ECONOMIC LIFELINE

Jordan 2019 | ECONOMY | FOCUS: LONDON CONFERENCE

Jordan is turning a new page after years of setbacks. As international partners rally to offer more support for its beleaguered economy than ever before, the stakes have never been higher.

In a region that is rife with economic, political, and social issues, Jordan has run into financial and economic difficulties in recent years, but it has also achieved economic growth and maintained internal stability against all odds. However, despite the Kingdom's achievements and resilience, the challenges have only grown bigger. To name a few, debt-to-GDP ratio has soared to 95%, unemployment is at a 25-year high of 18%, the percentage of people under the age of 30 is hovering around 70%, and almost 1.3 million Syrians are seeking refuge in Jordan, not to mention more than 2.2 million Palestinian refugees who have made the 10-million strong country their home for decades. The IMF has been urging the Jordanian government to press ahead with further reforms, stressing in February 2018 that future policies and reforms need to be supported by greater efforts from the international donor community.

With the clock ticking, Jordan was recently promised to receive just what the doctor ordered—and billions of dollars in support—from a host of international lending institutions, such as the World Bank, the European Investment Bank (EIB), and Small Enterprise Assistance Funds

SEAF, and some of the world's biggest economies, such as Japan, France, and the UK, at the historic Jordan Growth and Opportunity: The London Initiative 2019 event that was held on February 28. The event also attended by U.S. Treasury Secretary Steven Mnuchin, EU Foreign Affairs Representative Federica Mogherini, representatives from more than 60 countries, investors, and key leaders from the private sector. Rest assured, the sort of backing Jordan received from the international community would have been unlikely without the support of the UK, the Hashemite Kingdom's longtime ally and a country with whom it has enjoyed historic ties dating back to before its independence.

The London Initiative itself had been in the making since 2017, a year that saw the now former British PM Theresa May visit Jordan twice and lay the foundations of a new long-term economic partnership. According to PM May's own speech at the event, both countries “have built on that partnership through the London Initiative," which “backs Jordan's Vision 2025 and supports Jordan in delivering social and economic reforms that will transform its economy, making the most of its young, talented, and diverse workforce – and, crucially, actively encouraging the participation of its women."

In terms of numbers, the initiative garnered USD3.6 billion in support from the UK, Japan, and France for Jordan's five-year economic plan, EUR870 million from the EIB, and USD1.9 billion from the World Bank. Using its private investment arms, the World Bank also has explored launching pipeline projects within Jordan at a value of USD1 billion. Notably, the EIB loan will include a EUR65- million loan to finance improvement of water supply systems in Deir Alla and Al-Karamah districts in the Jordan valley, as well as the construction of a centralized sewage collection and treatment network in Deir Alla district.
The UK pledged GBP650 million in bilateral support over the next five years, more than double its GBP300-million support over the last five-year period. In addition, the UK will underwrite a USD250-million World Bank loan. An MoU was also signed with the British government to cooperate in the field of human resources, with the aim of providing rehabilitation programs for Jordanian youth and Syrian refugees and teaching them English, in order to qualify for jobs in tourism, advertising, communication, and renewable energy. The UK's support will also include a GBP14-million contribution a new World Bank led trust fund for Jordan aimed at modernizing government systems, promoting exports and making doing business easier.
On the other hand, France pledged EUR1.1 billion in loans and grants over the next four years, focusing on important projects in the sectors of water, sanitation, transport, energy and solid waste, as well as governance and vocational training. In particular, EUR150 million will be delivered as grants and technical assistance through several initiatives to support the Jordan Response Plan, the EU Madad Fund, and Green Climate Fund, among others. Meanwhile, Japan vowed to provide a USD100-million grant and a USD300-million loan.

With billions pledged in support, all stakeholders hustled to launch the Jordan Task Force three days after the event on March 3, representing a clear follow-up mechanism to ensure that commitments made in London are delivered. It will be jointly chaired by the governments of Jordan and the UK, but how well the former's economy will fare at the end of the five-year period will depend largely on efforts on ground, and Jordan's longtime foe: regional instability.