TEHRAN (Press Shia Agency) – A $2.5 billion aid package for Jordan has been agreed by the UAE, Saudi Arabia and Kuwait at a summit in Mecca.
The agreement includes a direct payment to the Jordanian central bank, as well as the three nations acting as guarantors to the World Bank on Jordan's behalf.
Development projects in Jordan will be financed by the donor nations over the five-year deal, The National reported on Monday.
Saudi Arabia hosted the meeting of the Persian Gulf Arab states to discuss ways to help Jordan after protests against IMF-backed tax reforms that led prime minister Hani Mulki to resign. New Prime Minister Omar Al Razzaz has said he will withdraw the original bill.
This leaves the government in a difficult position as it seeks to pass reforms tackling the ballooning government debt — now at 96 percent of its Gross Domestic Product — but Razzaz has said he will work on new tax legislation.
Jordanian Foreign Minister Ayman Safadi said on Sunday that his country appreciated the Saudi effort, and that they were "looking forward to the results of today's dialogue". He did not address the issue of the aid.
Jordanian activists, industrialists and trade unionists have said a financial aid package from the trio would serve to temporarily shore up Jordan's economy.
However, they added that the government needed to adopt sound financial policies to increase growth, rather than rely on the support of other countries.
For years Jordan's economy — one of the smallest in the region — has been largely dependent on the (Persian) Gulf Cooperation Council for aid, in particular from Saudi Arabia.
But with low oil prices, tighter fiscal policies and the kingdom's involvement in the war on Yemen, the aid has slowly dwindled.
In December 2011, the Saudi-based six-nation (P)GCC set up a $5bn development fund for Jordan that expired last year. Jordan received only $3.75bn because Qatar did not pay its share.
Maintaining Jordan's security is key for the Persian Gulf Arab countries.
"Jordan is a strategic depth for the (Persian) Gulf countries,” said Ali Abbous, head of Jordan’s professional associations, which called for the strikes and protests that unsettled the country last week.
“If there is unrest in Jordan, it will impact the entire region. So economic aid is crucial for Jordan’s stability," said Abbous. "But Jordan cannot keep asking for money, Jordan needs to invest the aid in a manner that would benefit the economy and improve transport as well.”