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Ammon News - AMMONNEWS - The International Monetary Fund (IMF) mission to Jordan said the Kingdom's real Gross Domestic Product (GDP) is projected to grow by 2.3 per cent in 2017.

Over the medium term, growth is projected to accelerate gradually, in spite of regional conditions, IMF said Tuesday in a statement.

An IMF team led by Martin Cerisola, who visited Amman during May 2–11 to complete discussions on the 2017 Article IV Consultation and First Review under Jordan’s economic program supported by an Extended Fund Facility (EFF) arrangement, welcomed the authorities’ intention to continue removing gradually the exemptions for general sales tax and customs duties (excluding health and basic food items) over the years ahead.

"The recent steps by the Central Bank of Jordan (CBJ) to raise its policy rates have helped to better balance the need for preserving an adequate reserves buffer and confidence in the Jordanian dinar peg against the need to provide supportive credit conditions to the economy. Going forward, the discussions confirmed the CBJ’s readiness to increase its policy rates if pressure on reserves were to emerge, in order to keep the reserves buffer at its current comfortable level," the statement added.

The IMF said in spite of challenging conditions, the authorities have made progress in implementing important structural reforms especially in the energy and water sectors, and public financial and debt management.

In spite of challenging conditions, the IMF lauded Jordanian authorities for "progress in implementing important structural reforms especially in the energy and water sectors, and public financial and debt management," while there were some delays in strengthening the business environment and in submitting legislation on deposit insurance and the insurance sector and, most notably, in implementing macro-critical structural fiscal reforms.

"Looking ahead, domestic, regional, and global geopolitical and security developments are expected to continue to impinge on investor confidence, exports, investment, and public finances. Recent economic indicators are encouraging," the statement said, pointing to a rebound in exports, remittances, and tourism in the first few months of 2017.

The IMF added that with the downward revisions to growth, public debt is now expected to decrease to 77 per cent by 2022, noting that donor support, including through budget grants, remains highly critical to alleviate the persistent pressures from hosting Syrian refugees, and to help the authorities meet their program’s debt reduction and inclusive growth objectives.

The IMF commended the recently announced Jordan Economic Growth Plan 2018-2022, and said it will improve the efficiency of public investment including through a strict adherence to the Public Private Partnership (PPP) framework, and enhance predictability and productivity, and minimize fiscal risks.

The fund welcomed the authorities’ commitment to conducting a comprehensive public expenditure review in 2018, which should help identify additional options to streamline expenditures across different public sector related entities.

The Jordan government and the IMF mission have reached a staff-level agreement on the completion of the First Review under the EFF. The IMF Executive Board is expected to consider the authorities’ request to complete this review by late June 2017, the IMF concluded.