Ammon News - The European Parliament has approved a new €500 million macro-financial assistance package for Jordan under the EU's Macro-Financial Assistance (MFA) mechanism. This assistance aims to support economic stability and enhance the Kingdom's ability to recover from the repercussions of regional tensions and unstable global economic conditions.

The approval was overwhelming, with 585 out of 664 members of parliament voting in favor, and 45 abstaining.

This vote represents the European Parliament's adoption of the resolution in its first reading, as part of the normal legislative procedure. The draft will now be sent to the Council of the European Union for its approval, paving the way for the final legislative process and the formal entry into force of the assistance agreement, pending the consent of both parties.

European Parliament President Roberta Metsola affirmed on Tuesday that strengthening support for Jordan contributes to consolidating regional stability and enhancing Europe's shared security.

Metsola stated that the European Parliament's vote on macro-financial assistance to Jordan is of particular importance, as it supports the Kingdom in advancing reforms and strengthening its economic resilience. She considered this an investment in one of Europe's strategic partners.

This assistance is part of the European effort to support the Jordanian economy in meeting its external financing needs amidst escalating geopolitical pressures in the Middle East, according to a parliamentary document.

This package is the 5th of its kind; four previous macro-financial assistance packages from the European Union have been implemented since 2014, totaling €1.58 billion. The most recent package, approved by Parliament last April, amounted to €500 million for the period 2025–2027.

The EU notes in its proposal that Jordan continued implementing its Economic Modernization Vision 2022–2033 and maintained its close partnership with the International Monetary Fund (IMF) through the $1.2 billion Extended Fund Facility program for the period 2024–2027, which achieved positive reviews through April 2025. Jordan also benefited from $700 million in new financing through the Resilience and Sustainability Instrument.

In January 2025, the European Union and Jordan agreed to launch a comprehensive strategic partnership, based on pillars including regional policy and cooperation, security and defense, economic resilience, trade and investment, human capital development, migration, and refugee protection. This new assistance is part of the financial package supporting the implementation of this partnership.

The Jordanian government submitted a formal request for this additional assistance in January 2025, stating that regional developments, particularly the tensions between Israel and Iran and the resulting airspace closures and flight suspensions, contributed to increased economic uncertainty, a decline in tourism and investment, weaker exports, and a decrease in domestic consumption and government revenues. The proposed document, reviewed by Al-Mamlaka TV, indicates that the ongoing tensions in the Middle East due to the war in Gaza, the situation in Lebanon, the potential fall of the Assad regime in Syria, and the escalation between Israel and Iran have had negative repercussions on the Jordanian economy.

It explains that these factors have impacted tourism, trade, and investor confidence. Economic growth reached approximately 2.5% in 2024, while inflation remained below 2% as a result of lower import prices and a tight monetary policy linked to the exchange rate pegged to the US dollar.

The document further states that Jordan "continues to face deep structural challenges, including a high unemployment rate of 21.4%, with even higher levels among youth and women, and low labor force participation."

Despite government measures to increase revenues and control spending, the budget deficit rose to 5.6% of GDP in 2024, while public debt reached 90.4% of GDP, excluding social security debt. The current account deficit also widened to approximately 6% of GDP due to a decline in exports and tourism revenues.

The new assistance package includes €500 million in long-term, concessional loans, to be disbursed in three installments over a period of up to two and a half years from the date the Memorandum of Understanding enters into force.

Disbursement will be contingent upon Jordan’s commitment to implementing a robust program with the International Monetary Fund and delivering an agreed-upon package of reforms. These reforms will cover areas such as public financial management, revenue mobilization, labor market policies, governance, energy and utilities, and improving the business environment.

The proposal document emphasizes that this assistance is part of the European Union’s policy to support economic stability and enhance Jordan’s capacity to pursue reforms, within the framework of a long-term political and economic partnership between the two sides. It also contributes to supporting the Kingdom’s efforts to address the repercussions of regional crises and improve its ability to maintain financial and economic stability in the coming period.