Abstract

Jordan has made major progress over the past several years in macroeconomic stabilization and transformation in its economic structure. Its impressive performance has been the result of a persistent, courageous, and difficult process of adjustment and structural reform, which started in 1989 and intensified in 1992. The IMF and the World Bank have been associated closely with this process and at the request of the Jordanian authorities continue to assist them in these efforts, particularly in the context of a rapidly changing regional environment. The authorities’ efforts to date have been supported by two stand-by arrangements (1989 and 1992) from the IMF, and by a three-year extended arrangement under the extended Fund facility (EFF) that was approved in May 1994. Jordan’s efforts have also been supported by several World Bank sectoral lending programs, extended debt reschedulings from Paris Club official bilateral creditors and commercial banks, and financial assistance from the European Union.

Jordan has made major progress over the past several years in macroeconomic stabilization and transformation in its economic structure. Its impressive performance has been the result of a persistent, courageous, and difficult process of adjustment and structural reform, which started in 1989 and intensified in 1992. The IMF and the World Bank have been associated closely with this process and at the request of the Jordanian authorities continue to assist them in these efforts, particularly in the context of a rapidly changing regional environment. The authorities’ efforts to date have been supported by two stand-by arrangements (1989 and 1992) from the IMF, and by a three-year extended arrangement under the extended Fund facility (EFF) that was approved in May 1994. Jordan’s efforts have also been supported by several World Bank sectoral lending programs, extended debt reschedulings from Paris Club official bilateral creditors and commercial banks, and financial assistance from the European Union.

This paper analyzes recent developments, macroeconomic policies, and structural reforms in Jordan and focuses on several central aspects of the country’s recent experience. Included are discussions on the factors underpinning growth in the form of structural reforms in key areas, such as public finance, the financial system, the trade and exchange regime, Jordan’s external debt-management strategy, and the dynamics of the public debt and its sustainability (taking into account the recent stance of fiscal policy).