São Paulo – Jordan is expected to see its Gross Domestic Product (GDP) decline by 3% in 2020 and increase by 2.5% in 2021, reflecting a gradual recovery as the COVID-19 pandemic abates, according to the International Monetary Fund (IMF) report by Ali Abbas, advisor at IMF Middle East and Central Asia Department, following virtual discussions with the Jordanian authorities.
Abbas said that the authority’s containment of the pandemic during the first half of the year has helped to protect lives and livelihoods. Still, the crisis has taken a toll on the Jordanian economy. Unemployment has surged, tourism and remittances have declined, and revenues of the central government and of other public sector entities have dropped.
According to the advisor, though, Jordan’s authorities showed policy discipline, including institutionalizing the drive against tax evasion and strengthening tax administration; and maintained external market access. The 2020 fiscal targets have been relaxed to support the authorities’ efforts to fight the pandemic and protect lives and jobs.
During his discussions with the authorities, an agreement has been reached on the fiscal targets for 2021, which seek to support the recovery, while arresting the rise in public debt. The agreement includes a review of the economic reform program supported by the Extended Fund Facility (EFF). This would release an amount of around US$ 146 million, bringing total IMF disbursements to Jordan in 2020 to US$ 687 million.
“The EFF provides for flexibility to accommodate higher-than-expected COVID-related spending and aims to protect the most vulnerable,” Abbas wrote in the report. As for financing from Jordan’s international partners, including to support Syrian refugees, it remains critical. Staff is proposing to bring forward some IMF disbursements into 2021. The IMF Staff proposed to bring forward into 2021 a part of IMF credit, including the amount drawn under the Rapid Financing Instrument, over 2020-24, which is expected to amount to US$ 1.7 billion. This agreement is subject to approval of the IMF’s Executive Board.
Translated by Guilherme Miranda
