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Middle East and Central Asia > Jordan

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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 IMF Staff Country Reports
Jordan: Fifth Review Under the Extended Arrangement Under the Extended Fund Facility and Request for Modification of Performance Criteria-Press Release; Staff Report; and Statement by the Executive Director for Jordan
International Monetary Fund. Middle East and Central Asia Dept.
This paper discusses Jordan’s Fifth Review under the Extended Arrangement under the Extended Fund Facility and Request for Modification of Performance Criteria. Jordan has continued a broad-based recovery amid a challenging external environment, thanks to the authorities’ effective policy response. Financial challenges in the electricity sector are exacerbating fiscal pressures, particularly as food subsidies have increased considerably on the back of high international prices. As agreed in the fourth review, the authorities have eliminated the subsidies on gasoline and diesel. They also met structural benchmarks on introducing goods and services tax place of taxation rules; strengthening the governance of fiscal incentives; improving the competition framework; removing legal impediments to female employment; implementing a foreign direct investment survey; and rolling out e-procurement. The 2022 and 2023 fiscal targets are being relaxed slightly to accommodate higher food-related spending. The authorities remain committed to reducing public debt/gross domestic product to 80 percent by 2027. IMF expects the implications for the program to be manageable, given the authorities’ ownership and commitment to program objectives and Jordan’s continued ability to attract development partner support.
Keywords:
staff appraisal; revenue generation; financing requirement; cabinet adoption of an action plan; fund staff; Arrears; Fiscal stance; Global
Cover Finance & Development
Finance & Development, December 2017
International Monetary Fund. External Relations Dept.
This paper analyzes that although demands for political transformation commanded the world’s attention, those calls were largely motivated by unresolved socioeconomic issues. Demonstrators in the streets of Cairo and Tunis demanding bread, dignity, and social justice expressed widely held aspirations for basic economic rights, along with greater prosperity and equity. Almost seven years later, notable progress has been achieved in terms of public finance reforms. However, these reforms still have a long way to go to reduce disparities in the distribution of wealth within most countries of the region or narrow the development gaps between them. Countries in the Middle East and North Africa now face a stark choice between short-term retrenchment and resolute pursuit of the long-term reforms needed to secure their future economic prosperity. Forsaking important economic adjustments needed to strengthen inclusive growth and modernize the state and private sectors would set the region back, possibly for decades.
Keywords:
FD; F&D; iron lid; country; oil-producing country; economy; development issue; government policy; paperback ISBN 978-1-51359-036-3; Oil; Women; Energy subsidies; Capital flows; Currencies; Global; Middle East; North Africa; East Africa; Africa; Climate change; oil discovery; Oil prices
Cover IMF Staff Country Reports
Jordan: 2017 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Jordan
International Monetary Fund. Middle East and Central Asia Dept.
This 2017 Article IV Consultation highlights that Jordan has made significant progress since the 2014 Article IV Consultation but pressing challenges remain. The gradual pick-up in growth from 2010 to 2014 ended in 2015, with real GDP growth decelerating from 2.4 percent in 2015 to 2 percent in 2016. Labor market conditions have remained challenging, particularly for youth and women, with the unemployment rate increasing to 15.8 percent in the second half of 2016. Despite considerable progress and recent improvements, the outlook remains challenging. Real GDP growth is projected to reach 2.3 percent in 2017, while inflation is expected to stabilize at about 2.5 percent by year-end.
Keywords:
ISCR; CR; deposit dollarization; electricity tariff; IMF director; central bank of Jordan; staff appraisal; Oil prices; Tariffs; Credit; Global
Cover Policy Papers
If Not Now, When? Energy Price Reform in Arab Countries; April 2017 Rabat, Morocco
International Monetary Fund
Regulating energy prices has been a common practice around the world. The objective is, generally, to facilitate access to energy products, which are central to people’s well-being and countries’ economic development. However, energy price regulation also leads to wasteful and excessive consumption, discourages investment in the energy sector, and locks in inefficient technologies. Low energy prices also result in subsidies that erode fiscal space, while benefits for the poor are limited. All these effects have been evident in Arab countries, where domestic energy prices are among the lowest in the world. The current environment of low oil prices offers a unique opportunity for change. Lessons from international experience suggest how well thought-out and sequenced reforms can be successful.
Keywords:
PP; price; country; government; price gap; energy price; country authorities; reference price; oil price; Energy pricing; Energy prices; Oil prices; Fuel prices; Energy subsidies; Global
Cover Staff Discussion Notes
The Economic Impact of Conflicts and the Refugee Crisis in the Middle East and North Africa
Mr. Bjoern Rother
,
Ms. Gaelle Pierre
,
Davide Lombardo
,
Risto Herrala
,
Ms. Priscilla Toffano
,
Mr. Erik Roos
,
Mr. Allan G Auclair
, and
Ms. Karina Manasseh
In recent decades, the Middle East and North Africa region (MENA) has experienced more frequent and severe conflicts than in any other region of the world, exacting a devastating human toll. The region now faces unprecedented challenges, including the emergence of violent non-state actors, significant destruction, and a refugee crisis bigger than any since World War II. This paper raises awareness of the economic costs of conflicts on the countries directly involved and on their neighbors. It argues that appropriate macroeconomic policies can help mitigate the impact of conflicts in the short term, and that fostering higher and more inclusive growth can help address some of the root causes of conflicts over the long term. The paper also highlights the crucial role of external partners, including the IMF, in helping MENA countries tackle these challenges.
Keywords:
SDN; conflict country; refugee crisis; central bank; economic activity; country authorities; Middle East and North Africa; conflicts; refugees; macroeconomic policy; economic spillovers; post-conflict reconstruction; international community; MENA region; MENA country; physical capital; financial support; IMF staff calculation; growth potential; MENA conflict country; Labor markets; Infrastructure; Inflation; Middle East; North Africa; Global; East Africa; Europe
Cover IMF Working Papers
The U.S. Oil Supply Revolution and the Global Economy
Mr. Kamiar Mohaddes
and
Mr. Mehdi Raissi
This paper investigates the global macroeconomic consequences of falling oil prices due to the oil revolution in the United States, using a Global VAR model estimated for 38 countries/regions over the period 1979Q2 to 2011Q2. Set-identification of the U.S. oil supply shock is achieved through imposing dynamic sign restrictions on the impulse responses of the model. The results show that there are considerable heterogeneities in the responses of different countries to a U.S. supply-driven oil price shock, with real GDP increasing in both advanced and emerging market oil-importing economies, output declining in commodity exporters, inflation falling in most countries, and equity prices rising worldwide. Overall, our results suggest that following the U.S. oil revolution, with oil prices falling by 51 percent in the first year, global growth increases by 0.16 to 0.37 percentage points. This is mainly due to an increase in spending by oil importing countries, which exceeds the decline in expenditure by oil exporters.
Keywords:
WP; Tight oil; shale oil; fracking revolution; oil price decline; oil supply; global macroeconometric modeling; international business cycle; oil exporter; oil-price shock; equity price; oil importer; error correction term; oil price data; oil-price environment; standard deviation; MENA oil importer; commodity exporter; price of oil; oil price environment; Oil prices; Oil; gas and mining taxes; Oil production; Vector autoregression; Global; Middle East; North Africa
Cover IMF Staff Country Reports
Saudi Arabia: Selected Issues
International Monetary Fund. Middle East and Central Asia Dept.
This Selected Issues paper assesses the importance of oil and interest rate spillovers for Saudi Arabia. Oil prices have fallen by more than 40 percent since mid-2014 while the Federal Reserve is expected in the coming months to begin raising its policy rate at the beginning of a gradual tightening cycle. Given the importance of oil to the economy and the peg of the riyal to the U.S. dollar, these are two key developments for Saudi Arabia. Although a temporary drop in oil prices would likely have little effect on the economy and banks given the financial cushions that have been built-up, a longer-lasting period of low oil prices would have a more significant impact.
Keywords:
ISCR; CR; price; oil price; private sector; government spending; equity price; energy price; NPL ratio; price reform; Energy prices; Oil prices; Fuel prices; Labor markets; Electricity; Global
Cover IMF Staff Country Reports
Jordan: Seventh and Final Review Under the Stand-By Arrangement and Proposal for Post-Program Monitoring
International Monetary Fund. Middle East and Central Asia Dept.
This paper discusses Jordan’s Seventh and Final Review Under the Stand-by Arrangement and Proposal for Post-program Monitoring. Jordan’s program has helped the economy weather different shocks. Performance has been good in the run-up to the final review. Although growth has been affected by regional tensions, the current account deficit is narrowing, foreign reserves remain at an adequate level, and inflation is low. All end-April performance criteria were met with comfortable margins, and policies are on track to meet their 2015 targets while fiscal structural reform is moving forward. The IMF staff supports the completion of the seventh review and the related purchase.
Keywords:
ISCR; CR; gas supplies; disbursement of SDR; macroeconomic fundamentals; executive board's decision; cost; policy rate; Credit; Government debt management; Public sector; Oil prices; Global
Cover Policy Papers
Arab Countries in Transition - Economic Outlook and Key Challenges
International Monetary Fund
The Arab Countries in Transition (ACTs) have had diverging trajectories over the past year and face an uncertain outlook.1 Improvements in the European economy, lower oil prices, and some progress on the policy front have provided tailwinds to growth, which is expected to pick up significantly in Egypt and Morocco. At the same time, unemployment remains high. Moreover, several of the ACTs have also suffered from intensifying and spreading conflicts that cause widespread human suffering and sizeable economic challenges. Libya and Yemen are directly affected, while spillovers from these conflicts and the civil wars in Iraq and Syria weigh on Jordan and Tunisia, as well as other countries in the region (e.g., Lebanon, Djibouti), Turkey and Europe. These spillovers come most prominently in the form of large refugee flows, deteriorating security, and pressures on economic infrastructures and labor markets. All these factors add urgency to the need in the Arab countries to strengthen economic resilience and address long-standing sources of inequity and exclusion. Coordinated and scaled-up support from the international community will be also critical in stabilizing conditions in the region, addressing the refugee crisis, and securing a more promising economic future for the ACTs in this challenging environment.
Keywords:
PP; government; deficit; financing; country; General government balance; budget deficit; job creation; exchange rate; labor market; economic activity; excl. grant; GDP growth; Current account deficits; Inflation; Government debt management; Oil prices; Global