The International Monetary Fund (IMF) has approved the payment of $385 million to Jordan, in the second tranche of a three-year $2 billion loan to help the country speed up its economic reforms, the finance minister said on Thursday. Jordan was hit by a financial crisis as foreign aid fell and welfare payments soared, leading it to sign a $2 billion IMF loan deal last July, conditional on budget tightening, including hefty subsidies cuts on fuel and raising electricity tariffs.
The latest disbursement brings the IMF's total loans to Jordan so far to about $770 million. "It's an extremely positive development, the fact the executive board of the IMF met yesterday and approved the staff report on Jordan and approved the release of the second payment of $385 million," Jordanian Finance Minister Umayya Toukan told Reuters.
Toukan said Jordan was making progress in reducing the budget deficit and streamlining a costly subsidy system, adding that the IMF's endorsement of the country's progress in moving ahead sent a positive signal to investors. "This is really evidence we are moving in the right direction and we did comply with commitments we made in the standby arrangement, and this should give confidence for the markets and for the international agencies that we are committed to reform," Toukan added. Jordan's decision last November to cut subsidies on most fuel products sparked violent protests. The government is seeking to raise electricity tariffs to help it cut losses this summer.