Jordan, EU sign 700m-euro soft loan agreement

AMMAN — Jordan on Sunday signed a soft loan agreement and a memorandum of understanding worth 700 million euros, according to a Planning Ministry statement.

The financing granted by the EU, at a total value of 700 million euros, will be disbursed to the Kingdom in three batches, the first, at a value of 250 million euros, is expected in October, while the second 250-million euro batch, will be granted during the first-quarter of 2021, after achieving the related indicators of the second tranche.

The third installment of 200 million euros is also expected during 2021, to be disbursed after the completion of the related indicators of the third batch.

Minister of Planning and International Cooperation Wissam Rabadi and Central Bank of Jordan Governor Ziad Fariz signed the agreements.

Rabadi said that the soft financing would be provided on "very lenient terms", at a competitive interest rate and a long repayment period of an average of 15 years.

He added that such processes would require the European Commission to borrow from the international capital markets, on behalf of the European Union, to provide assistance to its partners, at the same rate of interest set on the day of the issuance of bonds or on the date of receipt of the bank loan, according to the statement.

He stressed that the concessional funding and the memo will support a range of reforms adopted by Jordan in priority areas, including public finances, through measures to develop the electronic billing system for sectors or professions, and the adoption of regulations to enforce the Public-Private Partnership Act, increase transparency and efficiency of public investment projects through the establishment of a national register for investment projects.

They will also contribute in "increasing transparency and efficiency in the public procurement system" through operating the electronic bidding system, along with reforms aimed at reducing water waste and introducing smart metres, among other goals, the statement said.

The European Council and Parliament approved a 500-million-euro soft loan to Jordan in January 2020, which was raised by 200 million euros in May 2020 in response to measures against the COVID-19 pandemic, bringing the total amount to 700 million euros.

The European Union is one of Jordan's main donors, as its assistance has contributed in the implementation of programmes and projects in important sectors, as well as providing support to the public budget, besides allowing Jordan to address the economic cost of hosting Syrian refugees, as well as addressing the repercussions of the coronavirus epidemic.