Jordan finance minister says IMF approves $1.3bn reform program

Jordan eases nationwide curfew and allows neighborhood shops to open. The IMF approved $1.3bn reform program with the country on Thursday. (Reuters)
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Updated 26 March 2020

Jordan finance minister says IMF approves $1.3bn reform program

  • Officials are worried the crisis that has hit the thriving tourist sector, which generates around $5bn annually, will slash growth projections and deepen an economic downturn
  • Unemployment stood at 19 percent in the fourth quarter of last year.

AMMAN: Jordan’s finance minister said on Wednesday the IMF had approved a four-year, $1.3bn funding program that signalled confidence in the country’s reform agenda as it took measures to cushion its economy from the fallout of coronavirus.
Mohammad Al Ississ said the International Monetary Fund approval for the program would help his country get more donor and investor funds in the coming period as it pushes forward major structural reforms.
“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 in a statement sent to Reuters.
Officials are worried the crisis that has hit the thriving tourist sector, which generates around $5bn annually, will slash growth projections and deepen an economic downturn.
Jordan started a nationwide curfew last Saturday to stem the spread of the pandemic days after it closed land and sea border crossings with Syria, Iraq, Egypt and Israel, and suspended all incoming and outgoing flights.
Economists say the country’s poor, a majority of its 10 million inhabitants who mostly rely on daily wages, have already suffered from the closure of business activity.
Unemployment stood at 19 percent in the fourth quarter of last year.
Al-Ississ said the government would boost spending on social welfare programs, adding this was already envisaged in the IMF reform plan that aimed to raise job creation and generate faster growth.
“The government will be moving in coming months to protect vulnerable Jordanians from the negative repercussions of the global pandemic,” Al Ississ said.
The IMF expects Jordan’s economy to grow around 2.1% in 2020 but gradually rise in the next few years to 3.3%.
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.
Al Ississ said late last year 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 ($42.4bn) in 2019, equivalent to 97 percent of GDP.
Analysts say the spiralling debt is due in part to successive governments adopting an expansionist fiscal policy characterised by job creation in the bloated public sector.

Lee’s death sparks hope for Samsung shake-up, dividends

Updated 26 October 2020

Lee’s death sparks hope for Samsung shake-up, dividends

  • Shares in the company and affiliates rise; around $9bn in tax estimated for stockholdings alone

SEOUL: Shares in Samsung Electronics Co. Ltd. and affiliates rose on Monday after the death a day earlier of Chairman Lee Kun-hee sparked hopes for stake sales, higher dividends and long-awaited restructuring, analysts said.

Investors are betting that the imperatives of maintaining Lee family control and paying inheritance tax — estimated at about 10 trillion won ($8.9 billion) for listed stockholdings alone — will be the catalyst for change, although analysts are divided on what form that change will take.

Shares in Samsung C&T and Samsung Life Insurance closed up 13.5 percent at a two-month high and 3.8 percent, respectively, while shares in Samsung SDS also rose. Samsung Electronics — the jewel in the group’s crown — finished 0.3 percent higher.

Son and heir apparent Jay Y. Lee has a 17.3 percent stake in Samsung C&T, the de facto holding firm, while the late Lee was the top shareholder of Samsung Life with 20.76 percent stake.

“The inheritance tax is outrageous, so family members might have no choice but to sell stakes in some non-core firms” such as Samsung Life, said NH Investment Securities analyst Kim Dong-yang.

“It may be likely for Samsung C&T to consider increasing dividends for the family to cover such a high inheritance tax,” KB Securities analyst Jeong Dong-ik said. Lee, 78, died on Sunday, six years after he was hospitalized due to heart attack in 2014. Since then, Samsung carried out a flurry of stake sales and restructuring to streamline the sprawling conglomerate and cement the junior Lee’s control.

Investors have long anticipated a further shake-up in the event of Lee’s death, hoping for gains from restructuring to strengthen de facto holding company Samsung C&T’s control of Samsung Electronics, such as Samsung C&T buying an affiliate’s stake in the tech giant.

“At this point, it is difficult to expect when Samsung Group will kick off with a restructuring process as Jay Y. Lee is still facing trials, making it difficult for the group’s management to begin organizational changes,” Jeong said.

Lee is in two trials for suspected accounting fraud and stock price manipulation, as well as for his role in a bribery scandal that triggered the impeachment of former South Korean President Park Geun-hye. The second trial resumed hearings on Monday.

Lee did not attend the trial on Monday, as Samsung executives joined other business and political leaders for the second day of funeral services for his father.