IMF loan to help Jordan cope with refugee crisis

Jordan and the International Monetary Fund (IMF) recently agreed on the terms for an IMF credit line of up to $700 million that will help the kingdom's economy and enhance its ability to cope with Syrian refugees.

The Extended Fund Facility (EFF) programme extends for three years, Finance Minister Omar Malhas told Al-Mashareq, during which time the IMF will deposit the agreed-upon funds in the Central Bank of Jordan.

An IMF delegation will visit the kingdom in October to conduct the first performance review of the national economy as part of the new financial and administrative reform programme between the kingdom and the IMF.

By the end of this year, the IMF will provide between $100 and 150 million from the total amount of the agreement, Malhas said.

The IMF has said it will consider raising the amount to $900 million after the conduct of the first economic review, he said.

The new programme includes an agenda of structural reforms to encourage job creation, enhance the business climate, ensure the continuity of the energy and water sectors, maintain a strong financial sector, improve access to funding for small enterprises, and improve accountability and governance, the minister said.

The agreement requires Jordan to reduce its debt ratio to 77.2% of gross domestic product (GDP) by 2021, compared its present 94% level, he noted.

The reforms Jordan will implement as part of the agreement is expected to turn the budget deficit to a budget surplus estimated at 183 billion Jordanian dinars ($258 billion) by the end of 2021, he said.

Difficult circumstances

Countries participating in the February donor conference in London, "Supporting Syria and the Region", stipulated that Jordan enter into a programme with the IMF as a prerequisite to continued access to grants and soft loans, said Jordanian economist Husam Ayesh.

As a result of the agreement, "Jordan will receive aid and loans totaling billions of dollars", he told Al-Mashareq.

"Donor nations pledged to provide assistance -- after an agreement is reached -- related to supporting Jordan's efforts to create job opportunities for Jordanians and Syrians and improve the education of Syrian children in Jordan," he said.

A portion of the aid will go towards improving conditions for communities hosting Syrian refugees in all provinces of the kingdom, he added.

"Although some of the conditions [of the agreement] are difficult, they must be achieved to enable Jordan to overcome the pressures placed on the economy as a result of the regional circumstances and decline in trade due to the closure of the borders with Syria and Iraq in the wake of the spread of terrorist groups such as the 'Islamic State of Iraq and the Levant' (ISIL)," Ayesh said.

Pressure on infrastructure

Jordan is hosting about 1.3 million Syrian refugees, Ayesh said, with around 145,000 Syrian students attending the kingdom's public schools, which places tremendous pressure on its infrastructure.

According to Mohammed Jabour, who owns a clothing shop in Mafraq governorate where the Zaatari refugee camp is located, the Jordanian government should focus on creating opportunities for youth.

"I hope the government takes advantage of this support from the IMF to empower the Jordanian youth and help them establish income-generating projects," he said.

"We opened our homes to help the Syrian refugees and the world must turn to helping Jordan in light of the difficult economic situation and unemployment," he added.

The unemployment rate in Jordan rose to 14.7% in the second quarter of 2016, with 12.9% of males and 22.8% of females recorded as being out of work.

That is 2.8 percentage points higher than it was in the second quarter of 2015, according to the Jordanian Department of Statistics.