Jordanian Finance Minister Mohammed al-Isis said his country has agreed with the International Monetary Fund (IMF) on a new $1.2 billion reform program over 4 years, which would send a message of confidence to investors and help protect the economy from the negative impact of Israel's war on the Gaza Strip for more than a month.

Al-Isis said the new program will help the kingdom adapt better to the impact of the conflict in Gaza than most other countries.

He added that this program is a protection document against regional shocks that Jordan will be exposed to and will maintain its fiscal and monetary policy.

Jordan's recovery from the impact of global economic turmoil, including the repercussions of the aggression on Gaza, will enable it to continue to grow on track to reach 2.6 percent this year.

Jordan's agreement with the IMF will help secure preferential interest rates from major Western donors as well as access cheaper financing from global capital markets, he said.

In a statement, the IMF said the new extension fund facilitation arrangement will replace the current arrangement scheduled to expire in early 2024.

The program will continue to support Jordan as it "faces new shocks," with a focus on continuing fiscal consolidation to make public debt move on a steady downward trajectory, as well as ensuring monetary and financial stability, the statement said.

The IMF pointed out that Jordan has achieved most of its fiscal and monetary targets since its previous program, which began in March 2020, filling gaps in tax evasion, expanding the tax base and maintaining an adequate foreign currency reserve of $ 18 billion.

Jordan considers that it has large and safe foreign currency reserves (Reuters)

Linking the dinar to the dollar

In a related context, Central Bank of Jordan Governor Adel Al-Sharkas said that the dinar's peg to the dollar continues to serve the Jordanian economy well.

He added that the kingdom has large and secure foreign currency reserves. Dollarization of assets in the banking sector has reached around 18 percent, much lower than in many countries and a sign of confidence in the local dinar, he said.