The Makkah Summit and the New Gulf Aid: A Synopsis

By Jumana Ghunaimat

تم نشره في Mon 11 June / Jun 2018. 12:00 AM
  • Jumana Ghunaimat

The Gulf response was fast. The Saudis’ call for an urgent summit to support Jordan indicates an appreciation Jordan’s role and its regional weight, contrary to the common misconceptions of late.

It also uncovers a different understanding of the Jordanian popular movement and the mesmerising civility it showed in the recent phase.

The truth is, Jordan has come out of this crisis strong, projecting itself as a country that harbours respect for democratic practices and human rights. Particularly the right of expression.

His Majesty sided with the people, his own people, voicing his pride in the sophistication and cultivation of the people, who gave the world a lesson in civilised protest.

What matters now is the outcome of the Saudi initiative, the Makkah Summit.

Saudi Arabia, the United Aran Emirates and Kuwait agreed to extend a USD2.5 billion aid package to Jordan, in the forms of deposits at the Central Bank, guarantees and collateral to the World Bank, annual budget support for five years and funding for developmental projects.

Notably, these differ from the forms of aid presented to Jordan in the aftermath of the Arab Spring, in a number of ways.

Back then, the Gulf Cooperation Council allocated a total of USD5 billion provided by four countries, they are Saudi Arabia, Kuwait, the UAE and Qatar.

Everyone paid up, except for Qatar.

Another difference is that back then, the support was entirely in cash, to fund projects and support the budget.

This time, most of the amounts facilitated, around USD2 billion of it, will be distributed over a number of projects. Only a part of it will come in direct cash aid to cover the Treasury’s deficit.

Most probably, the quartet will deposit USD500 million at the World Bank, as collateral, to guarantee Jordan’s loans. Another amount will be deposited at the Central Bank of Jordan. This can be withdrawn at any time. However, it serves greatly the purpose of stabilising the fiscal system and supporting the foreign reserves. It also reiterates confidence in our economy.

Overall, these amounts will contribute effectively to the maintenance of our financial and fiscal systems. They may not be massive amounts, but they do pour directly into the Treasury and enables Jordan to borrow money at law interest costs.

This is mainly how this particular initiative differs from the earlier Gulf grant.

In other words, the prior grants went directly to the Treasury. These are distributed over a number of projects and provisions, from grants, to deposits and loans. Some of them will come from development funds, in the forms of credit, but eventually all of it will greatly reinforce our fiscal and financial stability and trust in our currency.

To put it simply, these steps will surely avoid Jordan a multitude of difficult scenarios.

The new Gulf aid is enough, for the few next years, to save our economy; for now. Once again, were not out of the woods yet.

Grant or not, if we do not launch a national reforms programme, tackle the imbalances and faults of our economic system, we will find ourselves in the same position soon.

A national reforms agenda is indispensable, to found for a productive economy and reinforce the principles of self-reliance.

In these last few years, the government spent a considerable amount of the Gulf Grant on projects Jordanians perhaps never even new existed. Much of the allocations went to funding projects that did not reflect positively, if at all, on the lives of Jordanians.

Now that the imminent threat of a suffocating financial crisis has greatly receded thanks to the Gulf Aid, it is time to launch a national task-force to help build a solid economic structure for Jordan, to pillar a better future for Jordanians, and soon.

This article is an edited translation of the Arabic version, published by AlGhad.