(MENAFN- Jordan News Agency) Jordan and the United States on Sunday signed a $1.5 billion Eurobond guarantee agreement, under which the U.S. government will provide the necessary guarantees for Jordan to borrow from international markets during this year.
The agreement is the third one signed between the Jordanian and U.S. governments, by which Jordan was able to borrow U.S. guaranteed bonds worth $1.25 billion in 2013 at an interest rate of 2.503 percent for 7 years and $1 billion at an interest rate 1.945 percent for five years in 2014.
It was signed by the Minister of Finance Umayya Toukan, and Director of the U.S. Agency for International Development (USAID) in Jordan Beth Page, as Prime Minister Abdullah Ensour and the U.S. Ambassador to Jordan Alice Wells signed the declaration of the agreement.
Pursuant to the loan guarantee agreement, the United States would 100 percent guarantee the repayment of principal and interest on Jordanian sovereign bond issuances which will mature after 7 and 5 years.
Ensour stressed that this loan guarantee is a testament of the U.S.s' firm support to the government and people of Jordan and the commitment made by President Obama to His Majesty the King.
He noted that the third loan guarantee will help the national economy to adapt to growing challenges in the region, including the disruption of gas supplies and conflicts in Iraq and Syria, as it will enable the Jordanian government to borrow from international markets at competitive interest rates.
The prime minister pointed out that the agreement will help the government to finance rising expenses and services in vital sectors, such as education, and thus reduce the current levels of public debt.
In turn, the U.S. ambassador stressed that this loan agreement is the largest guarantee signed by the United States with any country.
She noted that this agreement will enable Jordan to borrow from international markets, at the same interest rate that the U.S. gets, adding that the previous two agreements will spare Jordan about $500 million as a result of low interest rates.
Wells re-affirmed the commitment of the U.S. to supporting Jordan to maintain its stability and prosperity.
Toukan said the Kingdom's financing needs require, in addition to local revenues, loans and grants to cover operating and capital expenditures and debt service.
The net public debt at the end of 2014 amounted to about JD20.556 billion, or 80.8 percent of GDP, compared to about JD19.097 billion, or 80.1 percent of GDP at the end of 2013, an increase of 0.7 percent.
This agreement falls within the financing plan approved by the 2015 general budget law and is not considered as an additional debt. It achieves balance between internal and external debt and external borrowing to finance the budget deficit and mitigate domestic borrowing.
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