| Author (Corporate) | European Commission |
|---|---|
| Series Title | COM |
| Series Details | (2013) 242 final (29.4.13) |
| Publication Date | 29/04/2013 |
| Content Type | Policy-making |
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Since early 2011, Jordan's economy has been significantly affected by the domestic events related to the Arab Spring and the ongoing regional unrest, notably in neighbouring Egypt and Syria. Combined with a weaker global environment, the political transition of Jordan has taken a heavy toll on external receipts and has strained public finances. Lower tourism and FDI inflows, higher international energy prices and the repeated disruptions to the flow of natural gas from Egypt, which forced Jordan to replace gas imports from Egypt with more expensive fuels for electricity generation, have put a drag on growth and have resulted in a marked deterioration in the balance of payments and fiscal position. Jordan has also been affected by the intensification of the Syria crisis, notably through the inflow of refugees and its fiscal implications. While Jordan has so far managed to date to maintain macroeconomic stability, including through substantial fiscal consolidation efforts and financial support from foreign donors, there are significant balance of payments and financing needs. Under the pressure of a sharp drop of international reserves in the first half of 2012, the Jordanian authorities agreed on a $2bn (800% of quota), 36-month Stand-By Arrangement (SBA) with the IMF, approved in August 2012. In view of the worsening economic situation and outlook, the Jordanian government requested Macro-Financial Assistance (MFA) from the EU in the amount of €200m in December 2012. The Commission intends to submit to the European Parliament and the Council a proposal for MFA to the benefit of the Hashemite Kingdom of Jordan amounting to a maximum of €180m in the form of a medium term loan. The proposed legal base is Article 212 of the TFEU. The proposed MFA is consistent with the political and financial pledges made by the EU to the Jordanian authorities at the EU-Jordan Task Force meeting in February 2012. It is also in line with the aims of the new partnership for the South Mediterranean region proposed at the G8 Deauville summit and the orientations of the new European Neighbourhood Policy. In the same vein, it would signal to the other countries in the region that the EU is ready to support countries like Jordan, embarking on political reforms, in moments of economic difficulties. In this context, the Commission considers that the political and economic pre-conditions for a MFA operation of the proposed amount and nature are satisfied. |
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| Source Link | http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=COM:2013:242:FIN |
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| Countries / Regions | Europe, Middle East |
