The ongoing COVID-19 pandemic severely disrupted economic and social sectors worldwide, and Jordan is no exception. A tight lockdown imposed by the Prime Minister of Jordan has halted businesses, leading to its economy to shrink by 3% in 2020. According to the finance minister, Jordan expects its economy to rebound to 2.5% in 2021.
How COVID-19 Shocked the Nation
When the pandemic first entered Jordan, the government took an early measure of imposing a nationwide lockdown. Consequently, business activities were stalled, and unemployment was increasing. The tourism sector, the dominating industry in Jordan, suffered the worst hit. As Jordan’s economy relies heavily on tourism, the 30% downturn in tourism dropped down the national GDP.
As of 2020, the government revenue fell to 860 million USD (610 million dinars) - leading to a 2.3% increase in the fiscal deficit. To maintain economic stability, Jordan is urged to cut its public debt by 42 billion USD. Besides, the kingdom has as well allocated 9.9 billion dinars, equivalent to 14 billion USD, to sustain the fiscal economy.
Mitigating the Impacts from the Pandemic
Following the economic crisis, Jordan is pulling out efforts to simultaneously curb the spread of the virus and recover the nation’s economy. Along with the International Monetary Fund (IMF), the government has established a new four-year program of 1.3 billion USD to withstand challenges in economic, healthcare, and social fields.
The Extended Fund Facility (EFF), a strategy designed by the IMF to support a country facing medium-term balance of payment problems due to constitutional weaknesses, was agreed in 2020 to push for recovery and squeeze the public debt. The program was intended to provide 146 million USD - which would mean a total of 687 million USD in IMF total spending for Jordan.
On top of that, the World Bank also mobilized promptly at the start of the COVID-19 pandemic to help Jordan dig into its portfolio and develop new business opportunities to cope with the economic crisis. In order to boost digitally activated youth income opportunities and grow digitized government services in Jordan, the World Bank’s Board of Directors has approved a 200 million USD for the Youth, Technology, and Employment Project.
The Future of Jordan
Jordan is moving into a new anxiety period, pushing it to make strategic decisions with long-term consequences. To maintain the possibility of favorable international trade, Jordan is in an attempt to strengthen its alliance with Saudi Arabia and the United Arab Emirates. Further, Jordan aims to turn these alliances into more international aid and soft loan deals to lower the government debt and prevent destabilizing economic reforms over the coming years.
While the monarchy will keep a close hold on decision-making power, Jordan continuously tries to enact structural changes and get through what will undoubtedly be a rough few years.
