‘IMF could downgrade Kingdom’s growth forecast again’

AMMAN — The International Monetary Fund (IMF) may again downgrade its growth forecast for Jordan’s economy due to slow economic performance recorded in the first half of 2015 and regional instability, an IMF official said Tuesday. 

IMF Mission Chief to Jordan Kristina Kostial told a group of journalists in Amman that the growth forecast for 2015 may go down from 2.9 per cent projected in October to 2.5 per cent. 

“We think the 2.9 per cent growth rate is hard to achieve in light of [the] slowdown in key sectors such as exports and agriculture,” she said, adding that Jordan is still exposed to regional shocks from instability in neighbouring countries. 

The growth recorded in the first half of this year indicates that it will continue at a modest rate, according to the IMF official. Jordan’s economy grew by 2.2 per cent in the first six months of 2015. 

The IMF has lowered its growth projection for Jordan several times this year. In May it expected the economy to expand by 3.8 per cent, while in August, the growth rate was downgraded to 3 per cent, and in October, to 2.9 per cent.  

Kostial said Jordan and the IMF would start a second round of discussions in February next year over a new assistance programme to help the Kingdom implement medium-term structural reforms and that would enable Jordan to benefit from the fund’s financing tools. 

The Extended Fund Facility (EFF) would focus on growth and job creation and improving the Kingdom’s business environment to be more attractive for investors, she added. 

The EFF is another programme Jordan is seeking to implement with the IMF after concluding the three-year Stand-By Arrangement (SBA) in August this year, which gave the Kingdom access to around $2 billion. 

Kostial noted that the mission may conclude negotiations over the EFF in April to refer it to the IMF’s executive board for approval. 

She said the size of the funding would be discussed during negotiations, but indicated that it would be less than the $2 billion Jordan benefited from in the form of low-cost loans under the SBA. 

Kostial described the SBA with Jordan as a success, as it achieved fiscal discipline.