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EBRD program to support the Kingdom's balance of trade, Kandah says.

Amman, June 2 (Petra)--The European Bank for Reconstruction and Development (EBRD) shareholders discussed on Saturday the bank's special Trade Facilitation Program (TFP) ,which allocates 300 million euro per year to finance small- and medium-sized projects in the Kingdom.

A statement issued by the EBRD said the bank will sign an agreement with Jordan to open a preliminary office to facilitate the mechanism of credits in terms of lending the private sector directly , participating in projects , providing financing in banks with the possibility of lending under the Islamic finance principles as well as commercial lending .

Director General of the Association of Banks in Jordan (ABJ) Adli Kandah said that TFP will help Jordan in improving its foreign trade balance by increasing the Kingdom's exports and encouraging banks to extend more credit for foreign trade.

"Jordan is modeled as a small open economy with limited industrial base and limited natural resources, and it is classified as an emerging market and an upper-middle-class country according to the World Bank",Kandah said, adding that Jordan's economic resource base centers on phosphates, potash, and their fertilizer derivatives, tourism, overseas remittances, and foreign aid. These are its principal sources of hard currency earnings.

The ABJ official stated that Jordan continues to face multiple exogenous shocks in 2011--2012 high import prices for oil and food, repeated and extensive periods of interrupted natural gas flow from Egypt due to sabotage of energy infrastructure, slowdown in tourism and remittance flows, heightened domestic and regional political tensions as well as rising sovereign financing costs.

During 2011,Kandah said, Jordan's economy grew by 2.6 percent, and it is expected to grow by 2.75 percent during 2012. On the other hand, inflation rate in the Kingdom reached 4.4 percent in 2011, compared to 5.0 percent in 2010, and it is expected to reach 6 percent in 2012.

The Jordanian foreign trade policy is based on the norms of economic openness and integration into the rapidly globalizing world economy. It incorporates the country's vision and positiveness in viewing economic partnerships as necessarily achieving both mutual interests and fair dividends. Jordan has made giant strides on the path of economic and trade liberalization in addition to reinforcing mechanisms and functioning of a market-oriented economy that is built on an active role of the private sector in managing economic activities. This was made possible through an intensive reform process bringing about a modern and conducive regulatory environment for business and investment.

The volume of external trade (domestic exports plus imports) totaling JD 17.7 billion, at the end of 2011, which account for 86.8 percent of Jordan's GDP,where the Kingdom's imports to GDP ratio was 63.4% while Jordan's exports to GDP ratio was only 27.6% , as a result, the trade balance registered a significant deficit of about JD 7.4 billion (35.8% of GDP),he said.

The geographical distribution of Jordan's exports indicate that Arab countries import about 47.4% of Jordan's exports (of which , Iraq's share was 15%, and Saudi share was 9.4%), while USA imports 15.3%, and India 12.9%.

On the other hand, Kandah explained that Jordan imports from Arab countries about 37.3% of its total imports (of which about 60% comes from Saudi Arabia, as Jordan imports most of its oil from there). 20.6% of our imports comes from the EU Countries (about 9.5% from Germany and Italy), and about 10% from China.

Today, Jordan is at the forefront of the Middle Eastern liberal economies that gained wide respect and recognition for their reforms and economic endeavors. In fact, Jordan is cited as an example in economic policy for emerging nations that could creatively overcome the dilemmas of the scarcity of material and natural resources, Kandah added.

In such a short time, he added ,Jordan managed to foster its economic ties with its neighboring Arab countries through joining the Greater Arab Free Trade Area (GAFTA) and signing a number of bilateral trade agreements, entering into an association agreement with the European Union, signing a free trade agreement with the United States of America soon after successfully joining the World Trade Organization (WTO) in 2000; as well as signing free trade agreements with the European Free Trade Association (EFTA) countries and Singapore, as well as Turkey.

Kandah concluded that Jordanian banking sector comprises the central bank and 26 commercial banks, of which 10 are non-Jordanian banks,as well as having 4 Islamic banks. It has maintained its vigor and stability besides registering tangible developments. This was demonstrated by the general soundness and strength of the sector's macro-prudential indicators- banks remain profitable and well capitalized deposits (largely JD-denominated) continue to be the major funding base, liquidity ratios and provisioning remain high, while non-performing loans increased slightly to 8.5 percent at the end of 2011.

//Petra//S Kh 2/6/2012 - 02:31:04 PM

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Publication:Jordan News Agency (Petra)
Date:Jun 2, 2012
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