IMF Likely to Downgrade Jordan’s Growth Forecast Again

The International Monetary Fund (IMF) appears on the verge of downgrading Jordan’s growth forecast due to sluggish economic performance in the first half of 2015. Regional instability has also contributed to the nation’s slow performance, an IMF official said Tuesday.

IMF Mission Chief to Jordan, Kristina Kostial, told a group of journalists in Amman that the IMF’s growth forecast for the nation for 2015 may go down from 2.9 percent, as predicted in October, to just 2.5 percent now.

The International Monetary Fund (IMF) appears on the verge of downgrading Jordan’s growth forecast due to sluggish economic performance in the first half of 2015. Regional instability has also contributed to the nation’s slow performance, an IMF official said Tuesday.

IMF Mission Chief to Jordan, Kristina Kostial, told a group of journalists in Amman that the IMF’s growth forecast for the nation for 2015 may go down from 2.9 percent, as predicted in October, to just 2.5 percent now.

Kostial noted that the 2.9 percent growth rate would be hard for the Middle Eastern kingdom to achieve in light of slowdown that occurred across key sectors of the Jordanian economy, including exports and agriculture. She added that Jordan also suffers from “regional shocks” that splash over from political and military instability in neighboring countries.

Despite the problems described by the IMF, Jordan still managed to achieve some growth in the first half of 2015. This growth occurred at a rate that indicates it should continue at a modest rate for the balance of the year. Jordan’s economy grew by 2.2 percent for the first half of 2015. Unfortunately, this rate of growth will likely force the IMF to lower its growth projection for Jordan yet again this year. It has already done so in May, when it expected the economy to expand by 3.8 percent, in August, when it downgraded projected growth to 3 percent, and again in October to 2.9 percent.

Jordan and the IMF expect to begin new negotiations in February 2016, to discuss a new assistance program designed to aid the Kingdom in implementing medium-term structural reforms. These reforms should help the nation to focus on growth and job creation, while simultaneously improving the nation’s business environment, making it more attractive to outside investors.

The new funds would come from the Extended Fund Facility (EFF). This program would follow the conclusion of Jordan’s participation in the three-year Stand-By Arrangement (SBA). The SBA gave Jordan access to around $2 billion. According to the Jordan Times, negotiations over the EFF should last until April, at which point it will refer to the IMF’s executive board for approval.

Although the size of the assistance provided to the Kingdom would formalize during negotiations, Kostial indicated that it would probably be less than the $2 billion Jordan received under the SBA. Despite the sluggish performance and the need to seek additional funding, Koistal described the SBA as a success, as it achieved fiscal discipline.