UAE, Saudi, Kuwait Pledge $2.5 Billion Aid Package to Jordan

Published June 11th, 2018 - 07:06 GMT
Saudi Arabia, Kuwait and the United Arab Emirates pledged $2.5 billion of aid to Jordan on Monday. (KhT)
Saudi Arabia, Kuwait and the United Arab Emirates pledged $2.5 billion of aid to Jordan on Monday. (KhT)

Saudi Arabia, Kuwait and the United Arab Emirates pledged $2.5 billion of aid to Jordan on Monday, a joint statement from the Gulf states said, following austerity measures that have sparked massive protests in the country.

Price hikes and subsidy cuts pushed thousands of Jordanians to the streets last week against the government's economic policies. The rare, peaceful protests prompted King Abdullah to sack the government and appoint a new prime minister, whose first pledge was to shelve steep tax hikes.

Other monarchies are worried that unrest in the U.S. ally could spill over across the region where other countries such as Bahrain and Egypt have been facing similar challenges.

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The three wealthy Gulf states said Jordan would receive as much as $2.5 billion of aid to help it weather the economic and political crisis. 

The package includes a deposit in Jordan's central bank, guarantees to the World Bank, annual budget support for five years, and development projects, the statement carried by the Saudi state news agency, SPA, added.

The decision was taken in the Muslim holy city of Mecca in Saudi Arabia where King Salman hosted a summit with Jordanian King Abdullah, Kuwait's emir, Sheikh Sabah Al-Ahmad Al-Jaber al-Sabah, and UAE Vice President Sheikh Mohammed Bin Rashed.

Jordan is pushing fiscal consolidation measures required under an IMF financing program including tax increases and subsidy cuts that have weighed on poorer and middle-class families.  

Jordan's newly designated prime minister, Omar al-Razzaz, said on Thursday he would drop a proposed income tax bill, conceding to a key demand of protesters who had already brought down the previous government.

Jordan's biggest protests in years began eight days ago over tax increases and subsidy cuts pushed by the International Monetary Fund to reduce the country's big public debt.

Jordan's King Abdullah II arrived in Saudi Arabia on Sunday for a crucial four-nation meeting focused on supporting Amman to tackle an economic crisis in the wake of anti-austerity protests. 

He landed in the city of Jeddah ahead of his meeting later on Sunday with leaders of Saudi Arabia, the United Arab Emirates and Kuwait, the official Saudi Press Agency said.

Mass protests against price rises and a proposed tax hike have rocked Jordan in recent days as the government pushes austerity measures to slash the country's debt in the face of an economic crisis.

The Custodian of the Two Holy Mosques King Salman bin Abdulaziz Al Saud of Saudi Arabia had called the rulers of the three other nations to set up the meeting in the Holy City of Makkah, with speculation that an aid package could be announced.

European Union foreign policy chief Federica Mogherini on Sunday announced Sunday 20 million euros ($23.5 million) in aid for Jordan.

Cash-strapped Jordan is struggling to curb its debt after securing a $723-million loan from the International Monetary Fund in 2016.

Austerity measures tied to the loan have seen prices of basic necessities rise across the kingdom - culminating in a week of angry protests over tax proposals that forced prime minister Hani Mulki to resign.

The authorities on Thursday announced they were withdrawing the unpopular legislation, but still face a mammoth task to balance popular demands with the need to reduce the public debt burden.

Jordan blames its economic woes on instability rocking the region and the burden of hosting hundreds of thousands of refugees from war-torn Syria, complaining it has not received enough international support.

The World Bank says Jordan has "weak growth prospects" this year, while 18.5 per cent of the working age population is unemployed.

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