Jordan Seeks to Reduce Public Deficit to 2.5% in 2019
The International Monetary Fund has said that it agreed with Jordan on the kingdom’s policies and reforms for 2019, anchored on a gradual and steady fiscal consolidation path and the continued implementation of reforms to enhance business conditions and employment prospects.
The IMF mission to the Kingdom, led by Martin Cerisola, was in Amman from January 27 to February 7, during which it discussed the country’s recent economic developments, as well as the government’s economic policies under Jordan’s reform program, supported by a three-year IMF Extended Fund Facility (EFF) arrangement, the Fund said in a statement.
“The sustained strong efforts to rein in the combined public deficit, from 3.8 percent of GDP in 2016 to 2.9 percent of GDP in 2017, proved more difficult in 2018, as the combined deficit rose to 4 percent of GDP. To reduce the combined deficit to 2.5 percent of GDP in 2019, the authorities have taken several measures, including the adoption of a new Income Tax Law,” the statement said.
“Critical to this goal is the steadfast and unwavering implementation of the new Income Tax Law, together with a significant strengthening of tax administration to overcome the marked revenue underperformance of 2018.”
The IMF saw the new tax legislation as an improvement to the previous system, highlighting that “it expands the tax base in an equitable manner, by protecting the middle class and most vulnerable; closes some distortions and loopholes; and helps protect specific sectors severely affected by regional conditions and by the removal of non-World Trade Organization-compliant export subsidies”.
Meanwhile, the Fund noted that the conduct of monetary policy by the Central Bank of Jordan has skillfully balanced the need to maintain an adequate level of reserves to support the Jordanian dinar, while also keeping a close eye on supporting domestic economic conditions.
The IMF also referred to the importance of the upcoming London conference to support Jordan’s economy and investment, which it described as “a timely opportunity for Jordan to present an ambitious and credible reform path going forward and for the donor community to unlock much needed budget grants and concessional financing to support the reforms and Jordan’s large financing needs”.