IMF Expects Jordan's Economy to Grow by 3% in the Coming Years

SadaNews - The Executive Board of the International Monetary Fund has completed the fourth review under the Extended Fund Facility (EFF) and the first review of the Resilience and Sustainability Facility (RSF), allowing for an immediate disbursement equivalent to 97.784 million Special Drawing Rights amounting to 130 million dollars, bringing the total disbursements under the arrangement to about 733 million dollars.

The Fund stated in a statement issued today, Saturday, "Jordan's economy remains strong, supported by sound macroeconomic policies and robust international support. Growth rates accelerated to 2.7% in the first half of 2025 and are expected to reach 3% in the coming years, supported by large investment projects, enhanced regional integration, and continued implementation of structural reforms."

The Fund anticipated that inflation would stabilize at around 2%, and that the current account deficit would decline to less than 5% of GDP in the medium term, supported by a stable banking sector and a comfortable level of foreign reserves.
The Fund confirmed in its statement that public finance performance aligns with program objectives, through improving revenue collection efficiency and controlling current expenditures, alongside the Jordanian government's commitment to reduce public debt to 80% of GDP by 2028, through gradual measures to control expenditures and additional actions to reduce losses from public services (National Electric Company and Water Authority), while continuing to maintain social protection expenditures and development projects.

It is noteworthy that the public debt in the Kingdom reached 82.8% of GDP by the end of August this year, compared to 83.2% for the previous month, as GDP was recalculated based on 2023 data as the base year.

The Fund noted in its statement the government's determination to accelerate the pace of structural reforms to achieve stronger growth and provide more job opportunities, with ongoing reforms that include enhancing investment, encouraging competition, improving labor market flexibility, strengthening the social safety net, and digitizing government services.

In the framework of the Resilience and Sustainability Facility (RSF), the Fund stated that progress continues, with actions being taken to address vulnerabilities in the water and electricity sectors and enhance medical treatments, noting that reform measures related to the structural support fund scheduled for this review have been completed.

Kenji Okamura, Deputy Managing Director and Chairman of the Executive Board session, stated that Jordan's ongoing macroeconomic stability and resilience amidst persistent external challenges is evidence of the Jordanian government's steady pursuit of sound policies, supported by strong international backing.

He added in his remarks that economic growth continues to recover, inflation remains low, and foreign reserves are strong, emphasizing that amid ongoing regional tensions and global uncertainty, the Jordanian government's continued commitment to sound fiscal and monetary policies to maintain macroeconomic stability is crucial.

According to the Fund's statement, the Jordanian government continues to make progress in achieving gradual fiscal balance supportive of growth, praising the "re-calibrated" financial stance for 2026.

The Fund noted that gradual fiscal balance, supported by a medium-term revenue strategy and improved spending efficiency, would contribute to placing public debt on a downward trajectory, while enhancing spending on social protection and capital expenditures.
It added that efforts to maintain the long-term financial sustainability of the pension system and improve the financial feasibility of public services are critical.
The Fund praised the performance of the Jordanian Central Bank, stating that monetary policy continues to maintain monetary and financial stability and an exchange rate policy that has served the Jordanian economy, and that the Jordanian banking sector is healthy, as the Central Bank continues to enhance systemic risk analysis, oversight of the financial sector, and crisis management, welcoming ongoing efforts to strengthen the effectiveness of the anti-money laundering and counter-terrorism financing framework, thereby enhancing the protection of the Jordanian economy.

According to the Fund, structural reforms are essential to provide a resilient private sector and promote economic growth that provides job opportunities, along with the government focusing on taking actions to improve the business environment, enhance competition, increase labor market flexibility to address youth unemployment and tackle the declining female participation in the labor market, and promote investment.

The Fund emphasized the importance of continuing to provide international support to Jordan to enable it to face external challenges and achieve its development goals, while bearing the cost of hosting a large number of refugees.

The Fund confirmed that tangible progress in implementing reform measures under the Resilience and Sustainability Facility will help support the Jordanian government's efforts to address long-term economic vulnerabilities and enhance the balance of payments stability in Jordan.
(Petra)