On April 28, 2014, the Executive Board of the International Monetary Fund (IMF) completed the third and fourth reviews of Jordan’s performance under a three-year program supported by a Stand-By Arrangement (SBA) and concluded the Article IV consultation1 with Jordan. The 36-month SBA in the amount of SDR 1.364 billion (about US$2 billion, or 800 percent of Jordan’s quota at the IMF) was approved by the Executive Board on August 3, 2012 (see Press Release No. 12/288). The second review under the Stand-By Arrangement was approved by the Board on November 8, 2013 (see Press Release No. 13/435). The completion of the third and fourth reviews enables the immediate release of SDR 170.50 million (about US$264.7 million), bringing total disbursements under the program to SDR 852.50 million (about US$1.3 billion).
In completing the third and fourth reviews, the Executive Board approved the authorities’ requests for a waiver of nonobservance for the end-March 2014 performance criterion on the combined public deficit and for a waiver of applicability for the end-March 2014 performance criterion on the primary fiscal deficit.
A press release on the Article IV consultation will be issued separately in due course.
Following the Executive Board’s discussion on Jordan, Mr. Naoyuki Shinohara, Deputy Managing Director and Acting Chair, said:
“The Jordanian authorities remain committed to reforms and prudent policies despite a difficult environment. Their Fund-supported economic program, focused on reducing external and fiscal vulnerabilities, remains broadly on track.
“The 2014 budget appropriately targets further fiscal consolidation while protecting the most vulnerable. Measures to increase central government revenue are welcome and should be implemented without delay. Contingency measures should be prepared and implemented if expected revenue gains turn out to be lower than expected and fiscal targets appear at risk.
“Looking further ahead, the medium-term consolidation strategy hinges on further tax reforms to rein in rising public indebtedness. The new income tax law should aim at bringing the tax burden in line with that of regional peers. At the same time, tax incentives should be reduced. Continued implementation of reforms in the energy and water sectors is necessary to return the utilities to cost recovery.
“Monetary policy should continue to focus on preserving comfortable reserve buffers. While headline inflation has declined in recent months, a rising trend in core inflation calls for a continued cautious approach. Financial stability would be further supported by enhancements in the supervisory frameworks and improvements in financial statistics.
“Faster and more job-rich growth requires regulatory and legislative action to improve the business climate. There is also a need to step up labor market and educational reforms, strengthen public institutions, and better prioritize public investment.”
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.