Japan extends $254m soft loan to support Jordan’s budget

AMMAN — Jordan and Japan signed a $254 million soft loan agreement on Wednesday  to improve the government’s public service reform efforts.

The loan, to be extended through the Japan International Cooperation Agency (JICA), will go towards supporting the government’s “Financial Sector, Business Environment and Public Service Reform Policy”. 

“The loan is a direct support to the state budget and will contribute to bridging the 2016-2017 financial gap in the budget, which could help alleviate the financial challenges facing Jordan, especially after the huge influx of Syrian refugees,” Minister of Planning and International Cooperation Imad Fakhoury said at the signing ceremony. 

The loan, to be repaid over a 30-year period with a 10-year grace period and an interest rate of 0.2 per cent, is the third to be extended by Japan in support of the Kingdom’s financial sector, after two previous loans worth $315.8 million. 

“The first payment of the loan, amounting to $85 million, will be referred to the Treasury before the end of this year, while the rest will be extended in the last quarter of next year,” according to Fakhoury, who noted that the loan came after His Majesty King Abdullah’s visit to Japan in November. 

Commending Japan’s continuous support to the Kingdom, he voiced Amman’s appreciation for Tokyo as a key partner in pushing the development process forward and for its efforts in supporting Jordan with the “spillover of the regional crises and the Syrian refugee influx”.  

Fakhoury signed the loan agreement with Japan’s Ambassador to Jordan Shuichi Sakurai and JICA’s representative in Jordan. 

“I strongly hope that the new loan will mitigate Jordan’s financial burdens, promote economic stabilisation and support Jordan’s development efforts,” said Sakurai, noting that his country is aware of the tremendous pressure Jordan is facing. 

In 2016, Japan extended two grants worth $26.03 million to Jordan to support the Kingdom’s humanitarian role towards the refugees. The grants were used to purchase equipment for the ministries of water and municipal affairs, in addition to enhancing security measures at the borders. 

Since 1999, Jordan has received more than $1.021 billion in support from Japan, of which $491.12 million was in grants and the rest in soft loans. 

JICA has also been extending technical support to the Kingdom.