Changes from report parliamentary committee draft to plenary report

In an increasingly challenging global economic context, Jordan faces persistent structural challenges compounded by significant external shocks. While the country has maintained moderate growth of around 2% in recent years, this level remains insufficient to address fundamental economic needs: reducing high unemployment (22.9% in 2022) and alleviating a substantial public debt burden (88.7% of GDP in 2023).

These domestic challenges are further exacerbated by heightened regional tensions, including the war between Israel and Gaza and ongoing instability in Syria, which are disrupting trade, straining public resources and jeopardizing key sectors such as tourism. Therefore, Jordan is facing a series of unfavorable factors with economic, political, social and demographic consequences, and must receive appropriate and rapid support as a reliable and stable partner of the EU. Moreover, the migratory pressure is very high in the Kingdom with 1.3 million refugees from Syria out of total of 3.8 million of refugees. It means 1/3 of the Kingdom population are refugees.

To support Jordan's economic stability and cover the country's residual financing needs over the operation's availability period, the Commission proposes a macro-financial assistance (MFA) operation of up to €500 million in loans, despite the Jordan’s request for €700 million.

This assistance is designed to address pressing economic challenges, including high public debt, a structurally elevated budget deficit (5.1% of GDP in 2023), and a persistent external deficits (average of around 6.5% of GDP over the last five years). It also aims to mitigate the fiscal constraints exacerbated by recent crises, such as the COVID-19 pandemic and regional instability.

The political and economic conditions necessary for granting the proposed MFA are fulfilled, as confirmed by the Commission’s evaluation of Jordan’s current situation. The loan will be provided under the External Action Guarantee with a provisioning at a rate of 9%, which will be programmed under the NDICI-GE, for a total amount of EUR 45 million. To ensure risk coverage, the EU will provision 9% of the total amount, or €45 million, under the External Action Guarantee.

The MFA will have a validity period of two and a half years following the entry into force of the Memorandum of Understanding (MoU). The disbursement of funds will occur in three tranches, contingent upon the full and timely implementation of the agreed-upon economic policies outlined in the MoU. These policies include ambitious reforms in key areas such as public governance, fiscal management, and anti-corruption efforts, ensuring that the assistance supports Jordan’s long-term economic resilience.

This assistance complements the ongoing IMF program approved in January 2024, which provides $1.2 billion over four years, and aligns with support from other international partners, including substantial U.S. grants. It also builds on Jordan’s track record with macro-financial assistance, being the fourth MFA operation since 2014, totaling €1.08 billion to date. These successive programs underscore the EU’s ongoing commitment to strengthening Jordan’s institutional capacity and promoting economic stability.

By addressing Jordan’s immediate financing needs and supporting reforms in key areas, the MFA reinforces the country’s economic resilience while contributing to regional stability. Subordinated to clear economic policy conditions, this assistance ensures accountability and progress. The full and timely implementation of these policies will remain a prerequisite for the disbursement of each tranche, ensuring that Jordan continues to meet its reform commitments.

Jordan is a key partner in the region, able to engage in dialogue with the various geopolitical players in the Middle East. It is important to give Jordan due consideration and not to take its support for granted. It is therefore important to build a global and strategic partnership with Jordan, alongside and in addition to this MFA, in order to quickly lay the foundations for tomorrow's collaboration.