IMF staff concludes visit to Jordan
A team from the International Monetary Fund (IMF) led by Martin Cerisola visited Amman from 9 to 5 March 2017 to take stock of recent economic developments and discuss with the authorities their planned economic policies for 2017 and beyond.
At the end of the visit, Cerisola issued the following statement:
“Jordan continues to face a difficult external environment. The conflicts in Syria and Iraq continue to weigh on its economy, with growth expected at around two per cent in 2016 and unemployment increasing to 15.3 per cent. Inflation has accelerated to 2.5 per cent (year-on- year (y/y) in January and to 4.6 per cent (y/y) in February, reflecting higher global food prices and the one-off impact of the fiscal measures. The overall fiscal deficit is estimated at 3.6 per cent of GDP in 2016 and is projected to decline to less than three per cent in 2017 in light of fiscal measures underpinning the 2017 budget.
“The current account deficit is expected to reach 9.5 per cent of GDP in 2016 compared to 9.1 per cent in 2015. Recent data suggest a recovery in remittances and tourism, which could contribute to reduce the current account deficit in 2017. Credit to the private sector accelerated further, increasing by around 10 per cent y-o-y in December 2016. The recent steps by the Central Bank of Jordan in raising key monetary policy rates has helped to preserve the attractiveness of the Jordanian dinar and keeping international reserves at adequate levels. Due to challenging external environment, growth is expected to pick up modestly in 2017, driven by some rebound in exports, tourism, and remittances.
“Against this backdrop, the authorities have reiterated their commitment to sound policies that reduce vulnerabilities and support growth. Discussions with the Jordanian authorities were constructive and focused on taking stock of recent developments and exploring changes to the macroeconomic framework. The discussions also focused on the authorities’ plans for policies and reforms to preserve Jordan’s macroeconomic stability and to enhance growth and employment prospects in a difficult environment, where the pressure from refugees on the economy merits the continued support from the international community. It was agreed that discussions will continue during the Spring Meetings in Washington, DC, with a view to complete the review of the Extended Fund Facility. The IMF is committed to maintaining its dialogue with the authorities and supporting Jordan’s national programme of economic reforms.”