Jordan in talks with IMF for $1.4bn loan

Jordan has entered talks with the International Monetary Fund to borrow up to $1.4bn, Finance Minister Suleiman al-Hafez said yesterday, to ease strained public finances in the absence of help from its richer Arab neighbours. The request for funds comes as austerity policies are prompting protests by citizens concerned about subsidy cuts and price hikes. Al-Hafez told reporters Jordan would draw the funds from a new IMF lending instrument known as the “Precautionary and Liquidity Line”, launched last November to give countries with relatively good economic policies a short-term liquidity window. Jordan had sought a $1.8bn, five-year lending facility in two tranches but the final amount would be less, al-Hafez said. “The amount has gone down to $1.4bn but until now there is now set amount that we can draw from,” al-Hafez said. He gave no further details. Last year, Jordan’s subsidy-heavy economy was kept afloat by a $1.4bn cash injection from Saudi Arabia. There was no similar pledge of Saudi support this year, and some officials say that was what prompted the move to seek IMF assistance. Over the last decade, successive governments have adopted expansionist policies characterised by sizable state subsidies and salary increases. A further strain on public funds was caused when new state jobs were created in an already bloated public sector last year. Jordan began an austerity drive last month, raising fuel and electricity prices, imposing higher taxes on luxury goods and increasing corporate taxes on banks and mining companies. Opposition groups held street protests against price hikes on Friday and warned the authorities that the austerity measures could trigger wider demonstrations and even civil disorder in impoverished areas.gulf today.