Friday, Aug 03, 2012
--IMF approves $6.2 billion precautionary line of credit for Morocco
--IMF also approves three-year $2 billion stand-by loan for Jordan
--IMF says no mission to Egypt has been scheduled; it expects engagement in coming weeks
(Adds details and IMF comment in the second and seventh paragraphs.)
By Ian Talley
WASHINGTON--The International Monetary Fund approved financial programs for Jordan and Morocco Friday, as turmoil continues in the Middle East and North Africa and as Europe's debt crisis threatens to exacerbate the region's economic problems.
In the past year and a half, the Arab Spring that brought new political hopes for millions in the region has been accompanied by tough economic times. Political uncertainties within the countries and the strained outlook from Europe have withered foreign investment and curbed output. Unemployment and deficits have ballooned while international reserves have dwindled, threatening the countries' ability to defend their currencies and support their economies.
Many countries are looking to the IMF for financial assistance and economic advice. Though careful to call any programs "home-grown," the IMF is using its financial leverage to encourage economic restructuring.
"Continued structural reforms to strengthen competitiveness are essential to foster high and inclusive growth and create employment," IMF Managing Director Christine Lagarde said of the Jordanian program. It is a mantra the IMF uses liberally for the region.
The IMF approved a $6.2 billion, two-year precautionary credit line for Morocco to help the country continue its economic-reform agenda and to protect against external shocks, including the euro crisis and ongoing regional conflicts.
Jordan's $2 billion loan, of which around $385 million is immediately available, follows repeated damage to a key natural-gas pipeline that forced the country to import its fuels at a loss for the public power company. Also, the IMF pointed to regional turmoil that has hurt tourism, remittances and foreign-direct investment.
The assistance to Jordan and Morocco would enable both countries to support fiscal overhaul programs and ease pressures on budgets burdened by the rising cost of subsidies, particularly fuel. They also would help drive greater transparency and social reforms, IMF officials said late Friday.
Masood Ahmed, director of the fund's Middle East and Central Asia department, also said while the IMF doesn't have any plans scheduled for a mission to Egypt, which also needs an IMF loan, he expects the fund to engage with the country's newly formed government in the coming weeks.
Morocco doesn't plan to draw on what is known as a precautionary liquidity line. The credit line is designed to provide insurance to countries with sound economic policies against potential external shocks.
Earlier Friday, the IMF board also approved a seven-month extension for Iraq's $3.6 billion loan program, giving the embattled country more time to implement promised policy measures.
--Leila Hatoum in Dubai contributed to this article.
Write to Ian Talley at firstname.lastname@example.org.
(END) Dow Jones Newswires