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Middle East and Central Asia > Jordan

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Cover IMF Staff Country Reports
Jordan: First Review Under the Extended Arrangement Under the Extended Fund Facility and Request for Modification of Performance Criteria-Press Release; and Staff Report
International Monetary Fund. Middle East and Central Asia Dept.
This paper highlights Jordan’s First Review under the Extended Arrangement under the Extended Fund Facility and Request for Modification of Performance Criteria. Jordan’s economy continues to show resilience despite a challenging external environment. The economy continues to grow, albeit at a somewhat slower pace, inflation is low, and reserve buffers are strong. Growth is projected to pick up pace in 2025, contingent upon the Israel-Gaza conflict ending and its impact fading. Uncertainty is high, however, and structural challenges remain, with continued high unemployment. Strong progress was also made in implementing structural benchmarks (SBs), with all six SBs for the first review met, and with good progress being made toward meeting SBs for the next review. The authorities remain firmly committed to sound macro-economic policies and advancing structural reforms, to maintain macro stability, further strengthen economic resilience in the face of successive external shocks, and foster stronger, job-rich growth. Steadfast implementation of structural reforms is crucial to create a more dynamic private sector that can generate sufficient jobs and contribute to higher living standards.
Keywords:
IMF's transparency policy; government finance; Jordan's economy; authorities' policy effort; near-term outlook; Fiscal stance; Structural reforms; Global
Cover High-Level Summary Technical Assistance Reports
Jordan: Climate Module of the Public Investment Management Assessment and Green Public Financial Management
Bryn Battersby
,
Diala Al Masri
,
Robert N Clifton
,
Ed Hearne
,
Murray Petrie
, and
Jad Mazahreh
The assistance assessed how climate change impacts and mitigation and adaptation responses are addressed in the public investment cycle using the Climate Module of the Public Investment Management Assessment (C-PIMA). The assistance also evaluated the scope to advance Green Public Financial Management (PFM) practices, drawing on the IMF’s new Green PFM framework. Jordan was found to performs well in the climate-aware planning and coordination institutions of the C-PIMA, but some gaps were identified in implementation aspects of the framework, and there were several areas where climate could be better integrated in the PFM system.
Keywords:
Public investment management; C-PIMA; climate change; Green PFM; climate change consideration; PFM system; planning institution; Green PFM framework; C-PIMA show Jordan; climate change planning; climate sensitivity; Public Investment Management Assessment (PIMA); Public investment spending
Cover IMF Staff Country Reports
Jordan: Request for an Extended Arrangement Under the Extended Fund Facility and Cancellation of the Current Arrangement Under the Extended Fund Facility-Press Release; Staff Report; and Statement by the Executive Director for Jordan
International Monetary Fund. Middle East and Central Asia Dept.
This paper presents Jordan’s Request for an Extended Arrangement under the Extended Fund Facility and Cancellation of the Current Arrangement under the Extended Fund Facility (EFF). Building on Jordan’s consistently strong performance under the previous program, the new EFF arrangement will support the authorities’ efforts toward maintaining macro-stability; further building resilience, and accelerating structural reforms to achieve stronger, more inclusive growth and job creation. Sound policymaking and support from international partners have helped Jordan to withstand well a series of shocks over the past few years and to maintain macro-stability, broad-based economic growth, and market access, and strengthen social safety nets. Going forward, supported by the new EFF arrangement, policies are focused on maintaining macro-stability and further building resilience, and accelerating structural reforms to achieve stronger, more inclusive growth and job creation, to tackle high unemployment. Further progress in implementing structural reforms to improve the business environment and attract private investment is crucial to create a dynamic private sector, foster job-rich growth, and achieve the objectives of Jordan’s Economic Modernization Vision.
Keywords:
EFF arrangement; reform agenda; economy well; government entity; Jordan compact; Fiscal stance; Arrears; Global
Cover IMF Working Papers
An Extended Quarterly Projection Model for the Central Bank of Jordan
Adel Al-Sharkas
,
Nedal Al-Azzam
,
Sarah AlTalafha
,
Rasha Abu Shawish
,
Ahmad Shalein
,
Auday Rawwaqah
,
Amany Al-Rawashdeh
,
Daniel Baksa
,
Mr. Philippe D Karam
, and
Mr. Jan Vlcek
The Central Bank of Jordan (CBJ) has developed a Forecasting and Policy Analysis System (FPAS) to serve as a reliable analytical framework for macroeconomic analysis, forecasting and decision-making under a pegged exchange rate regime. At the heart of the FPAS is the CBJ’s extended Jordan Analysis Model (JAM2.0). The model captures the monetary transmission mechanism and provides a consistent monetary policy framework that uses the exchange rate as an effective nominal anchor. This paper outlines the structure and properties of JAM2.0 and emphasizes the enhanced interplay and tradeoffs among monetary, fiscal, and foreign exchange management policies. Simulation and forecasting exercises demonstrate JAM2.0’s ability to match key stylized facts of the Jordanian economy, produce accurate forecasts of important macroeconomic variables, and explain the critical relationships among policies.
Keywords:
forecasting exercise; policy analysis; model forecasting; FX reserve management; headline inflation; Inflation; Exchange rate arrangements; Output gap; Real exchange rates; Global
Cover Policy Papers
IMF Approach to Central Bank Digital Currency Capacity Development
International Monetary Fund. Monetary and Capital Markets Department
The global central banking community is actively exploring Central Bank Digital Currencies (CBDCs), which may have a fundamental impact on both domestic and international economic and financial stability. Over 40 countries have approached the IMF to request assistance through CBDC capacity development (CD). Current IMF CBDC CD efforts have focused on facilitating peer learning and developing analytical underpinnings for staff advice to member countries. CD missions have aimed at helping country authorities answer questions about how to think about CBDCs. With more available country experiments and empirical evidence, IMF CD will evolve to provide increased value-added advice more tailored to country circumstances and more solidly anchored in empirical and analytical work, and strengthen synergies with surveillance. This paper sketches a multi-year strategy to address frequently asked questions related to CBDC and outlines the process for developing a CBDC Handbook which will document emerging lessons, analytical findings, and policy views. The paper (1) explains the IMF’s approach to CBDC CD; (2) summarizes member countries’ emerging questions and challenges regarding CBDC; and (3) introduces the CBDC Handbook by motivating its scope and elucidating its governance structure.
Keywords:
Central bank digital currencies; capacity development; Handbook; CBDC handbook; IMF's digital money strategy; IMF approach; IMF CD; handbook chapter; IMF staff encounter; Payment systems; Digital currencies; Financial sector stability; Global
Cover IMF Working Papers
Personal Income Taxes in the Middle East and North Africa: Prospects and Possibilities
Mario Mansour
and
Eric M. Zolt
Personal income taxes (PITs) play little or no role in the Middle East and North Africa, often yielding less than 2 percent of GDP in revenue—with the exception of few North African countries. This paper examines how PITs have evolved in recent decades, and what they might look like in the next 20 years. Top marginal tax rates on labor and business income of individuals have declined substantially, a trend that mirrors reductions in advanced and developing economies. Taxation of passive capital income has changed very little, and the revenue intake from this source remains low throughout the region (less than 1 percent of GDP on average and concentrated in oil-importing non-fragile states). Social security contributions (SSC) have increased in importance in nearly all MENA countries, and some countries have introduced additional payroll taxes. The combination of reduced marginal tax rates, light taxation of income from capital and business activities, and increase of SSC, have resulted in income tax systems that create disincentives to work and incentives for informality, and contribute little to government revenue and income redistribution. Given differences in economic and political structures, demographics, and starting points, the path to PIT/SSC reforms will vary across the region. Countries with relatively mature PIT/SSC systems, where revenue performance has improved in the past two decades, will increasingly need to balance the revenue and equity objectives against effciency objectives (in particular labor market incentives and infromality). Countries with no PITs will have to weigh whether a consumption tax/SSC system that mimic a flat tax on labor income is sufficient to diversify revenue away from oil and whether to adopt PITs to address rising income and wealth inequality. Finally, fragile states, who face more political volatility and weaker fiscal institutions, will have to focus on simplicity of tax design and collection to be able to raise revenue from PITs.
Keywords:
Personal income taxes; social security contributions; payroll taxes; fragile and conflict states; Middle East and North Africa; Gulf-Cooperation Council; SSC reform; SSC system; revenue performance; PIT objective; PIT revenue; Personal income tax; Income tax systems; Income; Income and capital gains taxes; Corporate income tax; North Africa; Middle East; East Africa; Global
Cover PIMA Handbook
PIMA Handbook
Public Investment Management Assessment, 1st Edition
International Monetary Fund. Fiscal Affairs Dept.

Abstract

This handbook is aimed at anyone who is involved in a Public Investment Management Assessment (PIMA) or who has a practical interest in public investment management. It is intended to be useful for country authorities, IMF staff, staff of other financial institutions and development organizations, and anyone who is interested in exploring different aspects of public investment management to understand how country systems are designed and how they work in practice.

Keywords:
IMF Public Investment Management Assessment; public investment; PIMA; PIM; public investment management; handbook; investment; government; governance; country; spending; infrastructure governance; investment efficiency; investment shock; investment spending; public investment spending; public investment and public-private partnerships (PPP); infrastructure; budget planning; planification; allocation; execution; fiscal rules; global; Asia and Pacific; Africa; Caribbean; Sub-Saharan Africa; Western Hemisphere; Middle East; investment trend; infrastructure investment spending; Pima report; investment planning; PPP investment; Budget planning and preparation; Capital spending; Capital budget
Cover IMF Staff Country Reports
Jordan: Technical Assistance Report-Forecasting Framework for Currency in Circulation
International Monetary Fund. Monetary and Capital Markets Department
The currency in circulation forecasting model presently used by the Central Bank of Jordan is aligned with international practices and provides a solid basis for liquidity management. The central bank uses an Auto Regressive Integrated Moving Average (ARIMA) model with many indicator variables to model binary seasonality and to capture special events. The ARIMA model is fitted on daily currency in circulation data using a standard maximum likelihood estimator. This ARIMA approach is aligned with the models traditionally used by central banks in emerging and middle-income countries.
Keywords:
moving average; staff level agreement; IMF team; hierarchy forecasting; ARIMA model; Monetary base; Currency issuance; Open market operations; Global
Cover Growth and Adjustment in IMF-Supported Programs
Growth and Adjustment in IMF-Supported Programs
International Monetary Fund. Independent Evaluation Office

Abstract

This evaluation assesses how well IMF-supported programs helped to sustain economic growth while delivering adjustment needed for external viability over the period 2008–19. The evaluation finds that the Fund’s increasing attention to growth in the programs has delivered some positive results. Specifically, it does not find evidence of a consistent bias towards excessive austerity in IMF-supported programs. Indeed, programs have yielded growth benefits relative to a counterfactual of no Fund engagement and boosted post-program growth performance. Notwithstanding these positive findings, program growth outcomes consistently fell short of program projections. Such shortfalls imply less protection of incomes than intended, fuel adjustment fatigue and public opposition to reforms, and jeopardize progress towards external viability. The evaluation examines how different policy instruments were applied to support better growth outcomes while achieving needed adjustment. Fiscal policies typically incorporated growth-friendly measures but with mixed success. Despite some success in promoting reforms and growth, structural conditionalities were of relatively low depth and their potential growth benefits were not fully realized. Use of the exchange rate as a policy tool to support growth and external adjustment during programs was quite limited. Lastly, market debt operations were useful in some cases to restore debt sustainability and renew market access, yet sometimes were too little and too late to deliver the intended benefits. The evaluation concludes that the IMF should seek to further enhance program countries’ capacity to sustain activity while undertaking needed adjustment during the program and to enhance growth prospects beyond the program. Following this conclusion, the report sets out three recommendations aimed at strengthening attention to growth implications of IMF-supported programs, including the social and distributional consequences.

Keywords:
IMF programs; growth optimism; austerity bias; structural conditionality; debt sustainability; fiscal policy; exchange rate policy; PRGT program; debt operation; IMF support; reviews IMF policy; program objective; Fiscal consolidation; Real effective exchange rates; Structural reforms; Global; Middle East and Central Asia; West Africa; Sub-Saharan Africa; Caribbean; Europe
Cover IMF Staff Country Reports
Jordan: First Review Under the Extended Fund Facility Arrangement and Request for a Waiver of Nonobservance and Modifications of Performance Criteria, and Rephasing of Access-Press Release; Staff Report; and Statement by the Executive Director for Jordan
International Monetary Fund. Middle East and Central Asia Dept.
Timely containment, a large monetary stimulus, and targeted fiscal measures helped save lives and livelihoods during the first COVID-19 wave, but a significant second wave is still unfolding. The economic and human impact has been sizeable: real GDP is expected to decline by 3 percent in 2020; unemployment has surged to record levels; tourism and remittances have declined; and revenues of the central government and of other public sector entities have dropped, raising public debt to 90 percent of GDP. A new government and parliament have been ushered in, with welcome continuity in reform commitment.
Keywords:
ISCR; CR; staff appraisal; draft budget law; level staff; reform agenda; SSC's labor support scheme; COVID-19; Arrears; Fiscal stance; Global