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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 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 Analytical Notes
Exploring Multilateral Platforms for Cross-Border Payments
Bank of International Settlements
,
International Monetary Fund
, and
World Bank
This report provides an assessment of whether and how multilateral platforms could bring meaningful improvements to the cross-border payments ecosystem. It was written by the Bank for International Settlements’ Committee on Payments and Market Infrastructures (CPMI) in collaboration with the BIS Innovation Hub, the International Monetary Fund (IMF) and the World Bank.1 The report analyses the potential costs and benefits of these platforms and how they might alleviate some of the cross-border payment frictions. It also evaluates the risks, barriers and challenges to establishing multilateral platforms and explores two paths for their evolution. The analysis is based on a stocktake, conducted by the CPMI, of existing and potential multilateral platforms as well as bilateral discussions with existing platform operators.
Keywords:
multilateral platform; payment message standard; cross-border payment friction; platform operator; payments programme; Payment systems; Currencies; Public sector; Correspondent banking; Global; Southern Africa; West Africa; Central America
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 Working Papers
Digitalization and Resilience: Firm-level Evidence During the COVID-19 Pandemic
Nordine Abidi
,
Mehdi El Herradi
, and
Sahra Sakha
The COVID-19 pandemic has resulted in an unprecedented shock to firms with adverse consequences for existing productive capacities. At the same time, digitalization has increasingly been touted as a key pathway for mitigating economic losses from the pandemic, and we expect firms facing digital constraints to be less resilient to supply shocks. This paper uses firm-level data to investigate whether digitally-enabled firms have been able to mitigate economic losses arising from the pandemic better than digitally-constrained firms in the Middle East and Central Asia region using a difference-in-differences approach. Controlling for demand conditions, we find that digitally-enabled firms faced a lower decline in sales by about 4 percentage points during the pandemic compared to digitally-constrained firms, suggesting that digitalization acted as a hedge during the pandemic. Against this backdrop, our results suggest that policymakers need to close the digital gap and accelerate firms’ digital transformation. This will be essential for economies to bounce back from the pandemic, and build the foundations for future resilience.
Keywords:
COVID-19; digitalization; technology adoption; economic resilience; Middle East and Central Asia; digitally-enabled firm; digitally-constrained firm; firms in the Middle East; firm-level data; digital transformation; Digitalization; Financial inclusion; Foreign corporations; Asia and Pacific; Africa; Middle East; North Africa
Cover IMF Staff Country Reports
Jordan: Second Review Under the Extended Arrangement Under the Extended Fund Facility, Request for Augmentation of Access, and Modification of Performance Criteria-Press Release; Staff Report; Staff Statement; and Statement by the Executive Director for Jordan
International Monetary Fund. Middle East and Central Asia Dept.
Early success in containing the spread of COVID-19 has been challenged by two subsequent waves of the pandemic. Timely and effective fiscal and monetary policy responses helped contain the contraction in activity to 1.6 percent in 2020, shallower than the 3 percent expected at the first review. The authorities have also made significant efforts to protect jobs and the most vulnerable. Still, unemployment has surged to a record 25 percent in Q4 2020, with youth unemployment at 55 percent. The impact on fiscal and external balances has been significant, with public debt reaching 88 percent of GDP at end-2020. Nonetheless, despite the challenges from new virus variants and weaker tourism prospects, macroeconomic stability has been maintained, thanks to the authorities’ proactive policy stance; and a moderate 2 percent growth rate is projected for 2021 (slightly below the 2.5 percent projected in the first review), with a near-full reopening expected in the summer. The new parliament extended a vote of confidence to the incoming government in January, and approved the 2021 budget—consistent with the program—in February.
Keywords:
staff appraisal; post audit; CBJ Law; procurement process; lender of last resort function of the CBJ; COVID-19; Arrears; Fiscal stance; Global
Cover Policy Papers
Ensuring Financial Stability in Countries with Islamic Banking
International Monetary Fund
This paper discusses the need for ensuring financial stability in countries with Islamic Banking (IB). IB continues to grow rapidly, in size and complexity, posing a challenge to supervisory authorities and central banks. The legal environment within which IBs operate can be complex and challenging and may have implications for financial stability. IBs operate in diverse legal environments, some of which are more evolved than others in providing strong legal underpinnings for IB. International governance standards apply to IB but need to be customized to consider IBs’ distinct governance features. Significant progress has been achieved in developing prudential standards for IB, although broader implementation and more consistent application are needed. Progress has been slow in developing IB’s liquidity management and money markets. In recent years, hybrid financial products in IB have emerged that replicate aspects of conventional finance in an IB context, raising financial stability concerns. The IMF has played an important role in promoting financial stability in IB jurisdictions, working closely with IB standard setters, and international organization to shape IB standards and promote best practices.
Keywords:
PP; IB jurisdiction; balance sheet; IB industry; IB operation; IB practice; IB product; IB service; IB depositor; IB activity; IB products; IB governance; IBS stability; Islamic banking; Legal support in revenue administration; Deposit insurance; Capital adequacy requirements; Global; Middle East; East Asia; Central Asia; Sub-Saharan Africa
Cover IEO Annual Report 2015
IEO Annual Report 2015
International Monetary Fund. Independent Evaluation Office

Abstract

The twelfth Annual Report of the Independent Evaluation Office (IEO) describes activities during financial year 2015 (May 1, 2014–April 30, 2015). During the financial year, the IEO completed an evaluation of the IMF response to the global financial and economic crisis. It also issued two reports updating three past evaluations: The IMF’s Approach to Capital Account Liberalization: Revisiting the 2005 IEO Evaluation; and Revisiting the IEO Evaluations of the IMF’s Role in Poverty Reduction Strategy Papers (PRSP) and the Poverty Reduction and Growth Facility (PRGF) (2004) and the IEO Evaluation of IMF and Aid to Sub-Saharan Africa (2007). In addition, the Executive Board discussed the IEO evaluation of Recurring Issues from a Decade of Evaluation: Lessons for the IMF, which was issued to the Board in FY2014. The paper reports on the IEO budget and outreach efforts in the financial year. This paper also summarizes the evaluations on Recurring Issues and the IMF Response to the Financial and Economic Crisis, the Board discussions of these evaluations, and the two updates of past evaluations. It also discusses follow-up on IEO evaluations and addresses ongoing evaluations and the IEO work program going forward. A table lists the IEO evaluations and evaluation updates completed or in progress.

Keywords:
IEOR; IEO; evaluation; IEO evaluation; financial crisis; IEO FY2016; IMF performance; IMF response; evaluation update; budget proposal; Capital account liberalization; Capital flows; Capital flow management; Internal audit; Sub-Saharan Africa
Cover Policy Papers
The Fund's Lending Framework and Sovereign Debt-Further Considerations
International Monetary Fund
In discussing the June 2014 paper, Executive Directors broadly supported staff’s proposal to introduce more flexibility into the Fund’s exceptional access framework to reduce unnecessary costs for the member, its creditors, and the overall system. Directors’ views varied on staff’s proposal to eliminate the systemic exemption introduced in 2010. Many Directors favored removing the exemption but some others preferred to retain it and requested staff to consult further with relevant stakeholders on possible approaches to managing contagion. This paper offers specific proposals on how the Fund’s policy framework could be changed, presents staff’s analysis on the specific issue of managing contagion, and addresses some implementation issues. No Board decision is proposed at this stage. The paper is consistent with the Executive Board’s May 2013 endorsement of a work program focused on strengthening market-based approaches to resolving sovereign debt crises.
Keywords:
PP; fund's lending framework; lending; further consideration; annex; framework; financing commitment; Market access criterion; debt restructuring; prospects lie; Debt restructuring; Debt sustainability; Spillovers; Global
Cover Policy Papers
Review of the IMF's Communications Strategy
International Monetary Fund
The framework guiding the IMF’s communications—established by the Executive Board in 2007—has enabled the institution to respond flexibly to the changing global context. The framework is based on four guiding principles: (i) deepening understanding and support for the Fund’s role and policies; (ii) better integrating communications into the IMF’s daily operations; (iii) raising the impact of new communications materials and technologies; and (iv) rebalancing outreach efforts to take account of different audiences. In addition, greater emphasis has been placed on strengthening internal communications to help ensure institutional coherence in the Fund’s outreach activities. Continued efforts are needed to strengthen communications going forward. Several issues deserve particular attention. First, taking further steps to ensure clarity and consistency in communication in a world where demand for Fund services continues to rise. Second, doing more to assess the impact of IMF communications and thus better inform efforts going forward. Third, engaging strategically and prudently with new media—including social media.
Keywords:
PP; Fund; staff; communications; director; transparency policy; Fund communications; communications strategy; Board communications; IMF social media account; Communications in revenue administration; Social networks; Civil society organizations; Global financial crisis of 2008-2009; Global; Africa