Jordan signs $250m soft loan agreement with World Bank

AMMAN — Jordan and the World Bank signed a soft loan agreement worth $250 million based on the Finance Ministry’s financing requirements and the endorsed budget, the Planning and International Cooperation Ministry announced Monday. 

Planning and International Cooperation Minister Imad Fakhoury signed the agreement on behalf of the government during his official visit to Peru in his capacity as Jordan’s governor to the bank. He participated in the annual joint meetings of the World Bank and the International Monetary Fund (IMF), which were held between October 5 and 11.

The loan, meant to support the Kingdom’s budget, aims to improve the financial capabilities and gains achieved as a result of improved proficiency in the management of the energy and water sectors through two main aspects, a ministry statement said.

The first aspect is improving the financial feasibility of these sectors, and the second is increasing the gains achieved as a result of increased proficiency in both sectors.

The loan has been extended under flexible financing conditions, with a long-term repayment period of 35 years, a grace period of five years, and a low interest rate of 1.29 per cent.

The statement said the money is expected to be transferred to the general budget’s bank account within the next few weeks.

The loan would help the government implement a programme aimed at optimising water use allocations and lowering the cost of energy use in the water sector. It would also improve the management of surface water resources to meet the increasing demand for drinking water, allocate more treated water to farmers and the industry sector to help support economic growth, and limit excessive digging of wells to pump groundwater.

The water sector is the biggest consumer of electricity in the Kingdom. Subsequently, any increase in energy efficiency would help reduce costs, added the statement.

The financial return on increased efficiency in these sectors would provide the government with a freer hand in capital expenditure to invest in economic projects that can improve the quality of life for the Kingdom’s citizens.

During the signing ceremony, Fakhoury underscored the World Bank’s constant efforts in supporting the Kingdom’s development and assisting different reform programmes.

He also expressed the government’s appreciation for the bank’s support to Jordan through the past years, contributing to the development of the national economy despite ongoing regional and international political conditions and their economic and social repercussions on the Kingdom.

The World Bank’s administration expressed its willingness to continue assisting Jordan and stressed its commitment, through several institutions and tools, to providing fiscal and technical aid programmes to enable the country to achieve growth and sustainable development.

During the meetings, Fakhoury discussed economic developments in Jordan in light of the Syrian crisis and its repercussions on the national economy with bank officials, highlighting the importance of securing the necessary funds to enable the government to continue its role in hosting Syrian refugees.

In this regard, the minister called on the bank to deal with the crisis in three ways: the first is creating soft financial mechanisms to enable Jordan and other middle-income countries affected by conflicts to receive international soft loans.

The second is collecting enough money to cover the costs of the 2015 Jordan Response Plan, only one-third of which has been received. 

The third is establishing development initiatives to facilitate the movement of Jordan’s exports, especially to Europe, through providing jobs for residents of the most highly affected refugee host communities.