AMMAN, Jordan (AP) _ In his first policy statement to Parliament, Prime Minister Zaid Rifai said Wednesday that his government will try to improve relations with other Arab countries and strengthen its military forces.

Rifai, whose 23-member Cabinet was appointed by King Hussein on April 4, vowed efforts to improve ''the unnatural, deteriorated relations between sister Arab states,'' to strengthen ties with non-aligned and socialist countries, and to cooperate with the West.

Although Rifai did not mention Syria by name, his government already has demonstrated that it wants better relations with Syria by canceling limits on farm trade, reviving a Jordanian-Syrian bank, and publicly congratulating Syria on its independence day.

But Rifai also urged continued support of Iraq in its war with Iran. Syria and Iraq are bitter rivals.

Rifai condemned terrorism against Jordanians abroad, which officials in the past have blamed on Syria, and said Jordan would maintain a strong defense.

Rifai said the terrorism ''is directed and planned by our Israeli enemy, either directly or indirectly.''

He said the first arms had arrived for Jordan's long-planned People's Army, a militia to supplement the armed forces, and training would begin soon.

The prime minister expressed support for King Hussein's peace action accord with the Palestine Liberation Organization and for involvement of ''all Arab countries and the international community'' in bringing peace to the region.

The United States and Israel have pushed for direct Arab-Israeli talks. Hussein and the PLO support an international Mideast peace conference.

Rifai indicated his government would draw up a plan to aid Arab residents of the Israeli-occupied West Bank. He mentioned efforts to improve housing, industry and agriculture and to help reduce growing unemployment.

In Jordan, Rifai said, the government planned to reorganize tax and investment laws and to ease administrative procedures to stimulate investment - including investment by the estimated 500,000 Jordanians living abroad.

He said Jordan may limit the number of Jordanian students going to universities outside Jordan. About 60,000 to 100,000 Jordanians now study abroad.

Parliament is to meet April 29 to consider a vote of confidence in the new government.

Officials said Wednesday that Jordan's small stock market has staged its strongest rally in 21/2 years, fueled by optimism that the new government will help private business.

The market's general manager, Hashem Sabbagh, said the price index of all shares rose by 7.8 percent in the first 17 days of April, reaching 119.5, while the value of stocks traded reached $7.6 million - almost equal to the full-month figures for January, February and March.

Jordan has been in a recession for more than two years due to ripple effects from the sluggish oil market. Aid from Arab governments has fallen and money sent home by Jordanian workers abroad, which accounted for about 20 percent of the gross national product last year, has leveled off after a decade of sharp increases.