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OPEC Fund grants Jordan a $70.5mn loan

OPEC Fund

The OPEC Fund for International Development (OFID) has signed a $70.5 million loan agreement with Jordan to help mitigating the socio-economic impact of the COVID-19 pandemic, according to an announcement the fund released.

The agreement will provide social safety net programmes and stimulus packages to retain workers across various economic sectors and create new jobs.

The announcement said the loan will specifically support the creation of about 14,500 jobs in the forestry and tourism sectors.

The loan will also held employing fresh graduates in the information and communication technology sector and strengthening the staffing of various healthcare institutions.

OPEC Fund

OFID’s Director-General Abdulhamid Alkhalifa said, “As Jordan recovers from disruptions related to Covid-19, creating employment opportunities for youth remains especially critical.”

“The OPEC Fund is pleased to partner with the Jordanian government and the World Bank to support job creation in key sectors and to help increase economic resilience,” he said.

This loan is part of the OFID’s $1 billion commitment to collective and coordinated COVID-19-related assistance for developing countries worldwide.

OFID has committed more than $322 million, in addition to this loan, to support public, private and trade finance operations that are helping strengthen Jordan’s energy, health, education and agriculture sectors.

The fund was established in January 1976 by the then 13 member countries of OPEC to be a channel of aid to developing countries.

Jordanian public debt

In 2020, Jordanian public debt surged by 10.6% to 26.50 billion dinars ($37.4 billion).

The rise is due to the government’s heavy spending to support its economy during the COVID-19 pandemic.

According to data of the Ministry of Finance, Jordan’s public debt ended 2020 at 85.4% of GDP, up from 75.8% a year earlier.

The Hashemite Kingdom’s internal debt was 12.78 billion dinars last year, while external debt stood at 13.72 billion dinars, Ministry of Finance data show.

Unemployment rose to 25% in the fourth quarter of 2020, with youth unemployment reaching 55%, according to International Monetary Fund data.

Jordan responded “quickly and decisively” in its support of the economy during the COVID-19 pandemic and is making progress on its program of economic reforms, IMF Managing Director Kristalina Georgieva said in a statement to mark the kingdom’s 100th year.

“Timely and targeted fiscal measures have helped protect jobs and the vulnerable, while equitable tax reforms – aimed at tackling evasion, closing loopholes, and broadening the tax base – have helped maintain debt sustainability,” Georgieva said.

However, the country must address high unemployment to deliver durable, jobs-rich and inclusive growth, she said.

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