AMMAN: The cost of accommodating hundreds of thousands of Syrian refugees in Jordan is hampering the economy’s ability to grow substantially beyond a three to 3.5 percent IMF annual growth target for the next two years, the central bank governor said.
The drain on the country’s meagre economic resources and higher state expenditure resulting from the presence of over 600,000 refugees fleeing violence to neighbouring Jordan, had put brakes on an debt burdened economy already facing severe fiscal strains, Ziad Fariz said yesterday.
“Syrian refugees are bound to affect growth by I would say at least two percent. We would have had five percent. Despite this, I think the economy will continue to grow by about three percent more or less, three to 3.5 percent,” Fariz added.
This was in line with the International Monetary Fund (IMF) forecast, supported mainly by Gulf money for new infrastructure projects and greater confidence in the local economy.
“The impact of the Syrian refugees is huge on the economy directly and indirectly with its current impact and longer term and immediate on resources, on expenditure and the environment,” Fariz said in interview for the Reuters Middle East Investment Summit.
Jordan is one of Syria’s four immediate neighbours, along with Lebanon, Turkey and Iraq, inundated with refugees. Of more than two million refugees, almost one third are in Jordan. They are now almost ten percent of the country’s population.
Combined with a drop in foreign aid and soaring welfare payments and higher energy import bill, the kingdom went through an acute financial crisis last year that forced it to take a $2bn IMF loan.
Jordan’s economic problems deepened after 2011 as a sharp reduction in supplies of the cheap Egyptian gas it used to generate most of its electricity forced it to pay an extra $2.5bn a year for diesel and fuel bought in the global markets
Fariz who met senior IMF officials on the sidelines of a World Bank and IMF meetings in Washington earlier this month said extra foreign aid was crucial to help Jordan push through tough economic reforms and mitigate the negative impact of the the accelerated influx of refugees from Syria.
The IMF relaxed this month some fiscal targets on its budget belt tightening plans and on how quickly Jordan would have to raise electricity tariffs under its three-year loan programme, in recognition of the impact of the Syrian crisis and the need to safeguard social stability.
Reuters
