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Abu Dhabi, UAEWednesday 27 March 2019

IMF calls for faster pace of reforms and more donor funds for Jordan

Fund pledges continued support for Jordanian government's economic programme

Roman amphitheatre in downtown with Amman cityscape at background. IMF says international donor support for Jordan crucial to preserve economic stability.
Roman amphitheatre in downtown with Amman cityscape at background. IMF says international donor support for Jordan crucial to preserve economic stability.

The International Monetary Fund (IMF) called for international donor funds and a faster pace to fiscal reforms in Jordan to ensure the country's economic stability amid weak growth.

The IMF pledged continued support to the Jordanian government's economic programme and will send a mission to the country "soon", Christine Lagarde, the IMF's managing director, said in a statement.

"Sustaining fiscal consolidation remains critical to preserve macroeconomic stability, which needs to be supported by a faster implementation of reforms to promote jobs and investment and lower business costs," Ms Lagarde said.

The comments came following Ms Lagarde's meeting with Jordanian prime minister Omar Al-Razzaz at the IMF's headquarters in Washington, DC, on Thursday.

Tough IMF-backed austerity measures aimed at reducing public debt sparked protests in Amman last year after the Jordanian parliament approved an income tax bill to help raise revenues and lower a record public debt of $40 billion (Dh147bn). With scarce resources and unemployment at 18.6 per cent - over 40 per cent for people under 30 - Jordan's economic instability is exacerbated by hosting around 700,000 Syrian refugees.

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Ms Lagarde said Jordan's adoption of the new income tax law is a "step in the right direction" but that the country still faces "challenging" economic and social conditions.

"With Jordan still facing difficult regional conditions, including hosting a large number of refugees, international donor support is more important than ever to help it preserve economic and social stability," Ms Lagarde said.

Jordan is implementing fiscal consolidation measures required under and an IMF financing programme, which includes tax increases and subsidy cuts that have weighed on lower and middle-class families.

Arabian Gulf states in June pledged $2.5 billion in aid to Jordan. The five-year aid package from Saudi Arabia, Kuwait and the United Arab Emirates is directing at helping stabilise Jordan's economy.

"Our teams remain in close consultation on how best to advance policies to unlock much needed concessional financing and budget grants," Ms Lagarde said. "The IMF remains committed to supporting the Jordanian authorities’ economic program."

The World Bank expects Jordan's economy to grow 2.1 per cent in 2018 from 2 per cent the year before and forecast slight expansion of 2.3 per cent in 2019.

"Economic recovery depends on reducing debt levels and implementing structural reforms on the one hand and identifying sources to expand outward-oriented investment on the other, while taking advantage of international assistance and potential regional recovery," the World Bank said in an October 2018 statement.

Updated: January 12, 2019 12:16 PM

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