‘Huge’ assistance programme under way — WB

AMMAN –– The World Bank (WB) and the government are working together to ensure the effectiveness of the social safety net in Jordan, a top WB executive has said, announcing that a huge support programme is in the making. 

In a Thursday press briefing during his visit to the Kingdom, WB Vice President for the Middle East and North Africa Hafez Ghanem underlined the bank's commitment to helping Jordan overcome the difficult economic situation through loans, grants and technical support. 

After meeting with several officials in Jordan, he noted that the WB and the government agreed that education, governance, infrastructure and business environment were the top priority sectors in dire need of support. 

"We are fully aware of the impact of the regional unrest on Jordan, especially the war in Syria and the problems in Iraq," Ghanem said, adding that the decline in fuel prices had also affected the size of Gulf investments in Jordan. 

Citing the Jordanian burden of hosting more than 1.4 million Syrian refugees, Ghanem underlined that the bank regards Jordan as a main partner.   

"We want to foster the relationship with Jordan.  A huge programme of support is  under way," he announced.

While the interest rates for loans to middle-income countries like Jordan stand at 2.5 per cent, the WB offers the Kingdom soft loans with preferential interest rates in recognition of its humanitarian role towards the displaced.

The WB’s financial portfolio in Jordan stands at $750 million, of which $300 million goes to support the business environment and the qualified economic zones under a five-year plan that started last summer, according to the official. 

A total of $120 million goes to help small- and medium-sized enterprises (SMEs) and support the energy and water sectors.

Ghanem noted that a $150 million loan to support health services in Jordan will be referred to the WB board for examination next month.    

“Jordan’s portfolio also includes $50 million to fund SMEs and increase the financial allocations for municipalities to reach $120 million instead of the current $60 million,” he added.

On the economic forecast,  he noted that the bank expects the economic growth to reach 2.5 per cent next year.

“But this rate is considered unsatisfactory by the government… to generate job opportunities,” the official highlighted, stressing that the optimal way to address the shortage of infrastructure funding  is through public-private partnership.  

“The Queen Alia International Airport offers a great and rare example for the region on how the government can cooperate with the private sector without selling its assets,” he noted. 

Regarding the recent economic correction measures, Ghanem explained that these reforms are an “inevitable outcome in light of the transformations witnessed in the global economy”.

“The world used to help the poor through subsidising products, a measure that has a negative impact on the budget because all segments of society benefit from it,” including the rich.

Ghanem added that foreign countries had lifted their subsidies on goods many years ago and had started supporting the poor through direct cash allocations.   

Reinstating investors’ confidence in Jordan’s abilities requires striking a balance at the macro-economic level, including a budget without a huge deficit, or a zero deficit balance of payments, according to the WB official. 

“We need reforms that attract investors rather than keep them at bay. Investors should sense the government’s encouragement by reducing bureaucracy, improving the infrastructure and seizing opportunities offered by agreements, such as the EU agreement to ease the rules of origin,” he said. 

Ghanem underlined that Jordan has all it takes to contribute to the post-war reconstruction efforts in Syria, which “would hugely improve the national economy”.    

“For the time being, one of the main achievements realised by Jordan is its ability to sustain economic growth and credit rating. Even if at relatively low levels, this is considered a success in return of the negative economic growth other countries in the region have witnessed,” he said.