Relief in Jordan at US plans to guarantee government bonds
The US plans to guarantee Jordan’s government bonds in international markets, reducing the Kingdom’s borrowing costs, Minister of Planning and International Cooperation Jafar Hassan said Saturday.
US President Barack Obama, at a joint press conference with His Majesty King Abdullah in Amman, said on Friday that his administration is working with Congress to provide loan guarantees to Jordan this year.
Obama also announced additional assistance of $200 million to Jordan as the burden of hosting hundreds of thousands of Syrian refugees is growing heavier on the Kingdom’s budget.
“Together, I believe we can help deliver the results that Jordanians deserve — to see their schools better, their roads improved, healthcare, clean water all enhanced; the training that I know a lot of Jordanians seek, particularly young people, to get a job or to turn entrepreneurial skills into a business that creates even more jobs,” Obama said at the presser.
Hassan explained that US guarantees to Jordanian bonds on international markets will ensure the country borrowing conditions and costs similar to those on US sovereign bonds.
Asked on the value of the guarantees, Hassan said it would depend on Jordan’s financial needs according to the fiscal reform programme, adding it could range between $1.25 billion and $2 billion to finance the deficit in the state budget.
In September last year, the government announced plans to raise between $750 million and $1.5 billion by issuing Eurobonds on international markets in order to finance the Kingdom’s spending needs.
The Finance Ministry said at the time that the dollar-dominated bonds would be paid over a period of 7-10 years.
In 2010, Jordan issued $750 million in five-year bonds on international markets that carried a fixed annual interest rate of 3.875 per cent, to be paid in six-month instalments.
It was the first time the Kingdom issued international bonds.
In regards to the $200 million additional assistance to Jordan, the minister indicated that these funds will be allocated to support the budget.
Last year, the US extended an additional grant of $100 million to support the state budget and help the Kingdom address its fiscal difficulties, particularly in light of the regional unrest.
Annual regular US aid to Jordan is around $360 million.
The additional US support to Jordan, Hassan said, is related to the costs of hosting Syrian refugees.
King Abdullah said at the press conference with Obama on Friday that there are over 460,000 Syrian refugees in Jordan, accounting for 10 per cent of the country’s population.
Hosting this number of Syrian refugees is costing Jordan around $550 million annually, the King said, indicating that the figure is expected to double as the number of refugees is expected to reach one million by the end of the year.
Hassan called on the international community to take steps similar to the US to support Jordan during these difficult circumstances.