Impact of lower oil prices on Jordan ‘neutral’ — IMF

AMMAN – The International Monetary Fund (IMF) expects Jordan's gain from lower oil prices in 2015 to be only two percentage points of the gross domestic product, with an official from the financial institution saying oil prices impact on the budget would be neutral. 

In its Middle East and Central Asia Regional Economic Outlooks, part of the World Economic Outlook that was released Wednesday, the IMF said Jordan and other oil importing countries in the region, where remittances represent a major source of liquidity, could experience tighter liquidity conditions if cash transfers by expatriates decline.

IMF Director of the Middle East and Central Asia Department Masood Ahmed held a press conference in Washington late Wednesday to elaborate on the region’s situation. 

Responding to a question on Jordan and benefits from declining oil prices, the IMF official said the impact of prices on the budget is going to be very limited in 2015. 

"As you look at the impact on the budget of lower oil prices, it turns out to be more or less neutral. It's not a big positive impact on the budget. And why is that? Well, on the one hand, there are some savings to the government from transportation and cash transfers to the population, which they are only made when oil prices are above a hundred dollars, but on the other side, they lose from some of the revenues that they get by taxing energy products," Ahmed said.

On whether the IMF would modify some objectives included in the Stand-By Agreement signed with Jordan in August 2012, particularly articles related to addressing energy concerns in the Kingdom, Ahmed said an IMF team will be visiting Jordan early March and will discuss with the authorities how lower oil prices are likely to affect the budget, the economy and how they can be reflected in numbers.

Regarding the IMF projection for economy growth this year, he said the Kingdom's economy is expected to expand by 3.8 per cent, which is the same figure the fund put in December 2014.