Jordan to start loan talks with France
Jordan's Ministry of Planning and International Cooperation will hold negotiations with the French Development Agency next week on a €150m ($184m) loan, which the kingdom hopes to conclude by the end of July, the state-run Petra news agency reported.
The ministry will discuss the loan draft agreement with the AFD office in Jordan this week, which will help the government reduce the fiscal deficit and support the kingdom’s efforts to develop and enhance the energy sector, the state agency reported, citing a statement from the ministry.
The European Union is expected to increase its aid to Jordan within the aid-package presented to south Mediterranean countries, Petra cited Planning and International cooperation minister Jafar Hassan as saying. Jordan’s share of the aid accounts for €488m from 2007 to 2013.
The overall budget deficit increased to about 6 percent of GDP in 2011 as a result of commodity subsidies, and other social spending and borrowing by the government on behalf of Jordan’s National Electric Power Company to cover more costly imported fuel oil used during extensive periods of interrupted natural gas supply when saboteurs attacked pipelines in Egypt.
“Jordan remains highly dependent on commodity imports oil and grains, tourism receipts, remittances and FDI (foreign direct investment) flows, and external grants,'' the International Monetary Fund (IMF) said in a report in April.
The kingdom "is also facing risks from a further deterioration in its terms of trade, unrest in neighbouring countries, and the prospect of further disruptions to natural gas pipeline flows from Egypt".
The kingdom's public debt-to-GDP ratio increased to about 64 percent at the end of 2011.
Jordan, one of the smallest economies in the Arab world, imports almost all of its energy needs and finances its budget and current-account deficits with foreign investment and grants from Gulf states, the EU and the US.
Jordan's economy is forecast to grow 2.8 percent this year from an estimated 2.5 percent in 2011, while inflation is projected to rise to 4.9 percent from 4.4 percent last year, according to the IMF.