The European Investment Bank (EIB) is partnering with Housing Bank to provide a €100 million credit line to the country's small and medium-sized enterprises to help them cope with the economic fallout from Covid-19.
The funding is part of an Economic Resilience Initiative supported jointly by the EIB and the European Union to promote the development of Jordan's private sector as a way of generating economic growth and providing jobs.
“It is one of the EIB’s top priorities to support the resilience of the private sector during this unprecedented crisis with the provision of most needed funding through our cooperation with the Jordanian banking sector," EIB vice-president Dario Scannapieco said in a statement on Sunday.
"Our partnership with Housing Bank for Trade and Finance aims to make available vital financing [to] local businesses to help them cope with the economic impact of the Covid-19 pandemic," he added.
The agreement demonstrates "the depth of trust that EIB has placed in us as well as cementing their belief in our ability to support private-sector companies", Housing Bank's chief executive, Ammar Safadi, said.
Jordan's real gross domestic product rate is expected to grow 2.5 per cent this year after contracting by an estimated 3 per cent in 2020, the IMF said last month after it released a tranche of $146m of funding through an extended fund facility. In total, the Washington-based lender has released $687m of a $1.3 billion, four-year facility agreed in March last year.
SMEs make up about 95 per cent of all businesses in Jordan. They contribute more than 50 per cent of its gross domestic product and employ about 60 per cent of the workforce. However, many companies have seen sales and profits hit by the pandemic, leading to greater demand for liquidity.
The EIB's support "will go a long way towards recovery from the difficulties brought about by the coronavirus pandemic", Mr Al Saffar said.
"Through these funds, we will be able to continue supporting the sector and safeguarding jobs while simultaneously strengthening the economy’s resilience,” he added.
