IMF approves exceptional $2b loan for Jordan 

(MENAFN - Jordan Times) The International Monetary Fund (IMF) approved on Friday a 36-month 2.06 billion Stand-By Arrangement (SBA) for Jordan to support the country's 2012-2015 economic programme designed to address fiscal and external challenges and foster high and inclusive growth.

The approval by the IMF executive board makes about 385.35 million immediately available, and the remaining amount will be phased in over the duration of the programme, subject to quarterly reviews, the fund said in a statement e-mailed to The Jordan Times.

The SBA entails exceptional access to IMF resources, amounting to 800 per cent of Jordan's quota, the statement indicated.

"Jordan faced a series of exogenous shocks, beginning in 2011. Repeated damage of the Arab Gas Pipeline prompted an increase in imports of expensive fuel products for electricity generation," said the statement.

Regional tensions adversely affected tourism, remittances and foreign direct investment in Jordan, widening the current account deficit and slowing growth, it said.

The social impact of these shocks was contained because authorities accommodated it by increasing subsidies and wages, financed by grants. At the same time, the losses of the public electricity company rose due to the expensive fuel imports.

External pressures intensified in 2012, when gas inflow was further reduced. Continuing large public financing needs, including from the electricity company, are pushing up government and government guaranteed debt and also started to crowd out the private sector, according to the statement.

"Jordan's homegrown economic programme aims at maintaining macroeconomic stability by implementing fiscal, monetary and structural policies that will address challenges while fostering high and inclusive growth," the IMF added.

Authorities plan to establish transparent and sustainable energy prices, and reverse the recent trend in revenue losses. They intend to cut the primary deficit (excluding grants) by about 6 per cent of the gross domestic product during the programme period while the losses of the electricity company are expected to fall by 3 per cent of GDP.

The programme will also focus on making economic policies more equitable and inclusive, providing targeted subsidies and better opportunities for vulnerable segments of the population, the statement said.

To support growth and the medium-term external position, the programme will also aim at improving the investment climate through targeted structural reforms, while strengthening labour market skills, it added.

"Continued structural reforms to strengthen competitiveness are essential to foster high and inclusive growth and create employment. To this end, efforts to improve Jordan's business climate, enhance trade, reform the education sector and develop training programmes will be important," the IMF said.