The World Bank will extend a low interest, long-term $70 million loan to Jordan in order to facilitate the financing of microprojects and small and medium enterprises (SMEs).
The announcement was made on Tuesday when Minister of Planning and International Cooperation Jafar Hassan and Ferid Belhaj, the World Bank’s country director for Lebanon, Syria, Jordan, Iran and Iraq, signed the agreement at the ministry’s headquarters in Amman.
Hassan indicated that the loan carries an interest rate of 1.45 per cent with a maturity period of 30 years and a five-year grace period.
The loan, he explained, will be administered by the Central Bank of Jordan (CBJ) as it will re-lend funds to local banks, who will then allocate funding to microprojects and SMEs.
SMEs in Jordan face difficulties accessing low-cost financial tools, the minister said, adding that the World Bank loan seeks to facilitate lending to small- and medium-sized businesses, create jobs and reduce poverty, particularly outside Amman.
Belhaj said that the loan represents an opportunity to enhance cooperation between Jordan and the World Bank, saying that the international financial organisation has responded positively to the development needs of the Kingdom.
Belhaj added that in the coming months Jordan and the World Bank may finalise the details of another loan worth $100 million that will be used to support economic policies in the Kingdom.
CBJ Deputy Governor Maher Sheikh Hassan attended the signing of the agreement and noted that figures presented by eight commercial banks in the country show that the demands of SMEs for low cost funding is increasing in Jordan. The total cost of requested loans is estimated at over JD85 million.
When asked about the mechanisms of fund allocations to SMEs and microbusinesses, Sheikh Hassan said the CBJ will sign agreements with banks so that specialised bank accounts will ensure the funds go to the targeted businesses.
On the expected interest rate loans to SMEs could carry, the CBJ official said it would be lower than the average rates charged by banks when lending to SMEs, which he noted is currently at 9 per cent.