Economic reform policies tagcb

the Economic Reform Policies with Special

Attention to the Monetary and Fiscal Policies: the Case of

Jordan Khalid W.

WazaniChief

Economist/Strategist

Issnaad Consulting

Guest Speaker in “financial markets and institutions”

Table of Contents

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Jordan Economy: Characteristics & Challenges

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Jordan’s Socio-Economic Distortions

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Jordan’s Socio-Economic Distortions

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Some Socio-Economic Indicators in Jordan

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Indicator 2012Population Growth % 2.2

Population below 15 years old

37.3

Population bet. 15-59 % 59.5Family Size 5.4

Illiteracy Rate % 6.7Women Participation Rate % 16.7

Rate of Electricity Connection %

99.9

Families owning Pc s or Laptop

57.5

Families having internet connection t %

47.3

Families owning Mobiles/ Smart Mobiles %

98.2

Families Owning TV 98.9

Average Real Growth Rates 2005-2014

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Real Growth Rates% Period

8.24 2005-2007

4.96 2008-2010

2.60 2011

2.70 2012

2.8 (Preliminary) 2013

3.5 (Budget 2014 ) 2014

International Financial Institutions

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Main International Financial Institutions

صندوق النقد الدوليIMF

البنك الدوليWB

Facts about the WB & IMF

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Both Institutions were established in 1944 right after the WWII to deal with structural distortions in the world economic order

The IMF was found to help creating a stable money exchange system leading a dealing with the temporary challenges of balance of payments in member countries.

The WB was established to provide long term development loans to help in the reconstruction process in the member countries

The WB Group

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The World Bank for Reconstruction and Development (WBRD) 1944

The International Development Association (IDA) 1956

The International Financial Corporation (IFC) 1960

The International Center for Settlement of Investment Disputes (ICSID) 1966 The Multilateral Investment Guarantee Agency (MIGA) 1988

IMF Lending Policies (Tranches Policies)

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Credit Tranche Policy consist of First Credit Tranche 25% of Quota with no conditionality Three Upper Credit Tranches of 25% each with escalated

Conditionality

IMF Facilities: The Compensatory Financing Facility 1963 Extended Fund Facility 1974 Supplemental Reserve Facility 1976 Contingent Credit Lines 1987 The Enlarged Access Policy 1981 Stand-By Arrangement 1988

Determinant of IMF Lending Policies

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Membership in IMF

Approval of 75% of the Board Votes

Using of all Credit Tranches

Apply relevant agreed upon Conditionality

Letter of Intent

Structural and Stabilization Reform Measures.

Demand Management Policies with some Supply side Flavors

Economic Reform Policies

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Facts on Economic Reform PoliciesFacts on Economic Reform Policies

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Reform is an evolutionary continuous process

Reform account for stabilizations and Structural Adjustment Policies

Reform is an Inclusive Policy where all Stakeholders should be involved

Reform not only Manages Demand Side but also Expand the Supply Side of the Economy

A country could Graduate from IMF Reform Program but Should Never Stop Reforming

Demand Management Policies with some Supply side Flavors

Economic PoliciesEconomic Policies

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Fiscal & Monetary Policies; the Case of Jordan

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Monetary Policy & the Case of Jordan

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Aims At Sound and Stable Monetary System and Exchange Rate Through Controlling Money Supply & the Banking System

• الأدوات الكمية Quantitative Tools Discount Rate سعر إعادة الخصم•OMO عمليات السوق المفتوحة •�ات •��ة االحتياطي� Required سياس

Reserves

ة����ة/ الكيفي�� الأدوات النوعيQualitative Tools

�قوف •���ان )الس���أطير االئتم�� ت Credit Ceilingsاالئتمانية(

Credit Allocations تخصيص التمويل • قي�ام البن�ك المرك�زي بعملي�ات •

�رفية �� The Bank of theمصGovernement

Moral Suasion الإقناع الأدبي•

Fiscal Policy & the Case of Jordan

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Aims at Demand Management policies that lead to reasonable fiscal deficit, controlable public debt and results in a better economic growth rate.

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الأدوات التلقائية Built – in Stabilizers Progressive نظ�ام الض�رائب التص�اعدية •

Taxes (not Applied yet) Cash Transfers المدفوعات التحويلية • Subsidies Policy سياسات الدعم •

)ودة�����ة )المقص��� الأدوات الموجهDiscretionary Instruments

�ات •��ة لقطاع��ل الموجه��رامج التموي� ب�ة( ���ة تحتي���ة )بني�� Sectorialمعين

Financing Programs Public Hiring برامج التوظيف العامة • Diffrential Tax تغي�ير مع�دالت الض�رائب •

Rates

Applications of Economic Policy: Where Did we Go Wrong in Jordan?!

Applications of Economic Policy: Where Did we Go Wrong in Jordan?!

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Concluding Remarks

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Concluding SMSs

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Jordan Economy has always been able to stand up for all challenges and was able to create opportunities of some.

Poor Economic Policies led to poor GDP; that means the economy is much below it Potential output (Are we some where far inside our PPC)

Supply Side Policies is highly needed today, especially when it comes to investment atmosphere in Jordan. (Why we are going down ward in all Investment Ranking Reports such as Competitiveness Report & Doing Business Report)

The Recent IMF SBA is mainly focusing on Demand Management Policies with less attention to Supply-Side Policies

in Developing Country Fiscal Policy is more effective than Monetary Policy (St. Louis Model)

Dr. Khalid W. [email protected]

[email protected]: @Khwazani

Thank You

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