UAE transfers $1bn to Jordan's central bank

Cash will be used to finance development and infrastructure projects - report
UAE transfers $1bn to Jordan's central bank
Flag of Jordan
By Massoud A. Derhally
Wed 23 Jan 2013 01:43 PM

The United Arab Emirates deposited US$1bn at the Central Bank of Jordan to help the kingdom finance development and infrastructure projects that could assist in stimulating the economy, the Jordan Times reported, citing Planning Minister Jafar Hassan.

On December 25 the UAE transferred US$250m to Jordan's central bank, the state-run Petra News Agency reported earlier this month, citing Abdullah Al Ameri the Gulf country's ambassador to the kingdom. The funds are separate from the US$1.25bn earmarked by the UAE for Jordan as part of the US$5bn that GCC states agreed in 2011 to grant the kingdom over a five-year period.

UAE investments in Jordan are in finance, tourism, industry, agriculture and education.

The two countries agreed on a framework on Tuesday that regulates a US$1.25bn grant to the kingdom by the Gulf state over a five-year period in line with the GCC plan, the Times reported. The US$1.25bn will be extended by the Abu Dhabi Fund for Development, on behalf of the UAE government.

Jordan's debt-to-GDP ratio increased to about 72 percent of GDP in the first nine months of 2012, up from 64 percent the year before, according to official figures from the Ministry of Finance. Foreign currency reserves at the central bank declined 14.1 percent in 2011 to US$10.5bn from US$12.2bn the year before, according to official figures from the central bank.

Jordan's economy is forecast to expand 3.5 percent this year from an estimated 3 percent in 2012, while inflation is projected to fall to 3.9 percent from 4.5 percent last year, according to the International Monetary Fund (IMF).

"The country has faced challenges during the year from the disruption of the flow of natural gas, the ongoing conflict in Syria, and an acceleration of influx of refugees," the Washington-based organisation said in a report late last month. "Combined with higher oil and food prices and a shortfall in grants, this has put further pressure on the country’s economy. Nonetheless, growth is expected to increase."

“Despite this challenging environment, the authorities have been implementing sound macroeconomic policies aimed at reducing fiscal and external imbalances in a socially acceptable way," the IMF added. The removal of general subsidies on all fuel products except liquefied petroleum gas on November 14 "was an important step,'' the organisation said, adding the measure helped reduce costs and risks to the budget from fluctuations in oil prices.

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