The International Monetary Fund on Saturday praised Jordan’s progress in an IMF loan-supported program despite increasing outside shocks, notably from a flood of Syrian refugees.
IMF staff recommended the release of $258 million to Jordan under a three-year $2 billion loan approved in August 2012, following a September mission review in Amman with Jordanian authorities.
“Jordan has been really hit hard with exogenous shocks,” Kristina Kostial, IMF Mission Chief for Jordan, said at a news briefing. “The authorities have been doing a very good job in keeping the program on track… so far this year.”
From the IMF’s last staff review in April until now, the outside shocks have “even gotten tougher on Jordan,” she added.
The IMF official cited UN estimates of 540,000 registered Syrian refugees, saying the heavy influx was impacting fiscal accounts, public health spending and labor markets.
She said the IMF executive board could consider releasing the funds in early November with disbursement of the loan tranche probably in late January or early February. To date Jordan has received $774 million under the program.
The IMF awarded the loan, requested by Jordan, to help it weather regional instability as its energy-poor economy was ravaged by spluttering natural gas supplies from revolutionary Egypt and a flood of refugees crossing the border from war-torn Syria.
The loan represents “exceptional access” to the Fund’s resources, amounting to 800 percent of Jordan’s financial commitment to the institution.
Kostial said the flood of Syrian refugees pushed up Jordan’s unemployment rate to 14 percent in the quarter ending in September.
She said the IMF has cut Jordan some slack in the program’s targets to accommodate the increasingly difficult external shocks.
The 2014 target for the consolidated fiscal deficit, which includes the net loss of the National Electric Power Company (NEPCO), has been revised upward from 7.2 percent of gross domestic product, and now the IMF was “looking at” 8.3 percent.
She said there were high-level negotiations underway on Egyptian gas imports, highlighting “quite good prospects of it coming back” to the energy-poor country.
The central bank’s planned issue of a eurobond likely will be put on hold until there is a resolution of the US budget and debt ceiling battle, which threatens to cause the first default by the world’s largest economy.
“Given the current US situation, it’s probably not a good idea to issue one now,” said Kostial, who is the assistant director of the IMF’s Middle East and Central Asia Department.