São Paulo – Jordan needs to carry out reforms in order to strengthen its fiscal position, create mechanisms to cushion the country against external shock, and get the government-owned power utility back on its feet. To the deputy managing director of the International Monetary Fund (IMF), Nemat Shafik, these are the measures the country must adopt in the medium term in order to grow. Shafik’s meeting with Jordanian authorities this Wednesday (6th), in Amman, is a part of a US$ 2 billion loan issued by the Fund in August 2012.
Shafik said the reforms must be coupled with improvements in the business environment, stronger trade, increased transparency, and labour force qualification through investment in education and training. “These policy actions will help strengthen confidence and maintain macroeconomic and social stability,” she said, according to an IMF press release.
To Shafik, 2013 will be a better year for Jordan than 2012, when the country was “challenged” by adverse conditions such as a large inflow of Syrian refugees, soaring food prices, and a decline in gas supplies from Egypt. The increased cost of energy importation was reflected on inflation, which was up 6.7% and caused a current account deficit. The deficit could have been even higher, but was offset by a stronger capital account.
On the other hand, Shafik noted that Jordan benefited from loans from the Gulf Cooperation Countries (Saudi Arabia, United Arab Emirates, Qatar, Bahrain and Oman), by the issuance of dollar-denominated Treasury bonds, and increased dinar-denominated deposits. The Fund estimates that the Jordanian Gross Domestic Product (GDP) was up 2.8% in 2012. Shafik said risks to the country’s economy remain, but the improvements in the fiscal and external accounts are encouraging.
*Translated by Gabriel Pomerancblum
