Package will include a deposit in the Central Bank of Jordan, guarantees to the World Bank and annual support for Jordanian government's budget for five years
Saudi Arabia and two Arabian Gulf nations pledged $2.5 billion to help support Jordan’s economy after a proposed income-tax increase sparked days of widespread protests.
The package of aid will include a deposit in the Central Bank of Jordan, guarantees to the World Bank on Jordan and annual support for the budget of the Jordanian government for five years, according to a statement posted on the state-run Saudi Press Agency website.
The agreement came after a meeting between Saudi Arabia’s King Salman bin Abdulaziz Al Saud, Jordan’s King Abdullah II, the Emir of Kuwait, Sheikh Sabah Al-Ahmed Al-Sabah, and Sheikh Mohammed bin Rashid Al Maktoum, the United Arab Emirates’ prime minister and ruler of Dubai. The meeting was held in the holy city of Mecca in response to the “economic crisis” in Jordan, according to SPA.
Jordan has for decades relied on foreign aid from the U.S. and oil-rich Gulf nations to prop up its economy, and the influx of 1.5 million Iraqi and Syrian refugees has further strained the country’s finances. This year, regional contributions have largely dried up and the International Monetary Fund is pushing it to take austerity measures.
A proposed law that would have increased taxes touched off mass protests that forced the resignation of Prime Minister Hani al-Mulki’s government. His designated successor, Omar Al Razzaz, has withdrawn the proposal for review.
Jordan, whose public debt nearly equals economic output, has been hurt by the rise in global commodity prices. Unemployment is at a two-decade high.
The U.S. this year committed to give Jordan more than $6 billion in aid over the next five years, up from $1 billion annually.