Central Bank reviews financing conditions

“This effect has been evident over the past few months as there has been a tangible slow down in the rate of real growth and a large increase in the state budget deficit,” the statement added.

According to the CBJ, these indicators have also been accompanied by a regression, exceeding all expectations, in the figures on exports, imports, expatriates’ remittances and foreign direct investment inflow.

“Moreover, there has been a noticeable slowdown in the growth of credit facilities offered by licensed banks to the various economic sectors, resulting to a great extent from a decline in the overall demand witnessed in the national economy,” the Central Bank elaborated.

To deal with the fallout of the global financial crisis and to enhance confidence in the national economy, the CBJ has taken several fiscal and banking measures since October 2008.

Foremost of these procedures was lowering the interest rate at the CBJ’s window deposit and the rate of compulsory cash reserve several times, down to 3 per cent and 7 per cent respectively, the statement indicated.

The CBJ also pumped cash into the national economy by halting the issuance of certificates of deposit which totalled JD3.7 billion, besides other measures, related to allocations, credit classification and legal liquidity.

“Despite international consensus that public sector efforts should focus on encouraging demand and regaining confidence in the national economy, rather than mitigating the directives of supervisory parties and increasing risks, the state in which the global and the Jordanian economy are going through calls for otherwise,” the CBJ statement said.

Taking into account the report of the committee formed by former prime minister Nader Dahabi, the CBJ has decided to adopt banking measures as of December 13, to be observed until the end of 2010.

Foremost of these measures, disseminated to the banking system, is a review of the restructuring of non-performing debts to enable banks meet the financing needs of their clients and overcome the impact of the crisis.

A second measure is allowing banks, in a manner that does not contradict CBJ credit policies, to offer new facilities within specific ceilings to clients whose debts are classified as “debt under watch”.

These measures are in pursuance of the CBJ’s follow up of international and local developments, the statement indicated.

jordantimes