Jordan and the IMF’s third review: Where does the economy stand?

Jordan’s latest agreement with the International Monetary Fund (IMF) reflects growing confidence in the country’s economic direction. This step, part of the third review under the Extended Fund Facility, comes at a time when the region is under mounting pressure from both political instability and economic uncertainty. At the same time, Jordan is preparing to launch a new phase of cooperation with the IMF through the Resilience and Sustainability Facility—an initiative designed to support long-term structural reforms and strengthen the country’s economic resilience.

To fully understand where Jordan’s economy stands today, it’s helpful to examine six main policy areas that are central to the current reform agenda. A previous article discussed the first three of these. This article continues the analysis by focusing on the remaining three, which are equally important in shaping the country’s future economic outlook.

The fourth area is fiscal reform. Jordan has committed to reducing its public debt to 80 per cent of GDP by the year 2028. This will be done by improving how the government collects revenue and how it spends public money. Importantly, these steps are designed to avoid cutting important spending on social services and development. This shows that the government sees fiscal policy not just as a tool for managing the budget, but also for maintaining economic and social balance. To succeed, Jordan must expand its tax base, reduce tax evasion, and improve how public institutions work.

The fifth area is the labor market, which still faces serious challenges. Unemployment remains high, especially among young people and women. General reform plans are not enough. Jordan needs focused actions, such as improving the quality of education and vocational training, making it easier for people to enter the job market, and supporting entrepreneurship. The Ministry of Labor has recently begun to work seriously on these goals. However, the business environment still suffers from complicated procedures, weak competition, and limited access to finance. Speeding up reforms in these areas is essential to ensure that economic growth leads to real jobs.

The sixth area is the set of strengths that Jordan can build on. So far, the country has done well to maintain economic stability, even during difficult times. The trust shown by international organizations, including the IMF, is proof of Jordan’s ability to follow through on its commitments and carry out reforms. Jordan’s Central Bank has a strong reputation, the banking sector is solid, and the country’s foreign currency reserves are in good shape. These factors create a strong base for moving from economic stability to lasting growth.

In the last quarter of 2024, Jordan’s economy grew by 2.7 per cent, which was higher than expected. This is also an improvement over the yearly average growth of 2.5 per cent, showing that economic activity picked up near the end of the year.

This growth was supported by foreign currency reserves at the Central Bank that exceeded $21 billion, a decline in the use of the U.S. dollar to 18.4 per cent, and lower inflation, which dropped to 1.6 per cent. Inflation is expected to stay around 2 per cent in 2025.

Today, Jordan stands at a turning point. The country can either take advantage of the current momentum and international support to begin a new phase of sustainable, inclusive growth—or it can continue with slow reforms that hold back progress.

Opportunities are available, but success depends on staying committed to meaningful, wide-ranging reforms. While support from the IMF and other international partners is helpful, real progress depends on Jordan’s own efforts. Government institutions must work closely with the private sector to make these reforms happen and be accountable for results.

The IMF’s latest statement is not just recognition of good performance. It is also a clear message that more work is needed. To maintain progress, Jordan must continue with honesty, determination, and cooperation from all sectors of society.

Success will not come just from outside funding or good economic indicators—it must be felt by citizens through better job opportunities, better services, and more stable prices. The next stage in Jordan’s economic journey depends on turning reform plans into real actions and building national agreement to keep these changes going.

Raad Mahmoud Al-Tal is head of the Economics Department – University of Jordan, r.tal@ju.edu.jo