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Jordan consolidates as deeper reforms lag

16 June 2026

 

The past 12 months have tested whether a technocratic Jordanian government installed to address the country’s creeping fiscal crisis can hold the line while the region around it convulses.

On that narrow measure, it has largely succeeded, though more by adhering to an inherited programme than by breaking new ground. The question of whether Amman can move beyond budget discipline into structural reform remains open.

The most consequential developments of the past year have spoken more to Jordan’s dependence on external capital than to any decisive shift in domestic policy.

The fiscal line

When King Abdullah II appointed Jafar Hassan prime minister in September 2024, he installed a figure who had served as his chief of staff and, earlier, as deputy prime minister for economic affairs, with a specific brief to cut public debt. The choice put fiscal credibility in the chair.

Hassan inherited a wide fiscal gap. The overall government deficit stood at 7.3% of GDP in 2024, with gross public debt at 82% of GDP and the IMF programme targeting a reduction below 80% by 2028. Growth came in at 2.6% in 2024 and is projected at 2.7% in both 2025 and 2026 – providing little support to consolidation efforts.

The deficit is narrowing – the IMF projects 6.3% of GDP in 2025 and 5.4% in 2026 – on the back of concrete revenue measures: higher taxes on electric vehicles and e-cigarettes, the deferral of a planned customs-tariff cut, and the collection of tax arrears. Losses at the National Electric Power Company (Nepco), the state-owned single buyer, were held to 1.1% of GDP in 2024, against an expected 1.3%.

Much of that 2024 performance, though, preceded Hassan’s September appointment, and the consolidation is, in that sense, the programme’s trajectory rather than a break attributable to the new government. A March 2026 directive curbing government vehicle use and freezing official foreign travel – tightened as the regional conflict strained the budget and extended through year-end – speaks to the active restraint being applied.

The discipline is real, but it is the plumbing of the public finances – revenue, tariffs, arrears, loss containment – not the structural reform of the economy.

The harder reforms

The reforms that would lift growth and create jobs have gone virtually untouched. Labour market flexibility, stronger competition, and higher female and youth participation have recurred as priorities through successive IMF reviews but have run up against public-sector privilege and entrenched interests.

The resulting stagnation shows in the numbers. Growth, projected at 2.7% through 2026, sits well short of what the Economic Modernisation Vision demands: a doubling of GDP by 2033 – implying sustained growth at roughly twice the current rate – in order to create one million jobs.

The labour market is where the failure is sharpest, and where a narrower deficit changes nothing. Unemployment among Jordanians fell to 21.2% in the fourth quarter of 2025, the lowest since early 2020, but barely changed from 21.4% the previous quarter.

Within that is a widening gender split: male unemployment fell a full point year on year to 17.2%, while among Jordanian women it rose to 34.8%, up 2.6 points. The modernisation plan promises the opposite – a doubling of female labour force participation from 14% to 28% by 2033, from a base among the lowest in the world.

The distance between that participation target and the worsening female jobless rate illustrates how far the structural agenda still has to travel.

Gulf capital and the Aqaba corridor

With domestic reform slow, Amman leans on external capital to meet its infrastructure needs and stimulate the economy – though even that is faltering. Foreign direct investment ran at $1.3bn in the first three quarters of 2024, or 3.3% of GDP, down from $1.6bn a year earlier, and eased further through 2025.

The most strategically significant deal of 2026 binds Jordan to a bet on regional logistics: the April signing with the UAE of a $2.3bn agreement to build the 360-kilometre Aqaba Port Railway, structured as a 50/50 joint venture.

The rail project was first signed in September 2024 and sits within a broader $5.5bn investment framework agreed in 2023. MEED understands that the first-section construction contract is now being finalised and second-section bids are under evaluation, with financial close expected in early 2027.

The Jordanian half is held by the Jordan Phosphate Mines Company, Arab Potash, the Government Investments Management Company and the Social Security Investment Fund. On the UAE side are Abu Dhabi sovereign investment platform L’Imad Holding, with Etihad Rail as the venture’s executing arm.

The line will carry around 16 million tonnes of freight a year – some 13 million tonnes of phosphate and 2.6 million tonnes of potash – from the mines at Shidiya and Ghor Al-Safi to Aqaba’s terminals.

The corridor is designed to extend north from Aqaba toward Amman, Syria and Turkey, and south to Saudi Arabia, positioning Aqaba – Jordan’s sole port – as a Red Sea logistics node at a time of acute concern over supply-chain chokepoints.

For the UAE, the northward reach is the point. Abu Dhabi has moved over the past year to control Syria’s Mediterranean coast – DP World took a 30-year, $800m concession at Tartus; AD Ports took a stake in the container terminal at Latakia – and a rail line running from the Red Sea towards the Syrian border would knit those positions into a corridor from the Gulf to the Mediterranean. For Jordan, it is inward investment, lower export costs and a potential jobs source.

Dependence on external finance is a standing caveat, however. Jordanian projects have stalled at this stage before, conflict or no conflict: the estimated $2.6bn expansion of the refinery at Zarqa, 25 kilometres northeast of the capital, has been stuck over financing since bids were received in 2021.

The planned National Water Carrier desalination scheme – targeting financial close in July 2026 at a capital cost estimated at $4.3bn – is the bellwether to watch. If that moves on timeline or terms, the rail scheme may well follow.

Near-term outlook

The next two years point to continued consolidation under the IMF programme, Gulf-backed infrastructure edging towards financial close and growth holding near 3% at best.

Hassan’s test will be to not simply hold the line his predecessors had already drawn, but to advance the structural reforms – labour market flexibility, competition, female participation – that carry a political price and that consolidation cannot substitute for.

Those reforms have stalled for a decade under governments with more room than this one. Whether Hassan’s administration can deliver what its better-placed predecessors did not is the question that will decide whether the headline growth rate ever moves.

This month’s special report on Jordan also includes:

> BANKING: Caution governs Jordanian bank lending
> POWER & WATER: Record investment drives Jordan’s utilities market
> CONSTRUCTION: Prospects improve for Levant construction 

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John Bambridge

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