News Brief No. 02/40

News Brief: IMF Approves US$77 Million Disbursement to Jordan

April 30, 2002

The Executive Board of the International Monetary Fund (IMF) has discussed Jordan's performance under an economic program supported by a three-year SDR 127.88 million (about US$162 million) Extended Fund Facility arrangement (see Press Release No. 99/13), and completed the fourth and fifth reviews under the arrangement. Completion of these final reviews enables the release of SDR 60.89 million (about US$77 million), which would bring total disbursements to Jordan under the IMF-supported program to SDR 127.88 million (about US$162 million).

At the completion of the Executive Board's discussion of Jordan's economic and structural reforms, Anne Krueger, First Deputy Managing Director and acting Chair, issued the following statement:

"Jordan's economic performance has continued to strengthen over the last three years under the Fund-supported program. Real growth has accelerated to over 4 percent-led by strong export growth-inflation remains low, the public debt ratio has declined significantly, international reserves have risen to a comfortable level, and interest rates are at historic lows. In 2001, the fiscal deficit was also reduced, albeit less than the authorities originally planned. These successes reflect the authorities' pursuit of prudent macroeconomic policies and a strong package of structural reforms, including trade liberalization, a wide-ranging privatization program, and legal and administrative reforms.

"In completing the fourth and fifth reviews under Jordan's Extended Arrangement with the Fund, the Executive Board emphasized the importance of adhering to the authorities' plan to achieve further fiscal consolidation, together with accelerated privatization, in order to bring the public debt burden down to a more sustainable level over the medium-term.

"The authorities' 2002 program targets further fiscal consolidation through revenue and expenditure measures. The recent measures to extend the General Sales Tax to exempted and zero-rated products, to increase petroleum product prices, and other measures to reduce subsidies, represent important steps to strengthen the budgetary position. These measures were required to ensure the achievement of the target for the fiscal deficit for 2002. The strict adherence to the authorities' strategy to finance the Plan for Social and Economic Transformation (PSET) exclusively from foreign grants and a limited portion of privatization proceeds will be essential to reduce the debt burden further in the coming years.

"Continued progress with fiscal consolidation will also require action on a number of structural fronts. On the expenditure side, the implementation of measures to reform the public pension system will be essential to reduce the burden on the budget. On the revenue side, the authorities should broaden the tax base further, improve tax administration, and adjust petroleum product prices as needed to protect revenue. An acceleration of other structural reforms, as envisaged under the PSET, including privatization, human resource development, and legal and administrative reforms, are likely to strengthen Jordan's growth outlook over the long-run," Ms. Krueger stated.