The FINANCIAL — IFC, a member of the World Bank Group, and the Association of Banks in Jordan (ABJ) unveiled on October 21 a set of banking industry guidelines designed to help indebted businesses get back on their feet, part of an effort to promote economic growth across the country.
The guidelines, which have been endorsed by the Central Bank of Jordan, will make it easier for financially-troubled firms to reach an agreement with creditors outside of the court system. The guidelines will give viable businesses valuable breathing room, allowing them to re-organize and emerge from the process stronger than before, preserving the jobs and rights of their employees, according to IFC.
“These guidelines will minimize the cost and the time associated with the settlement of indebted businesses, and therefore, increase the recovery rates for creditors, which will strengthen the creditors’ confidence to retrieve their money. This will consequently improve the access to credit and encourage the growth of small and medium-sized enterprises.” says Musa Shehadeh, ABJ Chairman of the Board.
In Jordan, settling a bankruptcy case through the court system can take up to three years, which ties up potentially productive assets and acts as a drain on both businesses and creditors. The guidelines are expected to shorten the settlement time to less than one year.
“An efficient insolvency framework is vital to fostering a strong business environment and driving economic growth,” says Ahmed Attiga, IFC Country Manager in Jordan. “It protects viable businesses, preserves jobs, and puts valuable capital back to work.”
The guidelines were developed as, part of IFC’s Debt Resolution and Business Exit Program. The program helps the government of Jordan increase the efficiency and effectiveness of its insolvency proceedings both inside and outside of the court system.
The initiative is part of IFC’s wider strategy in Jordan, which aims to reduce regulatory burdens, increase access to finance, and improve the country’s business environment. The project is supported by the State Secretariat for Economic Affairs, Switzerland.
Discussion about this post