Jordan: Fifth Post-Program Monitoring Discussions Informational Annex
Author:
International Monetary Fund
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Publication Date:
10 Aug 2007
eISBN:
9781451820379
Language:
English
Keywords:
ISCR; CR; Fifth Post-Program Monitoring Discussions; monitoring; fund; fund-supported program; Jordan; ROSC update mission; DOS publication; country assistance strategy; data ROSC mission; PPI sample; Monetary statistics; Data dissemination; Balance of payments statistics; PPI calculation
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This paper focuses on the Fifth Post-Program Monitoring Discussions with Jordan. Jordan’s economic performance remains strong. Growth is robust, core inflation is contained, the current account deficit is narrowing, reserves are comfortable, and the fiscal situation continues to improve. The Fifth Post-Program Monitoring Discussions focused on a large current account deficit, still high public debt, and rapid credit growth. The authorities consider the outlook for the Jordanian economy as strong, including on growth, inflation, and the current account.

Abstract

This paper focuses on the Fifth Post-Program Monitoring Discussions with Jordan. Jordan’s economic performance remains strong. Growth is robust, core inflation is contained, the current account deficit is narrowing, reserves are comfortable, and the fiscal situation continues to improve. The Fifth Post-Program Monitoring Discussions focused on a large current account deficit, still high public debt, and rapid credit growth. The authorities consider the outlook for the Jordanian economy as strong, including on growth, inflation, and the current account.

Appendix I: Statistical Issues

1. The quality and timeliness of data are adequate to conduct Article IV consultation and post-program monitoring discussions.

2. A mission from the IMF’s Statistics Department (STA) visited Amman during December 17–21, 2003 to update the data module of the Report on the Observance of Standards and Codes (ROSC) prepared by the February 2002 mission. The main objectives of this mission were to (i) review and document the actions undertaken by the authorities to address the issues raised by the 2002 data ROSC mission for national accounts, price, government finance, monetary, and balance of payments (BOP) statistics; and (ii) discuss the authorities’ plans for further improving the quality of the statistics. A Special Data Dissemination Standard (SDDS) mission visited Amman during October 29–November 8, 2006 to assess data dissemination practices against the requirements of the SDDS and assist preparations for subscription to the SDDS. Jordan is a participant in the General Data Dissemination System (GDDS), and its metadata were initially posted on the IMF’s Dissemination Standards Bulletin Board (DSBB) in September 2000. Financial sector metadata (except for the stock market category) were last updated in December 2003. A national accounts statistics technical assistance mission visited Amman during December 10–21, 2006 to assist the department of statistics (DOS) with their project to develop the Supply and Use Tables (SUT).

3. Real sector. During the past two years, progress has been made toward enhancing the quality of national accounts statistics. However, the implementation of plans for improvement will require a strong commitment and allocation of additional resources. The main actions taken by the DOS in the area of national accounts statistics, since the 2002 ROSC mission, include:

  • compilation of import-export price indices for the calculation of GDP at constant prices;

  • estimation of household final consumption expenditure based on the 2002 Household Expenditure and Income Survey (HEIS);

  • updating of supply and use of tables for the assessment and valuation of the statistical output;

  • preparation of a study on the revision to the GDP series for 1976–2002;

  • conducting workshops to enhance quality awareness of data providers and users, and to monitor user needs;

  • adoption of a comprehensive training program for national accounts statistics compilers; and

  • dissemination of national accounts data at the two-digit level of the international standard industrial classification of economic activities.

4. With respect to price statistics, even though the CPI and PPI were already considered of good quality by the 2002 data ROSC mission, the DOS has short-term plans for improvements leading to full observance of international best practices. These plans include:

  • incorporation of owner-occupied dwelling services in the CPI;

  • updating of CPI weights based on the 2002 HEIS;

  • dissemination of regional CPIs; and

  • creation of core inflation.

5. With respect to the serviceability and accessibility of national accounts and price statistics, the DOS has short-term plans to:

  • inform the public about the planning minister’s access to data prior to public release (the ministry of planning has oversight responsibilities over the DOS);

  • continue the program to increase quality awareness and monitor user needs;

  • disseminate a statement on revision policy and practices in the DOS publications and website;

  • disseminate an advance calendar for the release of national accounts and price statistics; and

  • update the GDDS metadata on a more timely basis.

6. Government finance. An STA technical assistance mission visited Amman in April 2004 and found significant improvements in government finance statistics since the 2002 data ROSC mission. These improvements have been facilitated by the establishment of a statistical division in the ministry of finance (MOF) and the adoption of the Financial Management Reform Project (FMRP). The FMRP is guided by an interministerial committee headed by the secretary general of the MOF. Important actions that have already been taken include:

  • the regular publication of data on the operations of the consolidated general government; and

  • initiation of migration to the methodology of the Government Finance Statistics Manual 2001 (GFSM 2001)—the authorities provide data in GFSM 2001 format for publication in the Government Finance Statistics Yearbook. The scope of these data is, however, limited to the operations of the central government budget and should be expanded.

7. Some of the actions contemplated in the comprehensive plan to improve the quality of government finance statistics include:

  • dissemination of data on central and general government operations based on the classification and sectorization systems recommended by the GFSM 2001;

  • seeking feedback from users of government finance statistics to monitor their needs;

  • establishment of regular procedures for the verification of internal and intersectoral consistency of government finance statistics;

  • dissemination of a statement on the revision policy, an advance release calendar, and more detailed metadata in the MOF publications and website; and

  • updating of GDDS metadata on a more timely basis.

8. Monetary statistics. Monetary data for the Central Band of Jordan (CBJ) and the commercial banks are reported and published on a monthly basis. At present, consistency checks between government finance statistics and monetary statistics are not conducted. However, the CBJ authorities informed the 2003 ROSC update mission that the CBJ Research Department, which is responsible for the collection and compilation of the monetary statistics, proposed the establishment of an interagency group to monitor the intersectoral consistency of macroeconomic statistics. Further, actions are being taken to improve the quality of the source data and the methodological soundness of the statistical output. In particular, the CBJ is:

  • reviewing a new set of report forms for banking institutions, which the Banking Supervision Department prepared to facilitate better classification and sectorization of the analytical accounts; and

  • promoting the adoption of international accounting standards (IAS) by the commercial banks. Also, the Administrative and Financial Department and the Banking Supervision Department of the CBJ are in the process of adopting the IAS, in particular, with respect to valuation procedures and the recording of financial derivatives within the balance sheet.

Nevertheless, the reporting of monetary data for publication in International Financial Statistics remains irregular and little progress has been achieved so far by the CBJ in implementing the Standardized Report Forms for reporting monetary data to the Fund.

  • Balance of payments (BOP) statistics. The establishment of a BOP division within the Research Department of the CBJ and the allocation of additional resources have facilitated the development of a comprehensive program for the improvement of BOP statistics, including a detailed action plan to address weaknesses in all data quality dimensions. These efforts were supported by long-term STA technical assistance involving two peripatetic missions. The CBJ has adopted the methodology of the fifth edition of the Balance of Payments Manual (BPM5) for the compilation of the BOP statistics and the international investment position (IIP), and has disseminated data in the BPM5 format. Further, the CBJ started compiling and disseminating the reserves template on the CBJ’s website. The template has been reviewed by STA, and some minor outstanding issues will be addressed by an upcoming mission. The implementation of surveys in the area of services is important for the further improvement of the quality of the BOP statistics. Middle East Technical Assistance Center (METAC) provided technical assistance to the DOS in March 2005 on the construction of a foreign direct investment (FDI) survey. In October 2006, METAC also conducted an SDDS assessment mission. Preliminary results of the FDI survey containing data for 2004 and 2005 were presented by the DOS, the Investment Promotion Board, and the CBJ at a press conference on May 22, 2007. Efforts are continuing to complete the coverage of the IIP, including portfolio investment liabilities and private external debt.

Jordan: Common Indicators Required For Surveillance As of May 25, 2007

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Includes reserve assets pledged or otherwise encumbered as well as net derivative positions.

Both market-based and officially-determined, including discount rates, money market rates, rates on treasury bills, notes and bonds.

Foreign, domestic bank, and domestic nonbank financing.

The general government consists of the central government (budgetary funds, extra budgetary funds, and social security funds) and state and local governments.

Including currency and maturity composition.

Daily (D); weekly (W); monthly (M); quarterly (Q); annually (A); irregular (I); not available (NA).

Reflects the assessment provided in the substantive update of the data ROSC published on February 2004 for the dataset corresponding to the variable in each row. The assessment indicates whether international standards concerning (respectively) concepts and definitions, scope, classification/sectorization, and basis for recording are fully observed (O), largely observed (LO), largely not observed (LNO), not observed (NO), or not available (NA).

Same as footnote 7, except referring to international standards concerning (respectively) source data, statistical techniques, assessment and validation of source data, assessment and validation of intermediate data and statistical outputs, and revision studies.

Appendix II: Relations with the Fund

(As of April 30, 2007)

I. Membership Status: Joined: August 29, 1952; Article VIII

II. General Resources Account:

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III. SDR Department:

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IV. Outstanding Purchases and Loans:

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V. Latest Financial Arrangements:

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VI. Projected Obligations to Fund (Expectations Basis): (SDR million; based on existing use of resources and present holdings of SDRs)

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VII. Safeguards Assessment: Under the Fund’s safeguards assessment policy, the CBJ was subject to a full assessment with respect to the Stand-By Arrangement (SBA), which was approved on July 3, 2002 and expired on July 2, 2004. The assessment was completed on June 27, 2003, and concluded that the CBJ has made progress in strengthening its safeguards, as recommended in the previous assessment of May 2001. The assessment proposed a set of measures, the majority of which have been implemented. Implementation of the remaining recommendations is being monitored by staff.

VIII. Exchange System: The Jordanian dinar is fully convertible and is officially pegged to the SDR. In practice, the authorities have tightly linked its exchange rate to the U.S. dollar since October 1995, at JD 1 = $1.41044.

IX. Article IV Consultation: The 2006 Article IV consultation was concluded by the Executive Board on March 5, 2007. Two Financial Sector Assessment Program missions visited Jordan in August and September 2003, and the Financial System Stability Assessment (FSSA) was published in January 2004. The Ex Post Assessment (EPA) of Jordan’s of Longer-Term Program Engagement was published in November 2005.

X. Technical Assistance: Extensive technical assistance has been provided to Jordan over the years (Table A.3).

Table A.3.

Technical Assistance, 1999–2007

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XI. Documents:

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Appendix III: World Bank Group Strategy and Operations

9. As of April 30, 2007, Jordan had received 68 World Bank (Bank) loans, 2 guarantees, and 15 IDA credits totaling $2,225 million net of cancellations and terminations. Of the $2,346 million, $2,126 million have been disbursed to-date. All the credits and 61 of the loans have been fully disbursed. There are seven active projects in the Bank’s portfolio for a total of $280 million. Overall performance of the portfolio is good, both from the perspective of implementation and development impact. This reflects the generally good project implementation capacity of Jordanian institutions, Jordan’s strong ownership of the program, and the quality of the dialogue between the Bank and the government of Jordan. The International Finance Corporation (IFC) has made cumulative loan and equity investment commitments of $279 million and about $70 million in syndications as of April 30, 2007.

10. The new Joint World Bank-IFC country assistance strategy (CAS) for 2006–10, endorsed by the Bank’s Executive Board in May 2006, is aligned with the government priorities, as expressed in particular in the 10-year National Agenda, of poverty alleviation and the creation of higher productivity jobs, while assisting the country in its transition through the medium-term economic shocks. This CAS sets out a four-year program organized in four cross-sectoral clusters:

  • strengthening the investment environment and building human resources for value-added, skill-intensive, and knowledge-based economy;

  • supporting local development through increased access to services and economic opportunities;

  • reforming social assistance and expanding inclusion; and

  • restructuring public expenditures and supporting public sector reform.

11. The first two clusters tackle issues related to private investment and job creation, respectively at the macro level and at the local level. The third cluster deals with programs to support those who cannot by themselves achieve sufficient welfare. The last cluster is focused on strengthening the public administration’s ability to design and implement development polices, including improvements in the government budget, as the main tools of public policy. Important cross-cutting issues, such as gender and the environment, will be mainstreamed into the clusters. Various sectoral concerns, such as water and energy, will be integrated in these programmatic clusters through thematic approach. The CAS mix among possible policy lending, investment lending, and analytical services reflects the emerging needs with respect to short-term financial challenges and longer-term institutional developments, with a lending ceiling of up to US$540 million over four years.

12. Two investment loans were approved this fiscal year aiming to assist Jordan achieve a regionally balanced and equitable growth including access to services, employment opportunities, and private investments outside Amman. One partial risk guarantee for the Amman East 370 MW power plant was also approved this FY.

13. World Bank Group support to private sector development will continue to focus on improving the investment environment, public private partnership, partial risk guarantees for major projects (envisaged to attract private sector participation and to provide a better financial package for critical projects in water and energy), and, in the case of IFC, direct investment. The IFC has been active in Jordan for many years and has a current portfolio of $41 million in eleven companies as of April 30, 2007. IFC places a high priority on business development to seek investment opportunities in the following areas: (i) infrastructure development to encourage foreign direct investment; (ii) financial sector development (e.g., microfinance and trade finance); and (iii) export-oriented and foreign exchange generating investments. The IFC’s advisory activities in Jordan intend to fill the gaps and address critical areas for private sector development, such as improving the investment climate.

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Cover IMF Staff Country Reports
Jordan: Fifth Post-Program Monitoring Discussions: Staff Report; and Press Release on the Executive Board Consideration
Author:
International Monetary Fund
Volume/Issue:
Volume 2007: Issue 284
Publisher:
International Monetary Fund
ISBN:
9781451820379
ISSN:
1934-7685
Pages:
44
DOI:
https://doi.org/10.5089/9781451820379.002