The Washington-based IMF has approved the release of a $260.8m loan tranche to the government of Jordan, the Jordan News Agency reported. The payment represents the fourth tranche of a three-year programme totalling $2bn.
Regional instability continues to weigh on Jordans economy, according to Nemat Shafik, deputy managing director and acting chairman of the IMF.
Nonetheless, growth is slowly recovering, inflation is being contained and the external current account deficit is narrowing, she said. The central bank has rebuilt reserves, which are now at a comfortable level.
The banks focus on maintaining comfortable levels of foreign exchange reserves remains warranted. The recent successful issuance of a $1.3bn US-guaranteed Eurobond is welcome. Looking forward, the central bank should consider further cuts to interest rates only if there is clear evidence that core inflation is on a downward path.
Jordans deficit has widened in recent years, as a result of political tensions in the region. To address this, the government is planning to target fuel and food subsidies as well as introduce income tax reforms. Developing stable sources of energy is also crucial to get the economy back on track.
Looking forward, success will hinge on implementing the announced path of equitable tariff increases and bringing alternative energy sources on stream, in particular the liquefied natural gas (LNG) terminal in Aqaba, while improving energy efficiency, said Shafik.