AMMAN (Reuters) – Jordan’s finance minister said on Wednesday that the IMF had approved a four-year funding package of $ 1.3 billion that showed confidence in the country’s reform agenda as it took measures to protect its economy from the fallout from the coronavirus.
Mohammad Al Ississ said approval of the program by the International Monetary Fund would help his country secure more funds from donors and investors in the coming period as it pushes forward important structural reforms.
“This demonstrates confidence in Jordan’s economic reform process and support for our efforts to mitigate the impact of the virus on economic sectors and vulnerable individuals,” Al Ississ said in a statement sent to Reuters.
Officials fear the crisis in the burgeoning tourism sector, which generates around $ 5 billion a year, will lower growth projections and worsen the economic slowdown.
Jordan instituted a nationwide curfew last Saturday to stem the spread of the pandemic days after it closed land and sea border crossings with Syria, Iraq, Egypt and Israel, and suspended all incoming and outgoing flights.
Economists say the country’s poor, a majority of its 10 million people who depend mainly on daily wages, have already suffered from the shutdown of business activity.
Unemployment stood at 19% in the fourth quarter of last year.
Al-Ississ said the government would increase spending on social protection programs, adding that this was already envisaged in the IMF’s reform plan which aimed to increase job creation and generate faster growth.
“The government will act in the coming months to protect vulnerable Jordanians from the negative repercussions of the global pandemic,” said Al Ississ.
The IMF expects the Jordanian economy to grow by around 2.1% in 2020, but gradually increase over the next few years to reach 3.3%.
Monetary and fiscal authorities have taken a range of measures ranging from injecting more than $ 700 million in cash to cutting interest rates and postponing bank loan payments and customs and tax payments. to help mitigate the negative impact.
Al Ississ said late last year that a new deal with the IMF would help the country secure grants and concessional loans at preferential borrowing rates to ease the annual debt service required to reduce the debt. debt to GDP ratio.
Public debt has increased by nearly a third in a decade to reach 30.1 billion dinars ($ 42.4 billion) in 2019, or 97% of GDP.
Analysts say the soaring debt is due in part to successive governments adopting expansionary fiscal policies characterized by bloated public sector job creation.