“I expect Jordan to play a central role in the region after the situation stabilizes”

Historically, our role in the region has been fundamental. In Syria, subsidiaries from three Jordanian banks – Housing Bank of Jordan, Arab Bank and Bank of Jordan – are represented. We understand their environment and needs; we have institutions that can provide help and participate in joint ventures.

In Iraq, we have noticed many opportunities, especially since Jordan is adequately equipped in terms of available infrastructure, human resources, intellectual capital and institutional investors. I expect Jordan to play a central role in the region after the situation stabilizes since we have the expertise and skilled labor needed to help neighboring countries rebuild their institutions.

We have developed a national strategy in order to increase financial inclusion from 24.6% to 41.5% by 2020, covering youth, women, low-income segments, SMEs and refugees. For example, we have developed retail payment systems and services that allow the unbanked segments to open digital wallets and have access to money transfers, transact, and pay bills. We also aim to leverage fintech for financial inclusion for vulnerable groups by allowing the fintech firms to have a safe space where they can test new products without immediately incurring normal regulatory consequences.

Our non-performing loans ratio is low, at around 4.4%, while the provisions coverage ratio is high and recently reached 79.3%. We pay special care to the liquidity and capital positions of banks; our banks’ capital adequacy ratio average is around 17.8% as of June 2017, which is above our minimum requirement of 12%. Bank liquidity is constantly monitored because such operations are part of an ongoing national strategy to achieve sustainable growth, an aim that might be considered a little optimistic in midst of the unrest in the region.

Public debt in Jordan reached 95.3% of GDP at the end of 2017. Fiscal policy efforts aim to bring debt on a downward and sustainable path. To do this, the government has adopted a new national program for economic reform (2016-2019) supported by the IMF that is based on Jordan vision 2025, and the five-year growth plan launched in 2017. This program includes a bundle of fiscal measures concerning public revenues and expenditures to ensure public debt to reach 87.4% of GDP by the end of 2022.

The government intends to address major risks affecting public debt by re-profiling the short-term nature of domestic debt into medium to long term, as well as by switching towards more external borrowing through the issuance of more international bonds with long-term tenures. This would thus mitigate the crowding out effect of public financing on the private sector.

The government’s first attempt to approach international capital markets was in 2010, when it successfully managed to issue sovereign Eurobonds in the amount of $750 million. From 2013 to 2015, Jordan issued Eurobonds in the amount of $1.25 billion, $1.0 billion and $2.0 billion, respectively, issuances that had long-term maturities and suitable interest rates. In October 2017, the government issued non-guaranteed Eurobonds in the amount of $1 billion with a 30-years maturity. This issuance reflects the well-established confidence of international investors and funds in the ability of the Jordanian economy to grow and move forward with its financial and economic reform program.