World News

IMF approves $1.3 billion loan for Jordan, adjusts for coronavirus expenses

AMMAN (Reuters) – The International Monetary Fund said on Wednesday its board had approved a four-year, $1.3 billion loan program for Jordan, signaling confidence in the country’s reform agenda at a time it was taking measures to cushion its economy from the fallout of the coronavirus outbreak.

The extended fund facility program was anchored by Jordan’s commitments to make structural reforms designed to lower electricity costs for businesses and create incentives for them to hire more young people, the IMF said.

“The aim is to support stronger and more inclusive growth, create jobs, especially for women and young people, and reduce poverty,” the IMF said in a statement.

The program was designed before the coronavirus outbreak, but the IMF said changes were made to support unbudgeted spending covering emergency outlays and medical supplies and equipment.

“If the impact of the outbreak is deep enough to put at risk program objectives, the program will be adapted further to the changed circumstances, upon reaching understandings with the authorities,” the IMF said.

The IMF said the approval would immediately make available about $139.2 million for disbursement, with the remaining amounts phased over the life of the program, subject to eight reviews.

Jordanian Finance Minister Mohammad Al Ississ told Reuters earlier that the loan had been approved. He said in a statement that loan and associated reforms would help Jordan attract more donor and investment funds.

“It signals confidence in Jordan’s economic reform process, and support for our efforts to mitigate the impact of the virus on vulnerable economic sectors and individuals,” Al Ississ said.

Officials are worried the coronavirus crisis, which has hit the thriving tourist sector, will slash growth projections and deepen an economic downturn and a slowdown in domestic consumption. The tourist sector generates around $5 billion annually.

The monetary and fiscal authorities have taken a series of measures from injecting over $700 million in liquidity to reducing interest rates and delaying bank loan installments and customs and tax payments to help soften the negative impact.

The IMF’s approval of Jordan’s programme was testimony to the macroeconomic stability of a country where regional conflict in recent years has weighed on investor sentiment, Al Ississ said.

Al Ississ said late last year that a new IMF deal would help the country secure concessional grants and loans at preferential borrowing rates to ease annual debt servicing needed to reduce the debt to GDP ratio.

Public debt has shot up by almost a third in a decade to 30.1 billion dinars ($42.4 billion) in 2019, equivalent to 97% of GDP.

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UPDATE 1-IMF expedites U.S. Treasury official's appointment to No. 2 job

(Adds timing of Lipton departure, former Treasury officials)

By David Lawder

WASHINGTON, March 19 (Reuters) – The International Monetary Fund said on Thursday it expedited the appointment of U.S. Treasury official Geoffrey Okamoto to its No. 2 position effective March 30 as member countries struggle with the economic impacts of the coronavirus.

The appointment as the IMF’s first deputy managing director thrusts Okamoto, the Treasury’s acting assistant secretary for international finance, into a critical policy position at a time when dozens of countries are queuing up for emergency IMF loans as the coronavirus halts economic activity worldwide.

Okamoto, 35, has been coordinating U.S. participation in G20 and G7 finance meetings and the Treasury’s interactions with the IMF, the World Bank and other international financial institutions. But he lacks the experience in international economic policy and crisis management that his IMF predecessors had, including David Lipton, John Lipsky and Stanley Fischer.

Lipton, 66, a former IMF economist, U.S. Treasury undersecretary for international affairs and economic adviser to President Barack Obama, left the Fund at the end of February.

“Given the exceptional challenges that our member countries are facing with the COVID-19 pandemic, I am very pleased that the IMF’s Executive Board has agreed to advance Geoffrey’s appointment,” IMF Managing Director Kristalina Georgieva said in a statement.

“The IMF is putting all hands on-deck to help our membership address this crisis — and Geoffrey will play a key role in our efforts,” Georgieva added.

She announced her nomination of Okamoto a week ago, and it normally takes two weeks for the IMF board to consider an appointment at that level.

Okamoto’s appointment was backed by U.S. Treasury Secretary Steven Mnuchin. The U.S. administration normally selects an American for the No. 2 official at the IMF, part of a tradition that has kept a European in the Fund’s top job.

Okamoto said in a statement: “It’s at times like these when the Fund and its staff perform at their best in serving our member countries. I’m looking forward to getting to work immediately and helping to lead the Fund in addressing the crisis at hand.”

Georgieva announced earlier this month that $50 billion was available for emergency loans to member countries for coronavirus responses.

“The IMF should consider liberally augmenting access to its rapid financing for a one-year period,” wrote Mark Sobel and Matthew Goodman, both former Treasury officials now associated with the Center for Strategic and International Studies in Washington.

“The G20 should exhort the IMF and World Bank to remain vigilant; more support may be needed.” (Reporting by David Lawder Editing by Nick Zieminski & Shri Navaratnam)

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World News

Iran asks IMF for $5 billion emergency funding to fight coronavirus

DUBAI (Reuters) – Iran has asked the International Monetary Fund (IMF) for emergency funding to help it fight the coronavirus outbreak that has hit the Islamic Republic hard, Foreign Minister Mohammad Javad Zarif said on Thursday.

The escalating outbreak in Iran – the worst-affected country in the Middle East – has killed 429 people and infected 10,075. The outbreak has damaged Iranian businesses and is bound to hit its non-oil exports after many neighboring countries and trade partners shut their borders.

The IMF managing director, Kristalina Georgieva, “has stated that countries affected by #COVID19 (coronavirus) will be supported via Rapid Financial Instrument. Our Central Bank requested access to this facility immediately”, Zarif said in a tweet.

Iranian Central Bank chief Abdolnaser Hemmati wrote on his Instagram page that “in a letter addressed to the head of IMF, I have requested five billion U.S. dollars from the RFI emergency fund to help our fight against the coronavirus”.

Iran’s economy was already battered by U.S. sanctions that curb oil and gas exports crucial for government revenues. A slowdown in economic activity caused by the virus outbreak and a sustained closure of its borders are expected to lead to a contraction this year, analysts have said.

As Iran’s clerical rulers struggle to contain the coronavirus outbreak, Tehran has blamed the United States and its “maximum pressure” policy for restricting Iran’s ability to respond effectively to the virus.

In a letter to United Nations Secretary-General Antonio Guterres, Zarif repeated Iran’s demand for U.S. sanctions to be lifted, Iranian media reported.

U.S. officials have said that the sanctions do not target medicine for Iran and U.S. Secretary of State Mike Pompeo last month said the United States had offered to help Tehran face the outbreak. Iran dismissed the offer as ridiculous.

U.S. President Donald Trump withdrew the United States from a multilateral nuclear agreement with Iran in 2018 and reimposed sanctions on the Islamic Republic.

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