The IMF and the World Bank in Jordan: A Case of Over-optimism and Elusive Growth

Abstract

In June 2004, Jordan graduated from 15 years of economic reform promoted by the IMF, and supported by a series of World Bank sectoral reform loans. Jordan’s reform effort, which commenced in earnest in 1992, is often commended by the IMF and World Bank for being broad (encompassing domestic taxation/subsidy polices, trade liberalisation polices, monetary/financial sector polices, exchange rate polices, price reform and privatisation), deep and speedy (given that several changes in government and adverse external shocks took place during the reform period). Consequently, Jordan is now hailed as one of the most successful reformers in the MENA region; ‘a model of successful … economic reforms’ (Khalaf 2003 p.4), and ‘another success story in the making’ (Heresh 2003). During Jordan’s graduation ceremony in June 2004, Ann Krueger, then the IMF’s Acting Managing Director, ‘commended the government for being committed to prudent macroeconomic policies and far-reaching structural reforms’, which had produced high economic growth rates, brought inflation down to industrial country level, reduced the fiscal deficit and brought the public debt burden down to a more sustainable level (IMF 2004a, p.1). These measures, the IMF argued, ‘played a key role in alleviating poverty in the second half of the 1990s’ (Zakharova 2004 p.102).