Jordan finance minister says IMF approves $1.3bn reform program

AMMAN: Jordan’s finance minister said on Wednesday the IMF had approved a four-year, $1.3bn funding program that signalled confidence in the country’s reform agenda as it took measures to cushion its economy from the fallout of coronavirus.
Mohammad Al Ississ said the International Monetary Fund approval for the program would help his country get more donor and investor funds in the coming period as it pushes forward major structural reforms.
“It signals confidence in Jordan’s economic reform process, and support for our efforts to mitigate the impact of the virus on vulnerable economic sectors and individuals,” Al Ississ said in a statement sent to Reuters.
Officials are worried the crisis that has hit the thriving tourist sector, which generates around $5bn annually, will slash growth projections and deepen an economic downturn.
Jordan started a nationwide curfew last Saturday to stem the spread of the pandemic days after it closed land and sea border crossings with Syria, Iraq, Egypt and Israel, and suspended all incoming and outgoing flights.
Economists say the country’s poor, a majority of its 10 million inhabitants who mostly rely on daily wages, have already suffered from the closure of business activity.
Unemployment stood at 19 percent in the fourth quarter of last year.
Al-Ississ said the government would boost spending on social welfare programs, adding this was already envisaged in the IMF reform plan that aimed to raise job creation and generate faster growth.
“The government will be moving in coming months to protect vulnerable Jordanians from the negative repercussions of the global pandemic,” Al Ississ said.
The IMF expects Jordan’s economy to grow around 2.1% in 2020 but gradually rise in the next few years to 3.3%.
Monetary and fiscal authorities have taken a series of measures from injecting over $700 million in liquidity to reducing interest rates and delaying bank loan installments and customs and tax payments to help soften the negative impact.
Al Ississ said late last year a new IMF deal would help the country secure concessional grants and loans at preferential borrowing rates to ease annual debt servicing needed to reduce the debt to GDP ratio.
Public debt has shot up by almost a third in a decade to 30.1 billion dinars ($42.4bn) in 2019, equivalent to 97 percent of GDP.
Analysts say the spiralling debt is due in part to successive governments adopting an expansionist fiscal policy characterised by job creation in the bloated public sector.