WB loan to reduce financing costs rather than increase public debt — minister

AMMAN — Jordan’s recent talks with US-based international institutions have focused on government programmes to enhance economic growth and aid plans, including grants for the Treasury, loan guarantees and soft loans, Finance Minister Ezzeddine Kanakrieh said on Saturday.

Kanakrieh, who was part of an economic-ministerial delegation to Washington headed by Prime Minister Omar Razzaz, added that the loan agreed upon with the World Bank (WB) is part of the government’s financial plan for 2019 and is listed on the 2019 general budget draft law, the Jordan News Agency, Petra, reported.

The loan, whose value was set at $1.2 billion, will be used for funding schemes listed in the budget and repaying instalments of due loans, the minister added.

He stressed that the loan will not affect the public debt nor harm the government plans aimed at reducing the debt ratio. Instead, it will contribute to reducing the financing costs.

Kanakrieh pointed out that initial data for 2018 show that the debt-to-GDP ratio went down from 94.3 per cent in 2017 to 94 per cent in 2018, adding that the budget seeks to reduce the figure further in 2019 to reach less than 90 per cent by 2021. 

As for the conditions governing the interest rate and the term of the loan, the minister said that they have not been determined yet, noting that WB loans are usually soft loans with interest rates lower than that of commercial loans and have relatively long terms for repayment. 

He stressed that the conditions of the loan are currently being discussed by the economic team and the ministerial development committee, and, once approved, they will be referred to the Council of Ministers.