New Thinking needed to Finalize Jordan, IMF Deal


06-06-2016 05:00 PM

Ammon News - AMMONNEWS - Jordan has been engaging in talks with the International Monetary Fund (IMF) over the issue of the Extended Fund Facility (EFF) for some time. Now, the negotiations are in the final stages, expected to conclude in July, but the Middle Eastern Nation will be required to employ out-of-the-box thinking in order to achieve the requirements set forth by the IMF.

Jordan’s Deputy Prime Minister for Economic Affairs and Minister of Industry, Trade, and Supply, Jawad Anani, said the former government of Abdullah Ensour had nearly completed negotiations with the IMF, but that additional steps are needed on the economic reform program in order to meet the IMF’s requirements.

The program should help to reduce public debt ratio, bringing it from the current 93 percent of gross domestic product (GDP) down to a more manageable 77 percent by 2021.

The trickiest part of the process for Jordan is the process of raising revenues required by the IMF while simultaneously stimulating economic growth. The country hopes to achieve this through the promotion of investment opportunities that additional jobs for its citizens while simultaneously expanding the national tax base.

The purpose of the EFF is to maintain overall economic stability in Jordan while accelerating sustainable growth. The plan also addresses the nation’s debt problems and help suppresses an expanding budget deficit.

However, to qualify for the program, the IMF has made it clear that Jordan must satisfy six conditions.

The first is the debt ratio. To qualify, the IMF expects Jordan to keep its debt ratio the same by the end of 2016 as it was at the end of 2015. Second, it must establish a public investment unit to review the government priority projects. Third, the Jordanian Finance Ministry must publish all of the central government’s and its independent public agencies’ final accounts to transparency.

Fourth, Jordan must establish a macro fiscal unit to serve as a repository of data for all information the IMF would require; again, establishing greater levels of transparency. The fifth condition will make Jordan a quarterly plan outlining the kingdom’s financing needs. Finally, the sixth requirement will entail finding ways to curtail ongoing losses of the state-owned National Electric Power Company.

According to Jordanian officials, the IMF and the kingdom are still working out the details of the public debt ratio portion of the deal. They claim the other conditions have been met or will be met in time to satisfy the IMF.

Minister of Finance, Omar Malhas, said the issue requires the government to look for “creative” solutions in order to boost the economy and raise revenues. He added that, “The economy needed urgent surgeries for years but we kept saying it may recover, but it has not.”




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