Jordan looks to Arab states for financial bailout
Jordan on Tuesday called on rich Arab countries to extend financial aid to help the Kingdom overcome “critical” economic challenges.
So far this year, the country has not received any direct cash assistance from Arab states to support the budget, Minister of Planning and International Cooperation Jafar Hassan told reporters on the sidelines of the signing of economic cooperation agreements with Germany and Kuwait.
“We hope to receive urgent support very soon in light of the current critical economic conditions Jordan is facing,” Hassan said.
Last year, Jordan received grants worth $1.4 billion from Gulf countries, mainly Saudi Arabia, while — according to official figures — the Treasury has only received JD18 million out of the estimated JD870 million in foreign and Arab grants.
When preparing the government’s spending bill for this year, budget planners were expecting financial aid from Gulf states to reach JD700 million.
However, Hassan noted that in the coming two weeks, Jordan will sign economic aid agreements worth $650 million with the US, the EU and some European countries.
The minister explained that a total of $400 million will be extended to the Kingdom as grants, while $250 million will be in the form of soft loans.
Nearly half of the grants will be directed to finance the budget, he noted, adding that the rest of the funds will be used to carry out development projects in the fields of water, education, energy and business.
Out of the $250 million Jordan is scheduled to receive in soft loans, $200 million will also be pumped into the budget, forecast to see a deficit of around JD1.2 billion this year.
Pointing out that the development projects that will be funded by foreign economic assistance seek to secure Jordan’s strategic needs in the fields of water and energy on the medium and long terms, Hassan stressed the need for urgent support to address current challenges the country is going through.
“This assistance cannot meet the financial needs for this year, particularly those related to subsidising fuel and electricity,” he elaborated, saying that the cost of supporting energy prices is expected to exceed $2 billion.
He said the rising cost of energy subsidy is largely due to interruptions in gas supplies from Egypt and the rising oil prices on international markets.
- Integrating Islamic finance: challenges ahead for the global sukuk market
- Restoring confidence: Can S&P bank upgrade help Lebanon's economy?
- Getting their priorities straight: Emirati households spending more on phones, cars than education
- Why Qatar stocks hit six year high this week
- Are Arab Bankers right to blame the region's deteriorating economies on the Arab Spring?