[stop-imf] Jordan: There is life after IMF

[Robert Weissman]

http://www.menafn.com/qn_news_story_s.asp?StoryId=127744

There is life after IMF


	Jordan Times <http://www.jordantimes.com> - 06/03/2006


Fahed Fanek

For 15 years, since 1989, the International Monetary Fund has been
commending Jordan's economic management, and showing the steady progress
and outstanding success in achieving objectives and overcoming one
economic distortion after another. Everything was fine as long as Jordan
was adhering to an economic adjustment and stabilisation programme
supervised by the IMF.

The IMF reports and announcements were not short of excuses for
shortcomings. The IMF board of directors stood ready to waive any
unfulfilled condition. It seems that the IMF was at the time commending
itself, on the assumption that no country can go wrong while under the
guidance of the IMF!

It happened that when the IMF programme came to an end, mid-2004, the
Jordanian economy took off, growing during 2004 and 2005 at rates
exceeding seven per cent. The IMF apparently did not like this, because
it meant that Jordanian officials were able to manage themselves nicely,
without the blessings and the directions of the fund. IMF experts
continued to visit Jordan twice a year, to check on the economic
developments and offer their observations and unbinding advice, as they
normally do with all member countries which are not under special
programmes. However, the tone of their reports changed drastically,
becoming critical and more on the pessimistic side.

Instead of the lavish praise for Jordan's economic performance and the
compliments showered on the Ministry of Finance and the Central Bank,
the IMF started to go out of its way to point out the weak points and to
warn against possible future shocks and hardships before they happen. So
much so that Moody's, the rating agency, to be on the safe side,
downgraded the outlook of Jordan from stable to negative, a prophesy
that normally fulfils itself.

The IMF experts told everyone that Jordan's present economic growth rate
will slow down from 7 per cent to perhaps 5 per cent. They predicted
that inflation rate will pick up from 3.5 in 2005 to perhaps 9 per cent
in 2006, due to higher prices of fuel, that the exchange rate of the
dinar may become excessive, calling for more flexibility, and that
unemployment may become worse. In general, the underlying message was
that everything may go astray due to the absence of the compulsory IMF
programmes.

Moreover, the IMF delegation did not miss the opportunity to highlight
the deficit in the current account of the balance of payments during
2005, of around 15 per cent of the gross domestic product. It did not
bother to notice, at the same time, that the foreign exchange reserve of
the Kingdom did not decline, an indication that there was an inflow of
money coming to Jordan, for some reason not observed by the compilers of
the balance of payments. Such inflow appeared in an inflated item of
"errors and omissions" at the bottom of the balance of payments.

The IMF also reminded us that the advantages in the American market,
enjoyed by Jordan's Qualified Industrial Zones (QIZs), deteriorated
after lifting the quota system on textiles in the American market, as of
Jan. 1,2005, and the introduction of new, strong competitors such as
Egypt and China as of that date; Jordanian QIZs' exports of textiles to
the US market, judged by figures of the first three quarters of the
year, rose after those developments by over 40 per cent of the 2005 figure.

What a disservice rendered by the latest report of the IMF! With friends
like the IMF, Jordan does not need enemies.

Admittedly, the IMF helped Jordan overcome the crisis of foreign
indebtedness, which erupted in 1988/1989, and thus deserves our thanks
and gratitude, but things are fine now, and our economy did not go under
after the departure of the IMF.