- Strength of Jordanian banking sector and robust policy support avoided crisis
- SME access to finance less impacted than corporates
- EIB in collaboration with CBJ host SME financing conference in Amman
- New EUR 30 million financing confirmed
New research by European Investment Bank, in collaboration with the Central Bank of Jordan, confirms that although the Jordanian economy has been impacted by the COVID-19 pandemic, the Jordanian banking sector has remained solid.
The findings of the new “Banking in Jordan, Financing corporates and SMEs in the era of COVID-19” report, were highlighted in Amman today at the Jordan SME Finance 2022 conference, hosted by the European Investment Bank and the Central Bank of Jordan.
“Ensuring access to business finance is crucial for economic growth and creation of job opportunities. Better understanding the local dynamics of financing SMEs and the impact of external shocks such as COVID-19 and long-term climate change are crucial for design of impactful operations in cooperation with our partners. Today’s Jordan SME Finance Conference and the in-depth research outlined in the Banking in Jordan report will enable even closer cooperation with Jordanian financial partners and enhance our joint support for economic resilience in Jordan. The European Investment Bank greatly appreciates the excellent cooperation with the Central Bank of Jordan that reflects our joint commitment to support private sector investment in Jordan.” said Gelsomina Vigliotti, Vice President of the European Investment Bank.
“The European Union is committed to supporting private sector growth in Jordan and strengthening economic resilience. Today’s Jordan SME Finance 2022 conference provides a unique opportunity to discuss current business financing priorities and strengthen cooperation with Jordanian financial partners.” said Maria Hadjitheodosiou, European Union Ambassador to the Hashemite Kingdom of Jordan.
Close cooperation with banking and business partners supporting private sector growth
The Jordan SME Finance 2022 conference provided an opportunity for banking and business leaders, policy makers and international partners to exchange best-practice insights into SME financing and learn from recent policy responses to mitigate the economic impact of the COVID-19 pandemic.
EUR 30 million of new business financing confirmed
New EIB support for private sector investment totalling EUR 30 million was confirmed at the Jordan SME Finance 2022.
The EIB has agreed to support new credit lines to be managed by Jordan Commercial Bank.
Jordan’s banking sector avoided COVID-19 credit crunch
The Banking in Jordan survey showed how robust policy intervention, including liquidity support, loan rescheduling and additional guarantees for SMEs enabled both credit growth and banking sector profitability.
This enabled the economic and business impact of the COVID-19 pandemic to be less than in other Middle Eastern countries, in spite of the acute impact on Jordan’s tourism sector.
The survey shows that the impact of the pandemic on credit supply in Jordan has been relatively contained. Around two-thirds of surveyed banks reported a stable or even increasing supply of credit. On average, SMEs have been less affected than corporates: 50% of surveyed banks saw their credit supply to SMEs increase, while 25% reported a decrease; the respective percentages for corporates are 25% and 45%.
The limited impact on credit supply was seen as a result of both strong support measures being put in place and that small business entered the crisis in good shape and demonstrated flexibility and resilience throughout.
COVID-19 accelerating digitalisation in Jordan’s banking sector
COVID-19 has been a game changer for banking and triggered a strong push towards greater digitalisation. On the impact of COVID-19 on internal operations, 90% of banks confirmed that the pandemic will accelerate digitalisation of internal processes; 81% that banks’ daily operations will be impacted; and 90% that banks’ online offer will be enhanced.
EIB a key partner for supporting private sector investment in Jordan
Under its Economic Resilience Initiative, the EIB has been making available EUR 750 million of loans and guarantees to seven Jordanian financial intermediaries over the last five and a half years.
Background information
The EIB has been operating in Jordan since 1979.
Report available here: Banking in Jordan: Financing corporates and SMEs in the era of COVID-19 (eib.org)
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