Ammon News - The International Monetary Fund (IMF) confirmed that the Jordanian economy has continued to demonstrate resilience in the face of regional challenges, noting that the government's economic reform program remains "on track" despite the impact of the regional conflict and heightened uncertainty.

According to documents from the fifth review of the Extended Fund Facility (EFF) program, Jordan's economic activity remained resilient throughout 2025, supported by sustained domestic demand and improved performance across several sectors. Inflation remained low, while foreign exchange reserves stayed at comfortable levels.

The IMF noted that the government has made progress in implementing future reforms under its economic program, meeting all quantitative performance criteria through the end of December 2025 and achieving most indicative targets through December 2025 and March 2026.

Jordan's economy has faced new pressures resulting from the conflict, including weaker tourism activity, reduced trade, higher oil prices, and increased electricity generation costs, prompting revisions to some economic forecasts, the Fund explained.

The IMF lowered its forecast for Jordan's economic growth in 2026 to 2.7%, down from a previous projection of 2.9%, while expecting growth to rebound to 3.1% in 2027, supported by continued economic reforms and the launch of several investment projects.

The Fund projected average inflation of around 2.5% in 2026 due to higher energy and food prices, while remaining relatively low compared to many other economies.

It emphasized that the government's fiscal policy continues to target a downward trajectory for public debt. Fiscal performance in 2025 exceeded expectations, with the primary deficit reaching 1.6% of GDP compared with a target of 1.9%.

Public debt stood at 83.6% of GDP at the end of 2025, while the government reaffirmed its commitment to gradually reducing it to 80% of GDP by 2028.

The report indicated that the conflict would lead to a temporary widening of the fiscal deficit in 2026 due to higher energy costs and lower revenues. However, the government pledged to contain these pressures through expenditure reprioritization, securing additional budget grants, and gradually passing global oil price increases on to domestic prices.

In the external sector, the IMF said foreign reserves remained strong, reaching about 132% of the Adequacy of Reserve Assessment (ARA) metric in 2025 and continuing to increase during the first months of 2026, supporting the stability of the Jordanian dinar and market confidence.

The IMF also noted that the Central Bank of Jordan has maintained a prudent monetary policy, preserving the dinar's peg to the U.S. dollar and remaining ready to take additional measures to safeguard monetary and financial stability.

The report highlighted the strength of Jordan's banking sector, supported by high levels of capital, liquidity, and asset quality. The capital adequacy ratio reached 17.8%, while the non-performing loan ratio remained stable at 5.5% by the end of 2025.

The IMF stressed that continued implementation of structural reforms is essential for supporting economic growth and job creation, praising progress in tax administration modernization, government digitalization, electricity and water sector reforms, and efforts to improve the business environment.

The report noted that the government has digitized 80% of automatable public services, adopted a State Ownership Policy, approved a pension reform framework, and submitted several reform-related laws to Parliament, including legislation on competition, insurance contracts, and amendments to the social security law.

The IMF added that the Resilience and Sustainability Facility (RSF) program is also progressing as planned, with reforms advancing in the energy and water sectors, climate risk management, and health system preparedness.

The report warned that ongoing regional tensions remain the main risk to Jordan's economy due to their potential impact on tourism, trade, and energy prices. However, it noted that continued international support, government commitment to reforms, and strong foreign reserves enhance Jordan's ability to withstand these risks.

The IMF concluded that Jordanian authorities remain fully committed to implementing the economic program, stating that the strong performance so far justifies the completion of the fifth review under the Extended Fund Facility and the second review under the Resilience and Sustainability Facility, while continuing support for economic reforms in the Kingdom.