Jordan's economy: potash, remittances and a dinar held at one rate

How a small market came to live on transfers

At independence in 1946 Jordan was mostly a farming society. The war of 1967 took away the West Bank, which Britannica says had produced about a third of the country's domestic income, and Wikipedia's economic history puts the loss at 40% of farm income and 80% of tourism revenue, with some 360,000 refugees arriving on the East Bank.

The recovery came from outside. Between 1975 and 1980 the economy grew by about 9% a year on money sent home by Jordanians working in the Gulf states and on grants from Arab oil producers. Britannica records that as many as 400,000 people, many of them skilled, left the kingdom in the early 1980s alone. When oil prices fell in the late 1980s the Gulf aid shrank, government debt rose sharply and the first structural adjustment programmes followed, with riots over prices in 1989.

The Gulf crisis of 1990 and 1991 cut Jordan off from Iraq, its main trading partner, when it accepted United Nations sanctions. Hundreds of thousands of Jordanians and Palestinians came back from Kuwait, many with capital, and growth reached 11.1% in 1992. After the invasion of Iraq in 2003 Jordan became a service base for the reconstruction next door and the building trade recovered. Britannica's summary is that services, government spending above all, account for about a quarter of output and that the state remains the dominant force in the economy, despite reforms that began only in 1999, partial privatisation and membership of the World Trade Organization from 2000.

What holds the dinar at one rate

The Central Bank of Jordan opened in 1964 and is the sole issuer of the dinar, which divides into 1,000 fils or 100 qirsh. Since 23 October 1995 the dinar has been tied to the IMF's special drawing right, and in practice it trades at 0.709 to the US dollar; the central bank buys dollars at 0.708 dinar and sells at 0.7125.

The peg has kept prices calm. Inflation averaged 1.8% in 2025 and stood at 1.1% in January 2026, according to the World Bank. The IMF's board, completing its fifth review in June 2026, said the exchange-rate peg serves Jordan well and that monetary policy is geared to supporting it. Gross usable reserves covered 8.6 months of imports in 2025 by the Fund's estimate.

The cost of the peg falls on the budget and the current account. The central government ran a deficit of 5.0% of output in 2025, the current account a deficit of 5.6%, and grants still covered 1.6% of output. Britannica describes a trade gap that exports do not cover, financed by grants, loans, tourism, remittances and subsidies from Arab and Western governments.

What the IMF projects for the next three years

What Jordan mines from sea and desert

The mineral base is phosphate and potash. Britannica lists large deposits of both, along with limestone, marble, dolomite, kaolin and salt, and unexploited copper, uranium and oil shale. Phosphate rock comes from mines in the desert. In 2004 about 6.75 million tons of phosphate rock earned $135 million in exports, and output was 6.4 million tons in 2005.

Potash comes from the Dead Sea. The Arab Potash Company, formed in 1956, works from a plant at Safi in Karak Governorate, and its salt evaporation pans, together with those of Dead Sea Works, have diked off almost the whole southern end of the sea to produce carnallite, which is refined to potassium chloride. Potash earned about $192 million from roughly 2 million tons in 2003; output was 1.9 million tons in 2004 and 1.8 million in 2005.

Energy runs the other way. Jordan has no significant oil: it produced 40 barrels a day in 2004 while consuming an estimated 103,000. Its oil shale, estimated at about 40 billion tons, is largely unworked. It imported natural gas from Egypt through a pipeline that reached Aqaba in 2003 until supplies stopped in 2013, then built a liquefied natural gas terminal at Aqaba, and a gas line from Israel completed in 2017 supplies the Arab Potash plant. The state-owned National Electric Power Company generates most of the electricity.

What the factories make and where it goes

Manufacturing is concentrated around Amman: phosphate processing, oil refining, cement, fertiliser, pharmaceuticals and clothing. Clothing grew out of trade policy. The free trade agreement with the United States, signed in 2000 and in force from December 2001, led to about 13 qualifying industrial zones whose goods enter the American market duty free. By 2004, by the government's figure, the zones accounted for nearly $1.1 billion in exports, mostly ready-made garments.

Britannica lists the main exports as clothing, chemicals, potash and phosphates, sent chiefly to the United States, India, Saudi Arabia, Iraq and China, and the main imports as machinery, crude oil and food from China, Saudi Arabia, the United States, the United Arab Emirates and India. Agriculture is small and depends on water. Wheat and barley grow on the rain-fed uplands, and citrus, tomatoes, cucumbers and bananas on irrigated land in the Jordan Valley; the sector produced 6.9% of output by the US Commerce Department's 2025 count while using about half the water.

Farming's place has shrunk with each decade. It made up almost 40% of gross national product in the early 1950s, 17% on the eve of the June war of 1967 and only about 6% by the mid-1980s, and the agricultural share of output was put at 2.4% by 2004 under a different measure. Cereal harvests on the rain-fed land still swing with the winter rain, and the profitable part of the sector is fruit and vegetables grown under irrigation in the Jordan Valley. Pasture has shrunk too; Britannica notes that much former grazing land has been planted with olives and fruit trees and that large areas are too degraded to carry livestock.

How goods and money move through Jordan

Geography makes Jordan a transit country, and the routes earn money when the neighbours are open. During the Iran-Iraq war of 1980 to 1988 Iraq needed the port of Aqaba, and trade with Baghdad grew until it was worth two-fifths of Jordan's output on the eve of the 1990 crisis. The road from Amman through Ma'an to Aqaba is the main route to the sea, the Desert Highway runs on from Ma'an to Saudi Arabia, and the highway through Jerash and Ramtha carries traffic to Syria. The old Hejaz line still runs from Daraa through Amman to Ma'an, and a separate Aqaba railway serves the port. Transport and communications were worth $2.14 billion in 2007, and the sector contributes on average about a tenth of output.

The money side is concentrated in Amman. The banking system counts 25 commercial banks, three Islamic banks and nine foreign ones, and the Amman Stock Exchange, formerly the Amman Financial Market, had a market value of $37.639 billion in 2005 by the World Bank's count. Wikipedia's account credits the central bank's conservative rules with keeping Jordanian banks in profit through 2009, and non-performing loans held at 5.5% through the pandemic.

Who works and who does not

Unemployment is the figure that has moved least. The Department of Statistics measured it at 21.4% for 2024, and Wikipedia's account gives 25% in 2021. In 2025 the department began headlining a rate for the whole population, Jordanians and non-Jordanians together, alongside the rate for Jordanians alone, which runs well above it.

The gap between men and women is wide. In the first quarter of 2026 unemployment was 17.9% among Jordanian men and 32.7% among Jordanian women, and the World Bank reported female labour force participation of 14.4% in the third quarter of 2025. The national poverty rate was 15.7% in the 2017 to 2018 household survey, the latest whose results have been published.

The public payroll and the Gulf have absorbed much of the workforce. Britannica says the government employs nearly half of those in work. Remittances, mostly from the roughly 90% of Jordanian migrants working in the Gulf, came to about $3 billion in 2010. Refugees work under a separate settlement. Jordan has given Syrian refugees work permits and access to public schools and health care, and under the Jordan Compact donors help to pay for it; the World Bank's facility for refugee hosts had channelled $490 million to Jordan by the Bank's count in 2026.

How tourism and Aqaba earn foreign currency

Tourism brings in hard currency the peg needs. More than 5 million visitors entered Jordan in 2004 and spent $1.3 billion, rising to $1.4 billion in 2005. The sector's share of output fell to 3% in 2020, when output shrank by 1.6%. The IMF's June 2026 statement listed a decline in tourism among the effects of the regional war, alongside higher shipping costs and disruption in energy markets.

Aqaba was opened as a special economic zone in 2001. It covers 375 square kilometres, charges a flat 5% tax on most activities, levies no tariffs on imports and lets companies employ up to 70% foreign workers. Investment pledges reached about $8 billion by 2006 and $18 billion in committed investment by 2008, against an original target of $6 billion by 2020.

Why the IMF keeps coming back

Each round of adjustment has met resistance in the street. Food riots followed the removal of subsidies under an IMF-supervised plan in 1996. Fuel subsidies were cut in late 2012 to qualify for a Fund loan, and protests followed. A programme begun in 2016 raised taxes and cut subsidies on staples; an income tax bill brought the largest protests since 2011 in the spring of 2018 and was withdrawn, and a revised law passed that November. A new programme approved in 2020 met the pandemic.

The present arrangement under the Extended Fund Facility, approved on 10 January 2024, gives access to SDR 926.37 million, about $1.3 billion, over four years, and a Resilience and Sustainability Facility followed on 25 June 2025. At the fifth review on 17 June 2026 the board released about $134 million and $54 million under the two and reported every quantitative target met. Gross public debt including the electricity and water utilities was 109.0% of output in 2025, or 83.6% net of what the Social Security Corporation holds.

The World Bank is the other lender. In September 2025 its active portfolio in Jordan was 17 projects worth $5.6 billion, and on 30 June 2026 it approved a further $700 million aimed at private investment and jobs. The government's own plan is the Political, Public Sector and Economic Modernization Agenda launched in 2021 for ten years, and the Fund expects growth to pick up in 2027 as large investment projects start. The water conveyance from Aqaba to Amman alone was costed by the European Investment Bank at about €3 billion.