A team from the International Monetary Fund (IMF) led by Mission Chief Kristina Kostial visited Amman from June 15-23 to take stock of recent economic developments and discuss with the authorities their planned economic policies for the remainder of the year and for 2015.
At the end of the visit, Ms. Kostial issued the following statement:
“Jordan’s economy is gradually picking up, with growth expected to increase to 3.5 percent in 2014 from 2.9 percent in 2013. The 12-month inflation rate is projected to drop to 2.5 percent by the end of 2014 from 3.3 percent at the end of 2013, and the current account deficit (excluding grants) continues to narrow. Still, the external environment remains difficult, with the conflict in Syria weighing on Jordan’s economy, gas inflows from Egypt subject to fluctuations, and the recent turmoil in Iraq adding another layer to regional uncertainty.
“We had very good discussions on Jordan’s performance under the IMF-supported program. Despite a difficult environment, the program has stayed broadly on track through March 2014. The central government deficit remained in line with its programmed target and central bank reserves exceeded theirs.
“We are pleased that the Jordanian authorities reiterated their commitment to the program, including by safeguarding adequate reserve buffers in the face of an uncertain environment.
In particular, it is important to strengthen the agenda for stronger growth and more jobs, including by improving the business climate; revisiting public sector hiring and compensation; equipping new entrants to the labor market with skills needed in the private sector; addressing the constraints to female labor market participation; and enhancing the quality of institutions.
“We also discussed how to maintain the momentum on fiscal consolidation while distributing the adjustment burden fairly. This will reduce public debt over the medium term, thereby shielding future generations of Jordanians from carrying the debt burden. In this regard, we are encouraged by discussions in parliament on the income tax law, and hope that an appropriate law will be passed soon. This will help Jordan sustainably pay for its needed social programs; bring its tax system more into line with regional peers; and force those who are not paying their fair share to pay more. Reforms aimed at eliminating tax exemptions and improving tax administration are also key in this regard.
“A mission to review Jordan’s economic performance through June 2014 is scheduled to visit Amman in September. The IMF looks forward to continuing its dialogue with the authorities and supporting Jordan’s national program of economic reforms.”