IMF expands Jordan's loan programme by $200m to aid economic recovery

Jordan's economy is expected to expand by 3.6 per cent in 2021, according to the International Monetary Fund. Courtesy Four Seasons Hotel Amman

The International Monetary Fund expanded the size of Jordan's existing loan programme by $200 million after a review of the country's economic reform progress.

The move will help the country deal with “higher-than-expected Covid-related spending and protect the most vulnerable”, the Washington-based lender said yesterday.

“Jordan’s IMF-supported programme remains firmly on track, with strong progress on key reforms,” the fund said.

The total amount disbursed to Jordan, including a two-year Extended Fund Facility unveiled in March last year and money provided under the Covid-19 emergency loan programme, would stand at about $1.95 billion between 2020 and 2024, according to the IMF.

Jordan hosts 1.3 million Syrian refugees and its financing needs have increased amid the pandemic.

The country had more than 600,000 infections, 6,747 deaths and more than 500,000 recoveries as of Wednesday, according to Worldometer, which tracks the pandemic.

Its economic output shrunk by 2 per cent last year while unemployment hit a record 24.7 per cent in the fourth quarter because of the pandemic, the IMF said. Jordan is carrying out an IMF-backed programme to support its economy.

“Fiscal policy, thus far, has ensured the preservation of macroeconomic stability and sought to cushion the impact of the crisis on growth,” the fund said.

Jordan’s fiscal strategy remains anchored in equitable tax reforms aimed at tackling evasion, closing loopholes and broadening its tax base, the lender said.

"Recent months have seen major legislative reforms in this area,” it said.

The country’s nominal gross domestic product is expected to expand by 3.6 per cent this year as Jordan enacts reforms.

“Continued tax administration reforms and modernisation should help raise significant revenue over the medium term.”

The authorities also aim to enhance the efficiency of public spending and introduce a new public-private partnerships law to ensure effective selection and completion of viable projects to support the economy.

However, the lender said progress on structural reforms remains critical, notably in the power sector where there are efforts to reduce generation costs and growth-impeding tariffs on businesses while protecting low-income households.

“The continued progress on governance reforms is important to strengthening public trust,” the IMF said.

Reforms designed to increase the participation of women in the workforce, support more flexible markets and reduce the cost of doing business remain key to improving competitiveness and boosting inclusive growth, it said.