement to SDR 339.67 million (about US$453 million).

Jordan continues to show resilience and maintain macro-economic stability, despite the headwinds caused by the regional conflict and the heightened uncertainty. Jordan’s economy continues to grow, and inflation is low. This resilience is the result of the authorities’ continued pursuit of sound macro-economic policies and reform progress over the past several years, as well as sizable international support. Reflecting the authorities’ commitment to sound policies, performance under Jordan’s IMF-supported program remains strong. All quantitative performance criteria and structural benchmarks for the second program review were met and steady progress is made toward achieving the program’s overall objectives.

Nonetheless, as the conflict continues and has widened, it is having a larger impact on Jordan’s economy than anticipated at the outset of the program, dampening economic growth and affecting government finances. Growth is projected to moderate to 2.3 percent in 2024, from 2.7 percent in 2023. While only slightly down from earlier projections, the composition of growth is changing, with stronger net exports offsetting weaker domestic demand. Growth is projected to continue to be held back in 2025, at 2.5 percent, but is projected to pick up in the following years, assuming a resolution of the conflict and on the back of continued sound macro-economic policies and further progress in reform implementation. Risks to the outlook remain high, however. With moderate growth rates, progress in reducing unemployment has been limited and the unemployment rate remains high at 21 percent.

Inflation is projected to remain low, at about 2 percent, reflecting the Central Bank of Jordan’s firm commitment to monetary stability and the exchange rate peg. Jordan’s external position remains relatively strong. The current account deficit is projected to widen slightly this year and next, to just under 5 percent of GDP, from under 4 percent of GDP in 2023, with lower tourism receipts and lower prices for key exports. The CBJ’s international reserves remain at comfortable levels. The financial sector remains healthy and well-capitalized.

Government revenues have been adversely affected this year by the weaker domestic demand, as well as a sharper-than-expected drop in the prices of key export commodities. The authorities have taken strong actions to offset the revenue shortfall to contain this year’s central government budget deficit and will continue with a gradual fiscal consolidation in 2025, to reduce public debt and ensure medium-term fiscal sustainability. 

Executive Board Assessment^[2]

Executive Directors agreed with the thrust of the staff appraisal. They commended the Jordanian authorities on the economy’s resilience owing to the continued pursuit of sound macroeconomic policies and implementation of reforms despite increased challenges from the regional conflict. Noting the challenges arising from moderate growth and high unemployment, Directors encouraged the authorities to maintain the reform momentum to safeguard macroeconomic stability and foster stronger, more inclusive growth. They also underscored the importance of sustained donor support to help the country address financing needs from hosting a large number of refugees and to meet its development objectives.

Directors supported the recalibration of the fiscal adjustment path given the impact of the regional conflict on Jordan’s economy. They welcomed the authorities’ commitment to resume a gradual fiscal consolidation to place public debt on a steady downward path, while creating space for social and capital spending. Directors stressed the need for further broadening the revenue base and looked forward to the authorities’ Medium Term Revenue Strategy. They also underscored the critical need to sustainably ensure the financial viability and efficiency of the public utilities, to ensure an adequate and affordable supply of energy and water, as well as to help reduce public debt and create fiscal space to meet other priority needs.

Directors commended the Central Bank of Jordan (CBJ) for its prudent policies that have safeguarded monetary and financial stability in a challenging external environment. They emphasized that the CBJ should continue to adjust its policy rates as needed to support the exchange rate peg and maintain an appropriate level of international reserves. While the banking system remains sound, the authorities should continue to monitor banks’ financial health, while further strengthening financial sector oversight in line with the recommendations of the 2023 Financial System Stability Assessment.

Directors encouraged the authorities to accelerate structural reforms to foster a more dynamic private sector that can create more jobs and improve living standards. In this regard, they underscored the need for sustained efforts to reduce impediments to doing business, enhance competition and labor market flexibility, particularly to increase female labor force participation, while continuing to strengthen the social safety net. Directors noted the authorities’ climate adaptation and mitigation efforts, as well as efforts to enhance Jordan’s pandemic preparedness. In this regard, they noted the authorities’ interest in support under the Resilience and Sustainability Facility.

It is expected that the next Article IV consultation with Jordan will be held in accordance with the Executive Board decision on consultation cycles for members with Fund arrangements.

[1] Under Article IV of the IMF's Articles of Agreement, the IMF holds bilateral discussions with members, usually every year. A staff team visits the country, collects economic and financial information, and discusses with officials the country's economic developments and policies. On return to headquarters, the staff prepares a report, which forms the basis for discussion by the Executive Board.

[2] At the conclusion of the discussion, the Managing Director, as Chairman of the Board, summarizes the views of Executive Directors, and this summary is transmitted to the country's authorities. An explanation of any qualifiers used in summings up can be found here: http://www.IMF.org/external/np/sec/misc/qualifiers.htm.