Transparency in Majd Case marginalized impacts on Jordan’s economy
The Jordanian government’s transparency tactic, used in dealing with the financial fraud scheme carried out by local businessman Majd Sami Al-Shamaylih, helped the Kingdom confront the challenge of putting an end to financial corruption, stated Jordan’s former Deputy Premier and Royal Court Chief, Jawad Al-Anani.
Anani ruled out the presence of organized economic crime in Jordan. In an exclusive interview with Anani, Mena Report received an insider’s perspective on how the Majd Case has affected the Jordanian economy. Anani compared the latest crisis to an “acid test” which will reveal the ability of local banks to sustain competition:
How do you see the impacts of Majd case on the Jordanian economy in general and on the banking sector in particular?
The banking sector in Jordan has very large deposits at present in addition to 22 lending institutions. One or two of these may be affected and I believe even if they go bankrupt, it will not have adverse effect on the economy.
Do you think the banks that extended credit facilities will be become bankrupt or will they be able to recover from the crisis?
In the near future, we are going to enter the phase of implementing the International Trade Agreement (GAT), after which we will be unable to stop foreign banks and insurance companies from setting up in Jordan.
This situation will put our banks in confrontation with international competition. This crisis is like the “acid test” which will reveal the ability of some banks to endure competition. If certain banks appear to be financially weak, let them leave the market and allow room for the stronger banks to compete. We have approximately 21 banking institutions and it wouldn’t hurt to decrease the number to 17 or 18.
How do you assess the measures taken to deal with the crisis and the extent of their success?
In my opinion, the government alleviated the impact of the incident on the economy. I believe when King Abdulla II chose transparency in dealing with the issue, he enhanced the credibility of Jordan’s economy and its ability to put an end to any corruption. From the beginning, it was apparent that the government was reluctant for some time to take the proper actions until the King interfered.
Will Jordan’s Central Bank guarantee the reimbursement of money deposited into the involved banks to the depositors? How can the depositors be reassured that they will receive their money?
The banks are definitely responsible for reimbursing funds and obtained guarantees and collateral from individual and institutional borrowers whose names were recently published and whose assets were frozen. This money may be enough to cover a large part of the problem. In the past, banks have gone bankrupt and the Central Bank bore part of the responsibility for refunding depositors. As for the banks’ shareholders, they will not be compensated. — (menareport.com)
© 2002 Mena Report (www.menareport.com)