Identifier
Created
Classification
Origin
09AMMAN2064
2009-09-10 09:55:00
UNCLASSIFIED
Embassy Amman
Cable title:
Jordan Secures $300 Million World Bank Loan to Help Close
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UNCLAS AMMAN 002064
SIPDIS
STATE FOR NEA/ELA AND EEB
E.O. 12958: N/A
TAGS: ECON EFIN EAID JO
SUBJECT: Jordan Secures $300 Million World Bank Loan to Help Close
Budget Gap
REFS: A) Amman 1985
B) Amman 1955
C) Amman 1942
D) Amman 1932
E) Amman 1646
UNCLAS AMMAN 002064
SIPDIS
STATE FOR NEA/ELA AND EEB
E.O. 12958: N/A
TAGS: ECON EFIN EAID JO
SUBJECT: Jordan Secures $300 Million World Bank Loan to Help Close
Budget Gap
REFS: A) Amman 1985
B) Amman 1955
C) Amman 1942
D) Amman 1932
E) Amman 1646
1. (U) Ministry of Finance officials confirmed to the press on
September 8 that Jordan will receive $300 million in soft loans from
the World Bank in the fourth quarter of this year to address its
increasing budget deficit (ref E). Finance Minister Bassem Salem
explained that under the terms of the agreement, Jordan will have a
long grace period, a low interest rate, and a long-term settlement
period. He attributed the decision to finance the deficit through
external debt to two reasons: to lower interest rates in Jordan,
and to create conditions for the private sector to obtain credit
from local banks. Salem emphasized that the loan will not be used
to further increase spending on capital expenditures in the budget
(ref E). The loan, however, will increase Jordan's total public
debt, which at the end of July 2009 reached $12.9 billion, 56.5% of
the projected GDP for 2009. The total increase of public debt was
$860 million, 7.1% higher than the 2008 end-of-year figure of $12
billion.
2. (U) Jordan is in the midst of a budget crunch (refs D and E).
According to the Ministry of Finance, the budget deficit in the
first seven months of 2009 reached $903 million, a huge increase
over the $127 million deficit during the same period in 2008. Many
factors have contributed to this deficit increase. Foreign aid in
the first seven months of the year dropped 65% to $144 million from
$415 million during the same period the previous year. Domestic
revenues dropped $193.5 million from $3.92 billion in 2008 to $3.7
billion, a 5.1% drop. Public spending also vastly increased early
in 2009, but the GOJ has since reduced capital expenditure spending
by $212 million (ref E).
Visit Amman's Classified Website at
http://www.state.sgov.gov/p/nea/amman
BEECROFT
SIPDIS
STATE FOR NEA/ELA AND EEB
E.O. 12958: N/A
TAGS: ECON EFIN EAID JO
SUBJECT: Jordan Secures $300 Million World Bank Loan to Help Close
Budget Gap
REFS: A) Amman 1985
B) Amman 1955
C) Amman 1942
D) Amman 1932
E) Amman 1646
1. (U) Ministry of Finance officials confirmed to the press on
September 8 that Jordan will receive $300 million in soft loans from
the World Bank in the fourth quarter of this year to address its
increasing budget deficit (ref E). Finance Minister Bassem Salem
explained that under the terms of the agreement, Jordan will have a
long grace period, a low interest rate, and a long-term settlement
period. He attributed the decision to finance the deficit through
external debt to two reasons: to lower interest rates in Jordan,
and to create conditions for the private sector to obtain credit
from local banks. Salem emphasized that the loan will not be used
to further increase spending on capital expenditures in the budget
(ref E). The loan, however, will increase Jordan's total public
debt, which at the end of July 2009 reached $12.9 billion, 56.5% of
the projected GDP for 2009. The total increase of public debt was
$860 million, 7.1% higher than the 2008 end-of-year figure of $12
billion.
2. (U) Jordan is in the midst of a budget crunch (refs D and E).
According to the Ministry of Finance, the budget deficit in the
first seven months of 2009 reached $903 million, a huge increase
over the $127 million deficit during the same period in 2008. Many
factors have contributed to this deficit increase. Foreign aid in
the first seven months of the year dropped 65% to $144 million from
$415 million during the same period the previous year. Domestic
revenues dropped $193.5 million from $3.92 billion in 2008 to $3.7
billion, a 5.1% drop. Public spending also vastly increased early
in 2009, but the GOJ has since reduced capital expenditure spending
by $212 million (ref E).
Visit Amman's Classified Website at
http://www.state.sgov.gov/p/nea/amman
BEECROFT