The FINANCIAL — The World Bank and Jordan have signed a US$250 million financial package that aims to accelerate the Government’s quest to redress fiscal imbalances in the energy and water sectors and improve public service delivery.
The Second Programmatic Energy and Water Sector Reforms Development Policy Loan was signed on Sunday December 11, 2016, by Jordan’s Minister of Planning and International Cooperation Imad Fakhoury, and the World Bank’s Director for the Middle East, Ferid Belhaj, at an official ceremony in Amman.
During the ceremony at his office, Fakhoury lauded the Bank’s support to Jordan, and said the new loan would contribute to the Government’s efforts to shore up the fiscal deficit for 2016 through 2018. He said this support “will help to significantly reduce the debt servicing bill, provide more time for debt repayments and, consequently, lessen dependence on local market borrowing at higher interest rates.”
“Improving the efficiency of the water and energy sectors, and the consequent savings, will provide the Government with the fiscal space needed to invest more in economic development projects and improve the living conditions of citizens,” he said. Fakhoury noted that the water sector was the largest consumer of electricity in the kingdom, and the Government’s planned reforms aim to make better use of surface water for drinking purposes, while treating waste water for agricultural and industrial usage.
For his part, Belhaj reiterated the Bank’s unwavering commitment to help Jordan weather the exogenous shocks that have shaken its economy amid regional volatility. He said the Bank will deploy all its financing tools and work with the international community to help the Kingdom “transform challenges into opportunities.”
The loan is the second extended by the World Bank to Jordan supported by the Global Concessional Financing Facility (GCFF). The GCFF offers low-interest conditions normally reserved for the world’s poorest nations, not a middle-income country such as Jordan. The first was approved by the Bank in September 2016, and comprised a US$300 million package to help improve economic opportunities for Jordanians and Syrian refugees. The GCFF supports countries hosting large numbers of refugees to strengthen their resilience, notably Jordan and Lebanon, according to the World Bank.
The new package consists of a US$25 million contribution from the GCFF combined with a US$225 million loan, repayable over 35 years with a four-and-a-half-year grace period. The project is the second in a two-part series focusing on reforming Jordan’s energy and water sectors. The First Programmatic Energy and Water Sector Reforms Development Policy Loan was concluded in December 2015, and amounted to US$250 million.
These two programs are structured around two pillars: (i) improving the financial viability of the electricity and water sectors; and (ii) increasing efficiency of these sectors. These objectives are aligned with Jordan’s 2025 vision seeking self-reliance and financial stability. It is also in line with the Bank’s strategic goals for its engagement in the Kingdom as outlined in the Country Partnership Framework for 2017 through 2022.