IMF praises Jordan for reforms and economic growth

The Kingdom of Jordan is in one of its best economic times despite the current situation. The International Monetary Fund (IMF), one of its main supporters for the financing of its economy, has just praised the Kingdom's work on economic reforms. The entity assures that Jordan's financing programmes and reforms are "on the right track" and, thanks to this, the Jordanian kingdom has an economic growth forecast of 2.4 % this year. Moreover, GDP is set to rise above 3 % in the medium term.

This has been thanks to Jordan's remarkably strong performance as a result of its efforts. To achieve this, the Kingdom has had to mobilise domestic revenues. In addition, like all countries globally, Jordan has had to deal with the problems generated by the pandemic. Even so, the nation has protected itself from critical health and social spending, and has been able to enact key structural reforms for its recovery.

"A further rebound in tourism revenues and strong exports will help reduce Jordan's current account deficit to 6.5 % of GDP in 2022, from 8.8 % last year," confirms the IMF. 

The institution says Jordan needs an additional $165 million in outlays in 2022 to address current problems. The war in Ukraine and the consequences on the rise of hydrocarbon and commodity prices are having a very negative impact globally. Experts stress that the nation is prepared to cope with these inconveniences, although the deficit will be a little higher than normal. The IMF anticipates that it will also have to increase access by an additional $100 million.

With this disbursement, the organisation's assistance to the country will be extended until 2024 and will rise to a total of $2 billion. This also includes the $407 million that the nation received in May 2020 on a fast-track basis to deal with the consequences of the coronavirus.

In addition, Jordan also received an additional $469 million as part of the international fund's general allocation of special drawing rights in August 2021. This is one of the main assets that the IMF lends for the official reserves of the countries that make up the institution. They are a unit of exchange that is composed of a basket of the world's five major currencies, such as the US dollar, the euro, the yuan, the yen and the pound sterling. 

Thanks to these rights, countries such as Jordan can increase their international reserves and also reduce their dependence on more expensive internal or external debt. It is worth noting that the Fund distributes this aid in proportion to countries' quotas within the world organisation.

The Kingdom could still increase its wealth much further, but it faces a number of problems that severely affect its economy. The country lacks unlimited and renewable natural resources, so it has to import more than 90 % of its energy to provide electricity for its population. In addition, it is also responsible for hosting refugees from countries in conflict such as Syria, Iraq and Palestine. There are currently more than three million refugees residing in the country.

"Jordan continues to bear a disproportionate burden in supporting and hosting 1.3 million Syrian refugees," says the institution.

It is worth noting that Jordan is a country that relies heavily on foreign aid and grants to function. With these grants, Jordan covers and finances all its fiscal and current account needs. Without them, the nation would be in chaos with no jobs and no economic activity. Unemployment remains very high, especially after the pandemic, and mainly affects young people.

That is why one of the main focuses of the government right now is to cut state subsidies and reduce the large public debt it holds. This will be done through economic reforms that will try to put an end to the situation. These tax reforms promise to have a broadening of the tax base that will have to be maintained over the years in order to continue promoting projects.