This document discusses Jordan's economic reform policies, with a focus on monetary and fiscal policies. It provides background on Jordan's economy, challenges, and key socioeconomic indicators. It then discusses the roles of international financial institutions like the IMF and World Bank. The document analyzes Jordan's monetary policy approach and tools, as well as its fiscal policy aims and instruments. It questions where economic policy went wrong in Jordan and calls for greater emphasis on supply-side policies to boost investment and competitiveness. In conclusion, it argues Jordan's economy could perform better if unlocking its full potential through improved policies.

1. the Economic Reform
Policies with Special
Attention to the
Monetary and Fiscal
Policies: the Case of
Jordan
Khalid W. Wazani
Chief
Economist/Strateg
Guest Speaker in “financial markets and institutions”

2. Table of Contents
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3. Jordan Economy: Characteristics & Challenges
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4. Jordan’s Socio-Economic Distortions
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5. Jordan’s Socio-Economic Distortions
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6. Some Socio-Economic Indicators in
Jordan
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Indicator 2012
Population Growth % 2.2
Population below 15 years old 37.3
Population bet. 15-59 % 59.5
Family Size 5.4
Illiteracy Rate % 6.7
Women Participation Rate % 16.7
Rate of Electricity Connection % 99.9
Families owning Pc s or Laptop 57.5
Families having internet
connection t %
47.3
Families owning Mobiles/ Smart
Mobiles %
98.2
Families Owning TV 98.9

7. Average Real Growth Rates 2005-
2014
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Real Growth Rates%
Period
8.24
2005-2007
4.96
2008-2010
2.60
2011
2.70
2012
2.8)Preliminary(
2013
3.5)Budget 2014(
2014

8. International Financial Institutions
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9. 9Khalid Wazani®
Main International
Financial Institutions
‫الدولي‬ ‫النقد‬ ‫صندوق‬IMF
‫الدولي‬ ‫البنك‬WB

10. Facts about the WB & IMF
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 Both Institutions were established in 1944
right after the WWII to deal with structural
distortions in the world economic order
 The IMF was found to help creating a stable
money exchange system leading a dealing
with the temporary challenges of balance of
payments in member countries.
 The WB was established to provide long term
development loans to help in the
reconstruction process in the member
countries

11. The WB Group
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 The World Bank for Reconstruction and Development
(WBRD) 1944
 The International Development Association (IDA) 1956
 The International Financial Corporation (IFC) 1960
The International Center for Settlement of Investment
Disputes (ICSID) 1966
The Multilateral Investment Guarantee Agency (MIGA)
1988

12. IMF Lending Policies (Tranches
Policies)
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 Credit Tranche Policy consist of
 First Credit Tranche 25% of Quota with no conditionality
 Three Upper Credit Tranches of 25% each with escalated
Conditionality
 IMF Facilities:
 The Compensatory Financing Facility 1963
 Extended Fund Facility 1974
 Supplemental Reserve Facility 1976
 Contingent Credit Lines 1987
 The Enlarged Access Policy 1981
Stand-By Arrangement 1988

13. Determinant of IMF Lending Policies
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 Membership in IMF
 Approval of 75% of the Board Votes
 Using of all Credit Tranches
 Apply relevant agreed upon Conditionality
 Letter of Intent
 Structural and Stabilization Reform Measures.
 Demand Management Policies with some Supply side Flavors

14. Economic Reform Policies
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15. Facts on Economic Reform PoliciesFacts on Economic Reform Policies
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 Reform is an evolutionary continuous process
 Reform account for stabilizations and Structural Adjustment
Policies
 Reform is an Inclusive Policy where all Stakeholders should be
involved
Reform not only Manages Demand Side but also Expand the
Supply Side of the Economy
A country could Graduate from IMF Reform Program but Should
Never Stop Reforming
 Demand Management Policies with some Supply side Flavors

16. Economic PoliciesEconomic Policies
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17. Fiscal & Monetary Policies; the Case of Jordan
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18. Monetary Policy & the Case of Jordan
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 Aims At Sound and Stable Monetary System and Exchange Rate
Through Controlling Money Supply & the Banking System
• ‫الكمية‬ ‫الدوات‬Quantitative Tools
•‫الخصم‬ ‫إعادة‬ ‫سعر‬Discount Rate
•‫المفتوحة‬ ‫السوق‬ ‫عمليات‬OMO
•‫الحتياطيات‬ ‫سياسة‬Required Reserves
/‫الكيفية‬ ‫النوعية‬ ‫الدوات‬Qualitative Tools
•( )‫الئتمانية‬ ‫السقوف‬ ‫الئتمان‬ ‫تأطير‬Credit
Ceilings
•‫التمويل‬ ‫تخصيص‬Credit Allocations
•‫مصرفية‬ ‫بعمليات‬ ‫المركزي‬ ‫البنك‬ ‫قيام‬The Bank
of the Governement
•‫الدبي‬ ‫القناع‬Moral Suasion

19. Fiscal Policy & the Case of Jordan
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 Aims at Demand Management policies that lead to reasonable
fiscal deficit, controlable public debt and results in a better economic
growth rate.
•
‫التلقائية‬ ‫الدوات‬Built – in Stabilizers
•‫التصاعدية‬ ‫الضرائب‬ ‫نظام‬Progressive Taxes (not
Applied yet(
•‫التحويلية‬ ‫المدفوعات‬Cash Transfers
•‫الدعم‬ ‫سياسات‬Subsidies Policy
( )‫المقصودة‬ ‫الموجهة‬ ‫الدوات‬Discretionary
Instruments
•( )‫تحتية‬ ‫بنية‬ ‫معينة‬ ‫لقطاعات‬ ‫الموجهة‬ ‫التمويل‬ ‫برامج‬
Sectorial Financing Programs
•‫العامة‬ ‫التوظيف‬ ‫برامج‬Public Hiring
•‫الضرائب‬ ‫معدلت‬ ‫تغيير‬Diffrential Tax Rates

20. Applications of Economic Policy:
Where Did we Go Wrong in Jordan?!
Applications of Economic Policy:
Where Did we Go Wrong in Jordan?!
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•

21. Concluding Remarks
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22. Concluding SMSs
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 Jordan Economy has always been able to stand up for all challenges
and was able to create opportunities of some.
 Poor Economic Policies led to poor GDP; that means the economy is
much below it Potential output (Are we some where far inside our PPC)
 Supply Side Policies is highly needed today, especially when it comes to
investment atmosphere in Jordan. (Why we are going down ward in all
Investment Ranking Reports such as Competitiveness Report & Doing
Business Report)
 The Recent IMF SBA is mainly focusing on Demand Management
Policies with less attention to Supply-Side Policies
 in Developing Country Fiscal Policy is more effective than Monetary
Policy (St. Louis Model)

23. Dr. Khalid W. Wazani
kwazani@orange.jo
kwazani@issnaad.com
Twitter: @Khwazani
Thank You
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Khalid Wazani®