The International Monetary Fund (IMF) mission chief for Jordan Kristina Kostial said on Tuesday that the Jordanian economy has been resilient in a difficult environment, especially with fluctuations and shortfalls in gas supplies from Egypt and the ramifications of the Syrian crisis and the conflict in Iraq on the Kingdom.
In a press conference call from Washington, in which Petra participated, Kostial said the Jordanian economy growth has remained relatively stable at 3 percent. Inflation for October has dropped by 2.3 percent, while the international reserves of the Central Bank increased from there to comfortable level at about six months of import coverage.
She added that the account deficit narrowed and is expected to come down this year to below 14 percent.
Addressing the challenges facing Jordan, Kostial spoke about two main challenges. "The first main challenge is how to deal with public debt," she said, adding that public debt at the end of 2011 was about 71 percent of GDP and the IMF expects the public debt to reach 89 percent of GDP at the end of this year.
"Jordan has to do fiscal consolidation and there are two parts to it. It has to do fiscal consolidation on behalf of the central government and fiscal consolidation on behalf of the utilities and particularly important is the electricity company NEPCO, that this company, as well as the water companies, are implementing their medium term strategies which bring these companies to cost recovery," she said.
The other challenge is the relatively high unemployment rate particularly for the young and women. "This is a challenge which Jordan needs to tackle, that over the medium-term it reduces unemployment and that is not easy because Jordan's population is relatively young who want jobs," Kostial said.
Addressing the relationship between the IMF and Jordan, Kostial said that the Fund has remained flexible because of the difficult situation Jordan is facing. "We have been increasing the deficit target both to take into account the pressures on the fiscal accounts from the Syrian refugees but also to take into account the shortfalls and gaps from Egypt," the IMF official said The IMF will send a mission to Amman in December to review the performance of the public finance at the end of the year. The next IMF review mission on Jordan will probably going to happen in March, she said.
Answering a question on electricity tariffs increases, Kostial expected there will be increases in electricity tariffs early next year. Jordan, she added, should do an adjustment mostly on the revenue side, because it has lost about 9 percent of GDP during 2007-2011.
Responding to a question on the possibility of extending the IMF arrangement with Jordan, Kostial said that the arrangement will expire in August, 2015, adding that it is up to the authorities to request a further program with the IMF or not. "And from our side, of course, we stand ready to continue our relationship and I think that this has been a very successful relationship, because, Jordan's economy has proven resilient to shocks and that is something new," the IMF official said.