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Jordan banks increase domestic credit to private sector — JSF

By JT - Jul 29,2020 - Last updated at Jul 29,2020

AMMAN —  Licensed banks in Jordan have increased domestic credit to the private sector from 14.8 per cent of GDP in 1965 to more than 78 per cent by the end of 2019, according to the Jordan Strategy Forum (JSF).

Relative to GDP, domestic bank credit to the private sector in Jordan is lower than in Qatar and Kuwait. With a 25.3 per cent of GDP, Algerian banks’ credit to the private sector is the lowest, the JSF said in a statement made available to The Jordan Times.

Relative to GDP, domestic bank credit to the private sector in Jordan is lower than in many advanced economies. However, it is higher than in Italy, Turkey, Georgia, the US, and the Czech Republic, the JSF said.

Bank loans to the household sector in Jordan lie in the upper end of many international and Arab economies, according to the JSF.

With 34.6 per cent of GDP, loans to the household sector is much higher than that in Egypt standing at 7.7 per cent, Finland at 12.4 per cent, Turkey registering 14.6 per cent, and Qatar at 20.1 per cent. 

Household debt repayments, namely monthly interest and principle repayments, to household monthly income is equal to about 40 per cent, and this ratio is fine relative to international standards, the JSF said citing the Central Bank of Jordan’s 2018 Financial Stability Report. 

1.Bank credit to individuals, mainly for consumption, witnessed the largest increase in 2019 by 8.1 per cent. 

2.The behaviour of this line of credit after the CBJ announcement of the postponement of retail customers' and others’ installments, has increased by 1.5 per cent in March 2020, decreased by 0.4 per cent in April 2020, and increased by 0.6 per cent in May 2020. 

3.“This behaviour is encouraging because it reflects that not many individuals have chosen to postpone their debt repayments,” the JSF said.

4.Bank credit to households, individuals and to the private sector in general are within international limits, the JSF said


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