IMF agrees Syrian refugee funding package for Jordan

22-06-2016 08:08 AM

Ammon News - AMMONNEWS - The staff-level agreement, announced yesterday, is still being finalised and will be subject to approval by the IMF’s executive board. But Jordan’s finance minister Omar Malhas said in April the country expects the three-year deal to yield $800m in IMF credit, and unlock $1.9bn from donors and $1bn in US-backed bonds.

The fund also said the approval of the support package would “help catalyse loans and grants” from international sources, in line with pledges made to support Jordan as it struggles to host Syrian refugees.

The country has become home to around 600,000 Syrians fleeing the brutal, six-year conflict at home, while many Iraqis have also sought refuge in the country. This has placed a huge strain on public services and the economy, which is forecast to grow by 2.7% this year.

Martin Cerisola, who led the IMF team to Jordan, explained the programme will support the government’s “ambitious” reform agenda for the next three years, and its national development plan, which runs until 2025.

The aim is to enhance “the conditions for more inclusive economic growth, particularly in light of the challenges posed by regional conflicts on exports, investment and the labour market”.

Reforms will focus on the business environment, labour market, and the energy and water sectors. They will also protect the most vulnerable segments of the population and support refugees.

Jordan will work to put its public debt, currently at 94% of GDP, on a downward path, aiming to reduce its levels to around 77% of GDP by 2021.

“The authorities’ fiscal programme will address structural fiscal challenges, through broadening the tax base, maintaining a prudent growth of spending, enhancing tax administration and addressing tax incentives and income taxation,” Cerisola added.

The government will maintain a floor on social spending throughout to help cushion the impact on the vulnerable, he continued. Measures to strengthen accountability and governance, for example by improving public procurement processes, will also be central to the programme.

Cerisola said the reforms will add to the Jordanian economy’s resilience as it faces “a very challenging regional environment”.

The scale of the package will be finalised in the coming weeks, said the fund, with the executive board expected to consider the request in July.

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