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    Central Bank raises interest rate on monetary policy instruments by 25 basis points

    March 18, 2022
    banking

    AMMAN — The Central Bank of Jordan (CBJ) on Thursday decided to increase the interest rate on its various monetary policy instruments by 25 basis points, effective Sunday, March 20.

    The CBJ’s open market operations committee decision was taken in line with the regional and international monetary markets' interest rates changes, to address the anticipated inflation pressures amid the rising global inflation rates, the bank said, according to the Jordan News Agency, Petra.

    The committee also decided to extend the bank’s refinancing programme, at a worth of JD1.3 billion, that targets the 10 sectors of industry, tourism, renewable energy, agriculture and IT, engineering consultancy, health, transport (transport companies), education (vocational and technical training) and export sector.

    In order to guarantee the availability of appropriate financing for vital sectors in the economy, the CBJ decided to keep the refinancing programmes’ interest rates unchanged to stand at 1 per cent for projects located in Amman and 0.5 per cent for projects located in other governorates, according to Petra.

    Since the outbreak of the pandemic, the total amount of funding granted through the programme to the targeted sectors to date has reached JD1.254 million, benefiting around 1,728 projects and creating 14,238 employment opportunities and maintaining 51,000 jobs.

    The amount of funds available under this programme is currently about JD600 million.

    Under the decision, the CBJ will also continue a JD700-million programme aimed to support SMEs, professionals and craftspersons, and maintain the interest rate at no more than 2 per cent, with loans to be repaid in 54 months, including a grace period of up to 12 months.

    To meet citizens’ basic needs, the committee decided to raise the ceiling of financing provided to wholesale importers of basic commodities to JD1 million instead of JD600,000.

    A total of 5,871 projects benefited from the JD521.7-million programme, which helped in maintaining about 94,000 jobs since the outbreak of the pandemic.

    The CBJ has adopted an exceptional monetary policy during the COVID-19 pandemic, including cutting interest rates by 150 basis points during the beginning and mid-March of 2020, making the Central Bank's main interest rate 2.5 per cent, the lowest in 10 years, according to Petra.

    The Association of Banks in Jordan (ABJ) had decided to postpone payments on loans granted to individuals for April, which will coincide this year with the holy month of Ramadan, a move taken in coordination with the CBJ.

    Monetary, economic and banking indicators were positive in 2021 and the first two months of 2022, as the Kingdom’s foreign currency reserves currently stand at $18 billion, which could cover the Kingdom’s imports for 9.4 months.

    Inflation rate totalled 2.2 per cent during the January-February period of 2022, the GDP increased by 2.1 per cent during the first three quarters of 2021, while tourism income in the first two months of 2022 jumped by 196.5 per cent.

    In this context, the CBJ will continue to monitor local, regional and global economic developments, and will stand ready to act proactively to support monetary stability, Petra added.

    jordantimes

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