São Paulo – The Jordanian economy has shown consistent improvement in some of its main indicators in 2013. On the other hand, the daily lives of Jordanians still falls far short of ideal conditions, and has not improved accordingly. The unemployment rate exceeds 12% and the high costs benefit the well-off. So says a report on the Jordanian economy released this Friday (4th) by the International Monetary Fund (IMF), following a series of meetings between local authorities and a mission from the Fund, from March 4th to 19th. The IMF also discussed new tranches in a loan signed in 2012, which should be transferred until the end of this month.
According to the document, in 2013, the Jordanian Gross Domestic Product (GDP) increased by 3%, driven by the financial sector as well as telecommunications, trade and construction. Inflation stabilized at 3%¨and the current account deficit was lower than 10% of the GDP. The country’s foreign currency reserves grew to a “comfortable level,” sufficient to enable five months’ worth of imports. The main reasons for the improvement were lower energy imports and increased revenues by private institutions.
In the statement, the IMF forecasts 3.5% growth for this year, and 4.5% for 2014. In 2014, the inflation rate should be approximately 2.5% and the current account deficit should drop to 4.5% of the GDP. “Risks to this outlook remain high, mostly related to the Syria conflict and further disruptions in energy imports,” the IMF admonishes.
While the country’s economic outlook improved last year, the same does not hold true for the population. The document claims improvements must be made that will benefit all Jordanians. “the focus should remain on achieving an equitable distribution of the burden of adjustment and protecting the most vulnerable. As benefits of low utility prices and low effective income tax rates have accrued disproportionately to the well off, utility and tax reforms are essential to a balanced consolidation effort,” according to the IMF.
The unemployment rate dropped from 14% in the past decade to 12.6% last year, but is still considered high by the IMF, because it is highest among young people and women. In order for Jordan to be able to absorb new entrants to the labour force, its GDP will need to grow by 6.1% per annum, on average, until 2020.
The Fund advises the Jordanian government to carry out banking sector reforms, increase female participation in the labour market, secure lending, improve the business climate and insolvency laws. It also calls on the country to perfect its tax collection system and prioritize public investment.
In the statement, the IMF notes that it has reviewed the credit line it signed with Jordan in 2012. The contract concerns a loan from the IMF, amounting to US$ 2 billion, and divided into tranches. Jordan has received US$ 1.043 billion and should see another US$ 264 million this month, equivalent to the fourth and fifth tranches. The funds are wired following the Fund’s assessment of the country’s economic performance, as per the contract.
*Translated by Gabriel Pomerancblum
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