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Syrian refugees cost Kingdom $2.5 billion a year — report

By Khetam Malkawi - Feb 06,2016 - Last updated at Feb 06,2016

AMMAN — The influx of more than 630,000 Syrian refugees into Jordan has cost the Kingdom over $2.5 billion a year, according to the World Bank's estimates.

The estimated cost amounts to 6 per cent of Jordan's gross domestic product (GDP) and one-fourth of the government’s annual revenues, said the World Bank’s latest Quarterly Economic Brief (QEB), which was sent to The Jordan Times on Friday. 

Jordan and Lebanon — which, along with Turkey, are bearing the global responsibility of hosting Syrian refugees — are facing tremendous fiscal pressures, the QEB said. 

The World Bank announced last week that it plans to offer $200 million in concessional financing to Jordan and Lebanon in response to the Syrian refugee crisis.

According to the report, countries bordering conflict zones, many of which are already in fragile situations, are facing tremendous budgetary pressure. 

The World Bank said the Kingdom’s estimates show that each refugee costs the Jordanian government $3,750 (JD2,500) per year. 

“The influx of more than 630,000 Syrian refugees is thus estimated to have cost Jordan over $2.5 billion a year,” the report said. 

“Under this situation, government debt is accumulating fast — estimated at 90 per cent of GDP in 2015,” the report added.

According to the latest population census conducted late last year, 1.26 million of Jordan’s population are Syrians, but only 50 per cent is registered as refugees.

The World Bank’s QEB indicated that unemployment rates in Jordan increased to 12.5 per cent in the first half of 2015, compared to 11.4 per cent during the same period in 2014. 

It added that increased insecurity and uncertainty have lowered foreign and domestic investments in Jordan and Lebanon as well.

In Jordan, it explained, investment as a share of the GDP declined to an estimated 27.4 per cent in 2015, from its peak of 28.1 per cent in 2013.

“These factors are expected to keep growth between 2.5-3.8 per cent in 2016 and 2017 for both countries [Jordan and Lebanon], well below their potential.”

Remittances have also taken a hit in countries such as Egypt, Lebanon, and Jordan that rely heavily on flows from Gulf Cooperation Council countries and others. 

“Jordan is in the same situation with growth in remittance inflows dropping from 4 per cent in 2013 to 2 per cent in 2014 and 2015,” the report said.

The Syrian war has also affected the standard of living in neighbouring countries, with per capita average incomes lower by an estimated 1.1 per cent in Lebanon and 1.5 per cent in Turkey, Egypt, and Jordan, relative to the levels that could have achieved had the war been avoided, the report stated. 

For Egypt, Jordan, and Turkey, the opportunity costs of foregone trade integration are larger than the direct costs, the World Bank added.

In Jordan, Lebanon and Turkey, more than 700,000 Syrian refugee children are unable to attend school because the current educational infrastructure cannot cope with the additional load, or — in the case of Turkey — because of language barriers.

In a statement sent to The Jordan Times, the World Bank said the QEB for the Middle East and North Africa has revised estimates of economic growth at 2.6 per cent in 2015, falling short of expectations from the 2.8 per cent predicted in October. 

Constrained by war, terrorism and to some extent cheap oil, short-term growth prospects remain “cautiously pessimistic”, the statement said, adding that the report examines the different ways in which civil wars are affecting the economies of the region, including the important channel of forced displacement, which has become a crisis. 

It also explores how economic fortunes will turn around if there is peace.

 

“Five years of war in Syria and spillovers to the neighbouring countries — Turkey, Lebanon, Jordan, Iraq, and Egypt — have cost close to an estimated $35 billion in output, measured in 2007 prices, equivalent to Syria’s GDP in 2007,” the statement said.

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