Discussing Jordan’s Economy

The Atlantic Council’s Rafik Hariri Center for the Middle East hosted Jordanian Minister of Finance Ummaya Salah Toukan and Minister of Planning and International Cooperation Ibrahim Saif who offered their assessment of Jordan’s economy during a roundtable discussion on October 10. Dr. Toukan described recent economic and financial developments in Jordan, including challenges posed by fiscal pressures and the government’s ongoing efforts to reform the subsidy system. Dr. Saif discussed the newly adopted development plan to bridge regional income disparities and boost employment, and shared his view on how Jordan’s political transition is affecting growth. Senior Fellow Mohsin Khan moderated the conversation.

With the release of the second tranche of International Monetary Fund (IMF) money, Jordan has to date received $774 million out of a total of $2 billion to tackle fiscal and budgetary pressures. Last year, within the context of the IMF program, Jordanian authorities began implementing macroeconomic policies to reduce external and fiscal imbalances. Although Jordan’s economy performed well during the first half of 2013, with 2.8 percent GDP growth and inflation at 5 percent, there are ongoing budgetary pressures as a result of spillover effects from the conflict in Syria, the cessation of Egyptian gas supply, and the government’s inability to reform the burdensome subsidy system. Dr. Toukan stressed the importance of a sustained effort to address the influx of Syrian refugees, estimated at around 1 million and accounting for 20 percent of the labor force in Jordan. Dr. Saif added that the Syrian crisis is driving investors to take a wait-and-see approach. Overall, he was optimistic that Jordan will remain stable and highlighted the health, tourism, and IT sectors as potential drivers for employment and private investment.

Despite the myriad challenges that Jordan faces, the panel concluded that the country’s ambitious reform program and international grants will see it through this difficult period.