Central Bank launches initiative to stimulate economic growth

AMMAN — The Central Bank of Jordan (CBJ) on Sunday launched a set of economic initiatives to stimulate growth and job generation.

The initiatives included establishing investment companies for banks with a capital of JD125 million to invest in medium-sized enterprises, the Jordan News Agency, Petra, reported. 

During a ceremony attended by Prime Minister Hani Mulki, the CBJ also launched a programme to support the national exports credit, to which JD100 million has been allocated. 

CBJ Governor Ziad Fariz said the initiatives came as part of the banking system’s response to the recommendations of the Economic Policies Council (EPC), launched by His Majesty King Abdullah and later endorsed and adopted by the Cabinet. 

One of the initiatives aims at supporting exports through a JD100 million loan from the CBJ to the Jordan Loan Guarantee Corporation to establish a fund, the returns from which would enable the company to guarantee Jordanian exports’ credit and, subsequently, boost the sector in destinations abroad, especially newly-opened markets, according to Fariz. 

The CBJ, meanwhile, has worked with the Planning and International Cooperation Ministry to establish a Jordanian fund for entrepreneurship at a cost of $100 million to be launched during the first half of 2017, with the funds invested in start-ups split 50-50 between the CBJ and the World Bank, Fariz said. 

In support of start-ups, small and medium sized, the governor said, the CBJ would add another JD50 million to guarantee the loans of these companies when the current budget of JD50 million is used up. 

The initiatives launched include establishing two banking investment companies in Jordan, the first is a “Trade Banks Company for Investment” with a capital of JD100 million and the second is the “Islamic Investment Company,” whose capital stands at JD25 million. 

The two companies will be investing in medium-sized companies to trigger growth that reflects positively on their job-generation capacities. 

Fariz added that Jordan has proved resilient and resolute in the face of economic challenges, citing success in reducing the budget deficit to 3 per cent last year, with a forecast to send it lower to 2.4 per cent this year. 

He highlighted the private sector’s “pivotal role” in this pursuit.

Commenting on the CBJ’s recent decision to raise interest rates, he underlined the exemption made for sectors like industry, agriculture, tourism and renewable energy, including SMEs in these industries. 

The bank has secured $440 million from international and regional institutions for local banks, which, in turn, reloaned the funds to small and medium enterprises with the goal of limiting the credit cost for these borrowers, especially in light of their significant contribution to employment and economic growth. 

Credit extended to the private sector increased last year by 10 per cent, compared with 4.6 per cent in 2015, he said, noting growth in the tourism sector and money transfers from expatriates in the fourth quarter last year, keeping an up trend in January.

The meeting was attended by MP Ahmad Safadi (Amman, 3rd District), head of the Lower House Finance Committee, several ministers and chairpersons and executive directors of various banks. 

Representatives of the banking sector attending the meeting highlighted the importance of the initiatives in reducing poverty and unemployment, the performance of the banking sector in the past 10 years and the challenges facing the national economy.