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Ammon News - The Central Bank of Jordan (CBJ) on Sunday decided to raise interest rate on its various monetary policy instruments by 50 basis points, effective as of Monday, December 19.

The CBJ’s open market operations committee also decided to continue fixing preferential interest rates on loans granted by banks within CBJ’s program to refinance vital economic sectors, amounting to JD1.3 billion at 1.0% for beneficiary projects within capital Amman and 0.5% for other enterprises in the remaining governorates.

This step is taken according to the fixed interest rate over the loan period, which extends for ten years, as 10 sectors currently benefiting from this program, CBJ said.

The committee also decided to extend a JD700-million programme aimed to support SMEs, professionals and craftspeople and importers of basic commodities for an additional two months, until the end of next February.

Under this programme, the committee also decided to maintain the interest rate at no more than 2%, with loans to be repaid in 54 months, including a grace period of up to 12 months.

The committee’s decisions reflect the CBJ’s "unwavering" commitment to maintaining monetary stability in the Kingdom, preserving attractiveness of assets denominated in Jordanian dinars against US dollar and other regional and international currencies.

CBJ's steps also aims to align structure of domestic interest rates with similar regional and international financial markets' policies, fixing preferential interest rates unchanged on loans benefiting from the CBJ's programs to support path of economic recovery and supporting productive economic sectors with "high" added value to the national economy, the statement pointed out.

The committee’s decisions also reflect persistence of inflationary pressures in regional and international economies, compared to rates targeted by central banks, which contributed to the high inflation rates recorded this year in the Kingdom and its expectations in the near term.

Jordan's annual inflation rate reached 5.0% in November 2022, bringing the average inflation rate to 4.2 percent over the past eleven months of 2022, compared to 1.2% during the same period last year, the CBJ noted.

The available data for the last period of 2022 reveal the continued "strong" performance of Jordan's monetary and banking sector indicators, as the CBJ's foreign reserves recorded a "high" level, which currently stands at $16.7 billion, sufficient to cover the Kingdom’s imports of goods and services for a period of 8.7 months.

Over the last 10 months 2022, bank deposits hiked by JD2.4 billion, marking a growth of 6.1%, bringing their balance to JD41.9 billion at the end of October 2022.

Meanwhile, credit facilities granted by banks increased by JD2.3 billion during the same period, with a growth rate of 7.6%, bringing their balance to JD32.3 billion.

Noting "tangible" improvement in external sector indicators' performance, CBJ said volume of tourism revenues recorded during the past 11 months of 2022 exceeded double income during the same period last year, amounting to $5.3 billion, compared to $2.5 billion during the corresponding period last year, with a growth rate of nearly 115%.

Meanwhile, national exports increased by 44% during the first three quarters of 2022.

Volume of foreign direct investment entering the Kingdom increased by 96.9% during the first half of 2022, to reach $548.4 million.

Remittances from Jordanians expats rose by 0.6% during the first ten months of 2022.

In light of this situation, the "true" growth rate of gross domestic product (GDP) soared in 2022 to 2.7%, compared to 2.4% as forecast at the beginning of this year.

The CBJ will continue to closely monitor monetary, banking and economic developments, locally, regionally and internationally, and take the necessary measures to protect the macroeconomic, monetary and banking stability in the Kingdom.