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Official: Jordan to Push IMF to Slow Reforms after Protests

Official: Jordan to Push IMF to Slow Reforms after Protests
folder_openMiddle East... access_time3 years ago
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Jordan will ask the International Monetary Fund (IMF) to give it more time to implement reforms, after some of the largest protests in years showed pushing the debt-burdened country beyond its means risked major instability, officials said.

Official: Jordan to Push IMF to Slow Reforms after Protests

A week of rare protests has brought down the government and forced King Abdullah to effectively suspend tax rises - a key part of fiscal consolidation plans pushed by the IMF to reduce Jordan's large public debt.

The government is unlikely to abandon the IMF program, but officials believe its hasty implementation sparked the protests.

"Jordan cannot afford to abandon the program but will ask to extend its duration for one or two years. Provided you show commitment you are delivering, I think this is doable," an official involved with the IMF program said.

"Pushing countries to the extreme regardless of the political environment was not the right thing. The IMF now has to take into consideration Jordan's capacity in what it can do," a second senior economic official who requested anonymity said.

The designated new prime minister, Omar al-Razzaz, a Harvard-educated ex-World Bank economist, is expected to address deeper social and political factors that triggered the protests.

Razzaz has long opposed the free-market reforms that the kingdom pursued for nearly three decades. He is expected to steer away from the enthusiastic embrace of unpopular IMF mandated measures, officials familiar with his thinking said.

"He adopts a more gradualist approach ... and is more attentive to mitigating the impact of reforms on the poor," said a former cabinet member who has worked with Razzaz and requested anonymity.

IMF officials in the Middle East were not immediately available to comment.

Many in official circles believe the IMF and the outgoing government gravely miscalculated the potential risks of accelerating the economic reforms.

"The government could not measure exactly how much these steps were impacting people. They underestimated the economic pressure the middle class in the big cities has been subjected to in the last two years," said a former minister who requested anonymity. "They thought the fiscal space was there to generate more revenues."

But he added that the unrest might persuade Western donors and Gulf countries to offer Jordan more concessional loans to avert further instability.

"There are good signs ... that the other donors are more interested in helping us," he added.

Officials say the IMF has already hinted it would be amenable to a new approach to ease the burden on the heavily indebted country, including extending the program to allow more leeway to meet revenue targets.

"What is one or two years against the risk of losing the stability of the whole country," said the official involved with the IMF program.

Source: News Agencies, Edited by website team