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IMF observations and estimates

Jan 26,2014 - Last updated at Jan 26,2014

The latest statement on the Jordanian economy, issued by the International Monetary Fund on December 19, 2013, contained a set of estimates covering that year (2013).

The IMF estimates came very close to reality since they were made late in the year, when the economic situation was clear.

The statement also gave indications of how things will be in the new year (2014). It claims that economic recovery has started, which falls under wishful thinking and promises.

The IMF predicted that economic growth rate in 2013 would be 3 per cent. In fact, the growth rate may not exceed 2.7 per cent in view of a weak fourth quarter marred by a heavy snowstorm that had a negative impact on the economic activity.

It was only natural for the IMF to predict the right rate of inflation, i.e., 5.5 per cent, very close to the actual rate, which turned out to be 5.6 per cent. The statistical figures for the whole year were almost ready.

It is worth mentioning in this respect that the inflation during the year, i.e., the rise of the consumer price index in December 2013 compared to December 2012, was only 3.2 per cent, a fact that encouraged the IMF mission to predict that the inflation rate would be lower than 3 per cent in 2014, which is an optimistic guess.

The IMF mission used to put its publicised economic and monetary judgement in a soft public relation language so that the fund would not appear to the people and critics as a harsh institution.

If the IMF noticed a failure in achieving objectives, it would search for an excuse, such as the pressure of a difficult external environment, meaning troubles in neighbouring Syria.

If the economic performance under the reform programme was below objectives, the IMF would say that the programme is “broadly” on track.

If the government failed to fulfil all that it undertook to do in the area of structural reforms, the IMF statement would simply say that the results were “mixed”.

The outright failure of the government to abide by the agreed conditions would be overlooked or waived, in view of the difficult circumstances and external pressure.

As far as the near future is concerned, i.e., 2014, the IMF says that the focus will be on reducing public debt and implementing the agreed structural reforms.

The fiscal policy will be high on the agenda, with the objective of reducing deficit in the budget by increasing revenues and suppressing expenditure.

The IMF was kind enough to call on donor countries to provide Jordan with more grants to enable the country to finance the financial gap and face the challenges and risks.

During Jordan’s first experience with the IMF reform programmes (1990-2004), the economy in general and the reform measures in particular were the issue of the hour.

This time, an observer may hardly feel that there is a controversial programme under way.

No serious debate is taking place about its particulars; even the government’s letter of intent failed to receive appropriate media coverage, on the assumption that there is nothing new to make any tangible change.

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