Amman: The Senate’s Finance and Economy Committee, led by Rajai Muasher, engaged in discussions on Tuesday with Adel Sharkas, the Governor of the Central Bank of Jordan (CBJ), concerning monetary policy.
Muasher noted that this meeting is a continuation of previous sessions aimed at gaining insights into monetary policies, the CBJ’s efforts in maintaining monetary stability, and the impact of the war on Gaza on economic sectors, bank reserves, and the overall banking and monetary situation.
Sharkas emphasized that maintaining monetary stability remains the primary goal and utmost priority for the CBJ. He explained that the recent decisions to increase interest rates on monetary policy tools were made to achieve this objective and to contain inflationary pressures.
He highlighted the effectiveness of the bank’s measures, despite the unfavorable global environment and prevailing challenges in the region. The demand for the dinar increased, reflected by the continued decline in the dollarization rate, reachin
g 18 percent at the end of last November, compared to levels exceeding 20 percent pre-COVID-19 pandemic.
Sharkas underlined that foreign reserves are at comfortable and reassuring levels, currently amounting to $18 billion, sufficient to finance 7.8 months of the Kingdom’s imports of goods and services. He pointed out that the inflation rate reached 2.1 percent during the past year, compared to inflation exceeding 4 percent in 2022, which is among the lowest inflation rates recorded in the region and the world.
“Although the Central Bank of Jordan raised interest rates by 5.25 basis points since the end of March 2022, the weighted average interest rates on loans and advances rose by 216 basis points, constituting only 41.1 percent of the total raising operations carried out by the bank. This indicates that the banks did not raise interest rates on loans by the amount that the Central Bank of Jordan did,” he added.
He pointed out that the weighted average interest rates on term deposits increased by 248 bas
is points, constituting 47.2 percent of the total raising operations, indicating that the interest rate margin between loans and term deposits, amounting to 3.06 percent until the end of last November, is the lowest since 26 years old.
He commended the pivotal role of the banking sector in the national economy, highlighting that the facilities provided by banks increased annually by approximately JD997 million, reaching JD33.4 billion at the end of last November. Deposits in banks also saw an increase of JD1.2 billion, reaching JD43.3 billion, indicating a high level of confidence in the banking sector.
He emphasized that the banking sector in the Kingdom is robust, solid, and highly stable, equipped to withstand shocks due to its solidity and substantial levels of capital and liquidity.
He observed that the local economic landscape witnessed numerous achievements and advancements during the year 2023. A noteworthy accomplishment was the progress in the financial and structural reform approach, marked by t
he successful completion of the sixth and seventh reviews of the economic reform program with the International Monetary Fund.
Sharkas regarded this as a recorded achievement for the government, affirming its commitment and seriousness in implementing economic reforms, facilitating the transition to a new economic program with the Fund to seamlessly sustain the economic reform agenda.
He mentioned that Jordan’s stable credit outlook was a key consensus among credit rating institutions in 2023. Furthermore, the removal of Jordan’s name from the list of countries under monitoring for combating money laundering and terrorist financing in 2023 is anticipated to boost the confidence of the international community and investors in the Jordanian economy, underscoring Jordan’s commitment to legislation and international agreements.
He emphasized that many indicators demonstrated positive performance in 2023, with tourism income standing out. The economy recorded a growth of 2.7 percent during the first three quart
ers of 2023, and he expects the economy to maintain growth close to this percentage for the entire year.
He pointed out that the impact of the repercussions of the war on Gaza on the performance of economic activity in 2023 was limited. The extent of its repercussions in 2024, however, depends on the duration and expansion of the crisis.
He stressed that the national economy possesses the experience and tools to address shocks, enabling it to overcome this crisis at the lowest possible costs.
Source: Jordan News Agency