Jordan debt surges 5.2% to touch $28bn in H1

 Jordan’s central bank hopes to reduce public debt to 60% of GDP in 2017 from 78% currently

Reuters/Amman

Jordan’s gross domestic and foreign debt rose 5.2% to 20bn dinars ($28bn) in the first six months of the year from the end of last year as the kingdom tapped more foreign funds to help its economy cope with an influx of Syrian refugees, finance ministry statistics released yesterday showed.

The preliminary figures showed that gross net domestic debt stood at 11.7bn dinars at the end of June, falling from 11.8bn dinars at the end of 2013.

Foreign debt, mostly to major Western donors and international financial institutions including the International Monetary Fund, rose to 8.38bn dinars at the end of June against 7.23bn dinars at the end of 2013, the data showed.

The rise was attributed to a $1bn US government backed eurobond the government issued last June.

Public debt has grown steadily since 2011 as the country increasingly resorted to domestic borrowing to finance rising government spending and subsidies, and pay for a higher energy import bill, issuing more Treasury bills and bonds.

The central bank hopes to reduce public debt to 60% of GDP in 2017 from 78% currently.

The last two years have seen Jordan resort to more foreign financing on preferential terms than domestic borrowing to mitigate the impact of accommodating hundreds of thousands of Syrian refugees.

Jordan’s public finances have however steadily improved since last year with a rise in domestic demand and foreign cash flows, including remittances from expatriates in the Gulf.

The aid-dependent kingdom has close business and economic ties to Gulf governments, and has capitalised on a pickup in regional tourism with Syria in turmoil.

Meanwhile, Jordan’s trade deficit for the first six months of this year widened 10.5% to 5.35bn dinars ($7.5bn) compared with the same period in 2013, due to a higher bill for Saudi oil and increased consumption, according to official data.

Imports rose 9.2% in January-June from a year earlier to 8.3bn dinars, the Department of Statistics data showed.

A chronic trade deficit and spiralling budget deficit have for years been among the biggest concerns for Jordan’s economic policymakers.