Raad Mahmoud Al-Tal

Jordan continues to demonstrate strong economic resilience despite facing persistent regional conflicts and global uncertainty. The recent completion of the third review under the Extended Fund Facility (EFF) by the International Monetary Fund (IMF) confirms that Jordan’s economic reform program remains firmly on track. With this review, Jordan gained immediate access to SDR 97.784 million (about US$134 million), bringing total payments under the EFF to nearly US$595 million. The IMF also approved a new 30-month Resilience and Sustainability Facility (RSF) worth SDR 514.65 million (about US$700 million), aimed at supporting long-term reforms in the water and energy sectors and improving preparedness for future public health emergencies.

Economic performance in 2024 exceeded expectations, with real GDP growth reaching 2.5%, reflecting the economy’s ability to withstand external shocks. Inflation remained low at 1.9%, supported by the Central Bank of Jordan’s commitment to monetary and financial stability and the peg to the U.S. dollar. International reserves rose to over US$20 billion by the end of 2024, surpassing the IMF’s adequacy threshold. These indicators confirm that Jordan has maintained macroeconomic stability, which is crucial for investor confidence and long-term growth.

Despite regional spillovers, including increased fiscal pressures, the Jordanian government has made progress in gradually reducing its fiscal deficit. The overall central government deficit stood at 6.4% of GDP in 2024, slightly higher than the previous year but expected to improve to 4.5% by 2026. Importantly, the government has continued to prioritize public investment and social spending while improving the efficiency of tax collection and expenditure. The structural fiscal balance is also expected to strengthen as reforms in revenue administration and expenditure controls take effect.

The newly approved RSF provides critical financing to address structural weaknesses in two of Jordan’s most strained sectors: electricity and water. These sectors have long contributed to fiscal pressures due to inefficiencies and accumulated debt. The RSF will help improve financial sustainability and service delivery, especially through reforms targeting energy efficiency and water resource management. In parallel, the program includes provisions for enhancing Jordan’s capacity to manage health risks, including future pandemics, through stronger institutional and financial preparedness.

However, challenges remain. Unemployment remains high at 21.4% in 2024, with youth and women disproportionately affected. While foreign direct investment (FDI) is stable at around 3% of GDP, it needs to increase to support job-rich, private-sector-led growth. The government’s reform agenda under the Economic Modernization Vision is focused on improving the business environment, enhancing labor market policies, and encouraging competition and innovation. These measures are essential to attract investment, diversify the economy, and increase productivity.

Jordan has shown notable resilience under difficult circumstances, supported by sound policies and close cooperation with the IMF. Continued progress depends on steadfast implementation of fiscal and structural reforms, improved governance in public utilities, and greater inclusion of youth and women in the labor force. With strong donor backing and internal policy discipline, Jordan is well-positioned to sustain growth, reduce vulnerabilities, and build a more inclusive and sustainable economy.

Head of Economics Department – University of Jordan– r.tal@ju.edu.jo