AFTER 15 YEARS of IMF-directed reforms, Jordan's economy looks ready to stand on its own two feet. With the completion of its latest stand-by arrangement in July 2004, the country has now officially graduated from a series of Fund-supported programmes. The IMF's role will be scaled back to one of macroeconomic policy monitoring and the provision of technical assistance.
Jordan was forced to turn to the IMF after a severe financial crisis back in 1988, caused by military overspending as the country attempted to modernize its army. By the time the Fund stepped in, the Jordanian dinar had lost half of its value, gold reserves had dropped to zero, the budget deficit had reached 24% of GDP, inflation was out of control, and unemployment had skyrocketed to 30%.
In return for substantial loans, the IMF demanded that Jordan implement far-reaching economic reforms. The tax system was overhauled and a sales tax introduced, subsidies on utilities and food staples were abolished, the Jordanian dinar was further devalued, and several public utilities were privatized. In 1993, Jordan rescheduled $895 million of its debt to the London Club of commercial creditors.