AFAQ NEWS:
The Jordanian government has signed an agreement and a memorandum of understanding for a third €700-million soft loan from the European Union (EU).
The agreement and the memorandum were signed Sunday by Minister of Planning and International Cooperation Wissam Rabadi and Governor of the Central Bank of Jordan Ziyad Fareez.
Rabadi said in a statement that the three-installment loan will be used to cover immediate financial needs and will provide direct support to the state’s treasury given the current circumstances induced by the coronavirus pandemic.
He explained that the first installment of the loan, €250 million, is expected to be received in October while the second installment, also €250 million, will be received in the first quarter of 2021 after meeting all relevant performance indicators.
The third and final €200-million payment will also be made in 2021, the minister indicated, thanking the EU for this loan, which he said reflected the Kingdom’s strategic relationship with the bloc.
He indicated that the loan is provided on “very concessional terms”, and at a competitive interest rate, and a long repayment period, reaching an average of 15 years.
Rabadi explained that the lending process require the European Commission to first borrow from global financial markets on concessional terms and then lend to eligible partner countries at the same rates at which the original funding was secured.
Detailing the prospective spending areas of the loan, the minister said it will support a set of priority reforms, including public finance and the development of an electronic invoicing system for all sectors and professions, in addition to the introduction of the necessary systems to enforce the public-private partnership law.
It will also be used to boost the transparency and efficiency of public investments by establishing a national registry for all investments, according to the minister who also revealed that the rollout of an electronic government tenders system is another target of the facility.
Other reforms that will be financed by the loan include projects aimed cutting down water leakage and loss and the introduction of smart meters.
With regards to socioeconomic policy and the labor market, Rabadi indicated that the tranche will be channeled to finance reforms designed to expand women employment and support a strategy aimed protecting the poor against future volatility in energy costs by helping them install solar panels.
Additionally, the minister noted, the loan will help support a national plan aimed at providing training on digital skills.
Other areas of spending include expanding the Customs Department’s single-window clearance operations outside of Aqaba to include the Queen Alia International Airport in a bid to facilitate trasnboundary trade, according to Rabadi.
The minister also noted that the loan will help encourage a high level of good tax management through the signing of an agreement on mutual administrative assistance in tax-related matters.
Moreover, the multi-million payment will help the Kingdom formulate an amended investment law to simplify bussing-doing, upgrade administrative and governance structures, increase transparency and enhance tax revenues.
Originally, the European Council and Parliament agreed to provide Jordan with a soft loan of 500 million euros in January of 2020, however, the amount was increased by 200 million euros in May in response to the COVID-19 pandemic.
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