Jordanian King Abdullah II receives the finance ministers of Saudi Arabia, Kuwait and the UAE at Al-Husseiniya Palace in the capital yesterday. — AFP
Kuwait, Saudi, UAE extend $1.1bn to Jordan
AMMAN: Gulf states have deposited over $1 billion in Jordan’s central bank as part of a $2.5 billion package to shore up the kingdom’s struggling economy. The three states, Saudi Arabia, Kuwait and the United Arab Emirates, announced the aid package in June after IMF-backed austerity measures sparked some of the largest protests in Jordan in years.
As well as the deposits, Saudi Arabia and the United Arab Emirates also committed $250 million each in budget support to Jordan over five years, while Kuwait pledged $500 million in project finance over five years. Senior officials from all four countries signed an agreement in Amman yesterday on the deposit of funds.
Jordan’s King Abdullah II affirmed yesterday the deep rooted brotherly ties that bind Jordan with Kuwait, Saudi Arabia and the UAE. A statement issued by the Royal Jordanian Court said King Abdullah met Kuwaiti Finance Minister Nayef Al-Hajraf, Director General of Kuwait Fund for Arab Economic Development Abdulwahab Al-Bader, Saudi Finance Minister Mohammed Al-Jadaan and UAE Minister of State for Financial Affairs Obaid Al-Tayer. King Abdullah expressed his appreciation to the three Gulf countries for their continued support for Jordan to face the economic burdens it is suffering as a result of regional crises.
The $1.1 billion in deposits will help cushion Jordan’s $11 billion in foreign reserves, while the direct budget support will ease pressure on the government. “It will consolidate financial and monetary stability and confidence in the Jordanian economy and spur growth,” Central Bank of Jordan governor Ziad Fariz told Reuters. “This will bolster the reserves and allow the treasury to implement its projects to provide better services with the least burden possible,” Fariz added.
Kuwait was the first to place $500 million in the Central Bank while another $333 million were received each on Thursday from Saudi Arabia and the United Arab Emirates, a Jordanian government source said. Last month Jordan’s government sent a new tax bill to parliament, which it wants to push through this year to help it get a clean bill of health from the IMF to avoid higher servicing costs on over 1 billion dinars ($1.4 billion) of foreign debt due in 2019.
Credit guarantees extended by the Gulf states yesterday will also help Jordan avoid being downgraded by credit ratings agencies, officials said. The UAE alone extended $200 million in guarantees to allow Jordan to secure cheaper World Bank credit for much-needed infrastructure projects. Jordan’s key role in providing geopolitical stability in the Middle East already makes it one of the highest per capita recipients of foreign aid in the world, according to figures from USAID, the US aid agency. The kingdom receives over $1 billion a year from the United States, its largest donor, as well as aid from Europe and elsewhere.