Ammon News - AMMONNEWS - The Executive Board of the International Monetary Fund (IMF) has completed the second review of Jordan’s economic performance under the Extended Arrangement under the Extended Fund Facility (EFF).

The IMF said in a statement late Monday that the completion of the second review enables the disbursement of SDR120.085 million (about US$166.4 million), bringing total disbursements under the program to SDR 223.015 million (about US$309. million).

The Executive Board also approved the authorities’ request for waiver of non-observance of performance criterion on the Net International Reserves of the Central Bank of Jordan (CBJ), an extension of the arrangement to March 2020, and the rephrasing of access, it added.

On August 24, 2016, the Executive Board approved a three-year extended arrangement under the EFF for Jordan for an amount equivalent to SDR 514.65 million (about US$723 million at the time of approval of the arrangement, or 150 percent of Jordan’s quota) to support the country’s economic financial reform program. This program also aims at advancing fiscal
consolidation to gradually lower public debt and broad structural reforms to enhance the conditions for more social-friendly inclusive growth, according to the statement .

Deputy Managing Director and Acting Chair Tao Zhang said Jordan faces a challenging environment including low economic growth, high unemployment, and elevated public debt underscoring the importance of swiftly implementing policies and reforms to bring public debt on a downward path, boost investment and productivity, and enhance inclusive growth.

The Jordanian authorities are to be commended for preserving macroeconomic stability, maintaining a prudent monetary policy, and ensuring a sound financial system, he added.

In this regard, Zhang stressed that the recent "London Initiative" has been most timely, and demonstrated the international community’s ongoing determination to support Jordan.

Continued donor assistance is key to help Jordan cope with the refugee crisis and support the government's policy and reform efforts, the official also confirmed.

Zhang called on the government to continue on a path of gradual and steady fiscal consolidation, with due regard to social protection needs, noting that recent amendments to the income-tax law are encouraging and will be key in helping Jordan secure a fairer and more sustainable fiscal framework.

These reforms are crucial to preserve macroeconomic and external stability, place public finances on a sounder foundation, and lessen risks to debt sustainability, he further said.

Jordan’s monetary policy stance is appropriate, in light of the Central Bank of Jordan (CBJ) maintaining an adequate reserve buffer, he also added.

Zhang noted that banks remain sound and well-capitalized, and steps taken by the CBJ to improve financial sector oversight and supervision are welcome.

The IMF's official said that the enactment of long needed growth-enhancing reforms is encouraging, including the secured-transactions law, the bankruptcy law, and the business-inspections law. Together with reforms to promote labor-market flexibility, particularly for the youth and women, and publication of a financial-inclusion action plan along with measures to support credit to SMEs.

Much has been done to set the stage for high-quality, inclusive growth. These efforts should continue, including measures to improve labor market conditions and strengthen the social safety net, he added.

It is critical to advance structural reforms to reduce business costs in order to enhance investment opportunities and new jobs, the IMF official said, welcoming at the same time the government's roadmap to restructure the energy companies to reduce high electricity costs for businesses .