Jordan Times
Monday, May 24, 2004
June 2 marks the end of
15-year-old IMF economic development programme
The political and economic leadership of Jordan is `strong enough'
to overcome any regional challenges — Mansur
By Rami Abdelrahman
AMMAN — The Kingdom will be “graduating” from the International Monetary Fund's
(IMF) economic development programme on June 2, the government announced on
Sunday.
In a joint press conference with the IMF, Finance Minister Mohammad Abu Hammour,
indicated that the $1.2 billion debt Jordan owes the IMF will be repaid to the
Paris Club over the next five years.
“From June, our relationship with the IMF will be based on holding discussions
once or twice a year,” said Abu Hammour stressing that the role of the IMF will
only be that of an adviser to the government which can refuse or accept any IMF
advice. The IMF linked the end of its 15-year-old programme with Jordan to the
“enhanced performance of the government in handling fiscal issues and building a
stronger economy.”
IMF's Middle East and Central Asia Adviser Ahsam Mansur told The Jordan Times
that the Jordanian economy can now rely on its own capabilities in achieving
more growth and development.
“The economy achieved maturity and strength, but we will still provide technical
assistance and post-programme monitoring which will give us an opportunity to
enhance consultations with the Jordanian government,” explained Mansur.
He underlined the political and economic leadership of Jordan as “strong enough”
to overcome any regional challenges.
“Jordan cannot choose its neighbours, but can choose not to be affected by their
negative repurcussions. The Kingdom proved itself as a gateway to Iraq and
citizens will feel the effect soon,” said Mansur, noting that several mid-term
challenges still face the economy, but no new challenges are in the horizon. “We
discussed with Prime Minister Faisal Fayez how to overcome the challenges facing
the Kingdom's economy especially maintaining the current economic stability,
overcoming the international hike in petroleum prices and keeping the current
policies unaffected by modifications,” he said.
The IMF announced last week the establishment of a Middle East regional
technical assistance centre in Lebanon, which will start operations in autumn
2004, providing technical assistance and services to the region.
Technical assistance provided by the centre, will fall in the IMF's main areas
of expertise including macroeconomics policy, tax policy and revenue
administration, public expenditure management, financial sector issues, and
macroeconomic statistics. The centre aims at helping countries strengthen their
human resources and institutional capacity, as a means to improve the quality of
policy-making.
According to Abu Hammour, the government will start implementing a national
economic development programme which promises a 5.5 per cent net growth this
year and six per cent next year despite all challenges. The programme would
provide a “solid” solution to curbing poverty and unemployment rates, he
remarked.
The minister described the economic performance during the first quarter of this
year as “tremendous growth” highlighting a JD139 million budget surplus that
equals 1.8 per cent of the gross domestic product (GDP).
He attributed this surplus to enhancing the tax collection methods by merging
the sales and income tax departments.
Besides the budget surplus, the net public debt was cut by 11.2 per cent to 90.6
per cent of GDP as a result of cost-cutting measures that the government is
pursuing. The government already cut staff telephone, electricity and water
costs by 20 per cent.
The finance minister put the foreign debt at 70.4 per cent of GDP.
Abu Hammour pointed out that revenue from the tourism sector, which is seen as a
key growth-oriented sector, increased by 31 per cent. He mentioned that exports
and imports went up by 29 per cent and 32.3 per cent respectively and that the
Amman Stock Exchange index increased by 5.5 per cent while the inflation rate
was kept low at 3.5 per cent.
The minister pledged to keep on issuing long-term bonds to prolong the repayment
of commercial loans and to take necessary steps to develop a secondary bond
market.
He expected privatisation proceeds to reach JD300 million this year privatising
the electricity, phosphates, telecommunication, aviation and postal services
sectors.
Abu Hammour stressed that no increase in petroleum prices would occur this year,
noting that the government is currently striving to find deals that would cover
the government subsidies on petroleum.
“When we drew the budget, we referred to international indicators which expected
oil prices to remain at $26 per barrel, but unfortunately it shot up
dramatically to $40, and the government pays between JD22 million to JD25
million for each $1 increase in oil prices,” Abu Hammour revealed.
The minister concluded by saying that the Kingdom is expecting more grants this
year while keeping in mind that the economic programme will be focusing on
self-sustainability to curb reliance on grants in the long-term.