Jordan needs to market its image to investors as an open economy with a skilled labour force, according to President of the European Bank for Reconstruction and Development (EBRD) Suma Chakrabarti.
In an interview with The Jordan Times on Monday, Chakrabarti said that the Kingdom could enhance its position as a regional hub for the ICT sector, which he described as promising, as well as other service sectors, underlining the country’s edge represented in its qualified human resources.
The EBRD president, who was on a two-day visit to the Kingdom, met with His Majesty King Abdullah and government officials. He also attended the signing of cooperation agreements with the Cairo Amman Bank to establish a $35 million trade finance facility to support international and intra-regional trade transactions with tenors of up to three years for guarantees and 12 months for cash advances.
He said that Jordan is now the bank’s number one client in the region in terms of capital to finance several projects, which reached $165 million in the past three months.
He expects EBRD to inject more investment into the country this year but could not predict the exact figure.
“I will be very surprised if we don’t have another $50 or $60 million invested in Jordan this year,” Chakrabarti noted.
Asked if EBRD would be interested in partnering with public and private sectors to implement large-scale projects in key strategic sectors such as energy and water, he said that the bank could cooperate with international and regional financial institutions to carry out mega-development schemes.
“We have done this elsewhere and yes, we are open to do it in Jordan,” he added, indicating that the bank will largely focus on infrastructure projects such as energy, renewables and water as well as small- and medium-sized enterprises (SMEs).
Bank officials need to determine which sectors are most important in Jordan, he said.
On the main objectives of his visit, Chakrabarti remarked that he wanted to look at the economic and political reform process in Jordan, see how the economy is doing, talk to the private sector and try to work out how the bank can add value to its operations in the country.
The EBRD chief commended the political and economic reform process in Jordan, saying: “I’m full of praise the way political and economic reform challenges were handled.”
The key challenge for Jordan is to make the economy grow as fast as possible or otherwise the deficit and account of payments cannot be financed in the long term, he indicated, stressing the importance of the private sector in reducing unemployment.
“Our goal is to help the private sector grow,” Chakrabarti said, referring to the credit lines and the free-of-charge technical assistance EBRD is offering to Jordan’s SMEs.
Commenting on the issue that the private sector in the Kingdom blames commercial banks for holding back economic growth by charging high interest rates and adopting strict lending measures, he said this is a global issue, not just in Jordan.
“After the international financial crisis banks have to comply with new monetary regulations, Basel II and Basel III, by holding higher levels of liquidity than prior to the crisis.”
But as liquidity has to stay inside banks and not be pumped into the economy, banks now will have to put the blame on international banking regulations rather than the private sector.
“Our job is to get that money out of banks into the economy. That’s why we need to work with SMEs and others — in order to improve their chances of getting access to the money,” he added.
Late last year, the EBRD provided a $100 million loan for the construction and development of Al Manakher Power Plant, some 15 kilometres east of Amman, to help address the country’s acute energy shortage.
In September last year, the European bank launched a $30 million trade finance line for InvestBank in Jordan, in order to facilitate their international trade financing activities.
This facility will support InvestBank as it develops new products and is aimed specifically at SMEs which also trade with counterparts from the EBRD’s countries of operations.
The EBRD, which opened an Amman office earlier this year, started investing in Jordan in 2012 by providing financing in September to help support trading operations of Jordanian companies.
By 2015, the EBRD expects to be investing up to 2.5 billion euros across the southern and eastern Mediterranean region which includes Jordan, Morocco, Egypt and Tunisia.