CBJ lowers compulsory reserves for commercial banks to 5 per cent

AMMAN — The Central Bank of Jordan (CBJ) on Sunday decided to lower commercial banks’ compulsory reserves from 7 per cent to 5 per cent, among other measures aimed at injecting JD550 million into the economy amidst the coronavirus crisis.

During a press briefing, CBJ Governor Ziad Fariz said that the measure, taken for the first time since 2009, will enable the banks to lower the interest rates on facilities provided to institutions and individuals. 

Amidst the rapid acceleration of the repercussions of the novel coronavirus (COVID-19), the CBJ decided to allow for banks to restructure individual and company loans, mainly those granted for small- and medium-sized enterprises, the Jordan News Agency, Petra, reported. 

Financing costs within the CBJ's programme to support development projects were also reduced, as the interest rate became 1 per cent instead of 1.75 per cent for Amman-based projects, while in the other governorates the rate dropped from 1 per cent to 0.5 per cent, he said. 

Fariz stressed that, as of Sunday, commercial banks must lower interest on existing loans, as well as extend the timeframe for repaying debts.

The Kingdom's foreign reserves amount to JD14 billion, enough to cover imports for more than 7 months, he added.

The situation is “reassuring” in this arena, Fariz said, pointing out that falling oil prices will have positive effects on the value of the Kingdom's imports and increase national exports. 

Jordan’s trade balance deficit currently amounts 3 per cent of the GDP, he said, expecting it to reach 4 or 5 per cent given the spread of the novel coronavirus and the decline of world economies. 

He added that the negative change in the inflow of remittances of Jordanian expatriates is “still minor” and will not affect the foreign reserve in the short term.