Jordan’s economic woes far from over even with $2.5 billion aid package

By Middle East Affairs

Jordan welcomes financial support from Saudi Arabia, Kuwait, and the U.A.E. after the country feels the effects of conditions the International Monetary Fund (IMF) has set out to ensure its loan repayment.

The IMF loan has increased prices in Jordan, which Jordanians have not taken sitting down, citizens took to the streets in the largest protest in recent years to show their dissatisfaction with the direction that the country’s policies were going down.

The $2.5 billion in aid that Saudi Arabia, Kuwait, and the U.A.E. pledged was a welcome piece of good news, after Jordan’s stormy week that saw the resignation of a prime minister and continued protests.

Jordanians say they want reform in policies, not just new names in government, while the government has to prioritize between keeping its citizens happy and its obligations to the IMF, which saved it from a giant public debt. The loan was supposed to stimulate economic growth, but Jordanians have become angry over the rapidly rising living costs including electricity, transportation and a cut on bread subsidies.

The financial aid package was agreed on between King Salman, Jordan’s King Abdullah II, the UAE’s Prime Minister Sheikh Mohammed bin Rashid Al-Maktoum and Kuwaiti Emir Sheikh Sabah Al-Ahmad Al-Jaber Al-Sabah.

The three allies have offered their Gulf neighbor Jordan a welcome show of support in its tough times.

Included in the $2.5 billion aid package is a deposit in the Jordanian Central bank, World Bank guarantees, budgetary support for five years and financing for development projects.

The outgoing minister of finance, Omar Malhas told Arab News, “What happened in Makkah in the past 24 hours is welcome news and gives people hope that things will improve.”

Malhas who was not privy to the details of the support package did express concerns as to the added interest that Jordan would have to pay back in due time.

He said, “What we need is support to the annual budget and not any more loans.”

Malhas is currently serving as the finance minister until the newly appointed Prime Minister Omar Razzaz has set up his cabinet.

In addition to the $2.5 billion aid support that its Gulf neighbors offered to Jordan, Malhas said it is hoping to take on an $800 million loan from Japan, which is conditional if IMF agrees to it.

The IMF did say that it is willing to release another $70 million in a loan to Jordan’s new government.

The E.U. has also offered Jordan $23.5 million to help its current economic situation.

Jordan is currently indebted to the IMF with a bill of $723 million from a loan it received in 2016.

The new prime minister Razzaz was pleased with the Gulf’s financial package as he met with leaders of political parties and parliamentary coalitions in Amman on Monday.

The chair of the Stronger Jordan party, Rula Hroub said to Arab News that Razzaz was serious about democracy and the country’s diversity.

He said, “He said he will work on a true partnership and will not try to monopolize any political decision-making process.”

The newly appointed prime minister did away with the income tax which had angered many Jordanians for the effect it was having on lower economic class citizens. He also said he supported people’s right to protest and was grateful for the mainly civilized behavior of the security forces in place to monitor the protestors. Razzaz also expressed that the latest protests in Jordan were a more mature response to the protests that began during the Arab Spring.

The Arab Spring protests also ushered many aid packages to Jordan and Morocco in 2011 from Gulf allies.

Awwad Zawaideh, a Jordanian member of parliament who represents Bedouin communities in the south was pleased with the latest unfoldings in the country.

He said, “I come from the south of Jordan and our tribes are split between Saudi Arabia and Jordan. Since the late King Faisal, Khaled, Fahad and Abdullah we have always depended on Saudi whenever we had a crisis.”

Many economic experts from the country agree that the new financial package will not solve the country’s problems but will help them tremendously. They view the $2.5 billion aid as a way to help with its immediate problems and buy more time for Jordan to repay its massive debt to the IMF, before sinking into further debt.

Some protest organizers and union leaders believe that the events that the demonstrations triggered have strengthened the economy and have comforted Jordanians to go and spend during the upcoming holiday Eid Al-Fitr.

Jordan still has many problems to deal with including what the World Bank sees as a “weak growth prospects” for the year and an 18.5 percent of unemployment.

The war in Syria has also affected and downsized Jordan’s prospects of economic growth.

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