What changed

DRAFT EUROPEAN PARLIAMENT LEGISLATIVE RESOLUTION

BUDGETARY ASSESSMENT

for the Committee on International Trade on the proposal for a decision of the European Parliament and of the Council on providing macro-financial assistance to the Hashemite Kingdom of Jordan

(COM(2024)0159 – C90146/2024 – 2024/0086(COD))

(Ordinary legislative procedure: first reading)

The Committee on Budgets has carried out a budgetary assessment of the proposal under Rule 58 of the Rules of Procedure and has reached the following conclusions:

The European Parliament,

A. whereas Jordan continues to face significant external financing needs and economic challenges, with a current account deficit of 7.1% of GDP in the first semester of 2023, driven by persistent deficits in trade in goods and Jordan's public debt burden remains high at 88.7% of GDP in 2023, raising concerns about long-term fiscal sustainability;

– having regard to the Commission proposal to Parliament and the Council (COM(2024)0159),

B. whereas Jordan's narrow revenue base, with domestic tax revenue at only 16% of GDP, raises concerns about long-term fiscal sustainability and capacity to service external debts;

– having regard to Article 294(2) and Article 212 of the Treaty on the Functioning of the European Union, pursuant to which the Commission submitted the proposal to Parliament (C90146/2024),

C. whereas the severe deterioration of external accounts and Jordan's strategic importance for regional stability justify this support package;

having regard to Article 294(3) of the Treaty on the Functioning of the European Union,

1. Notes that the Commission proposal of EUR 500 million in MFA requires EUR 45 million in provisioning under the External Action Guarantee from NDICI-Global Europe;

– having regard to Rule 60 of its Rules of Procedure,

2. Notes that the assistance will be disbursed in three instalments between 2024 and 2027, with release strictly linked to progress with implementation of both the IMF programme and additional policy measures;

– having regard to the budgetary assessment by the Committee on Budgets,

3. Recalls that this represents the fourth MFA operation for Jordan since 2014, bringing total MFA support to EUR 1.58 billion, demonstrating the EU's sustained commitment to supporting Jordan's economic stability;

– having regard to the opinion of the Committee on Foreign Affairs,

4. Acknowledges that the loan structure includes a grace period and spreads repayments over a long period, creating extended contingent liabilities that require monitoring;

– having regard to the report of the Committee on International Trade (A100000/2024),

5. Acknowledges that the IMF assessed Jordan's public debt level as sustainable in its January 2024 report, while noting that debt sustainability risks remain significant;

1. Adopts its position at first reading, taking over the Commission proposal;

6. Recalls that previous MFA operations to Jordan have demonstrated positive track records in terms of repayment;

2. Calls on the Commission to refer the matter to Parliament again if it replaces, substantially amends or intends to substantially amend its proposal;

7. Emphasises that the MFA underpins Jordan's continued commitment to values shared with the Union, including democracy, rule of law, good governance, and respect for human rights; stresses that a pre-condition for granting the Union's macro-financial assistance is that Jordan respects effective democratic mechanisms and guarantees respect for human rights;

3. Instructs its President to forward its position to the Council, the Commission and the national parliaments.

8. Stresses the importance of regular verification of Jordan's compliance with the pre-conditions, ongoing conditionality and objectives to protect the EU's financial interests and ensure implementation of the MFA in accordance with the regulation;

EXPLANATORY STATEMENT

9. Calls for proper monitoring and regular reporting to the European Parliament and Council on developments relating to the assistance as well as the continuous monitoring of conditions and objectives;

In an increasingly challenging global economic context, Jordan faces persistent structural challenges compounded by significant external shocks. While the country has maintained moderate growth of around 2% in recent years, this level remains insufficient to address fundamental economic needs: reducing high unemployment (22.9% in 2022) and alleviating a substantial public debt burden (88.7% of GDP in 2023).

10. Recalls that while MFA is meant to be an exceptional crisis response instrument, its increasing use to address structural economic challenges in partner countries risks diluting its emergency nature;

These domestic challenges are further exacerbated by heightened regional tensions, including the war between Israel and Gaza and ongoing instability in Syria, which are disrupting trade, straining public resources and jeopardizing key sectors such as tourism. Therefore, Jordan is facing a series of unfavorable factors with economic, political, social and demographic consequences, and must receive appropriate and rapid support as a reliable and stable partner of the EU. Moreover, the migratory pressure is very high in the Kingdom with 1.3 million refugees from Syria out of total of 3.8 million of refugees. It means 1/3 of the Kingdom population are refugees.

11. Concludes that the proposal for a Decision on providing macro-financial assistance to Jordan is compatible with the EU's budgetary framework and financial rules.

To support Jordan's economic stability and cover the country's residual financing needs over the operation's availability period, the Commission proposes a macro-financial assistance (MFA) operation of up to €500 million in loans, despite the Jordan’s request for €700 million.

This assistance is designed to address pressing economic challenges, including high public debt, a structurally elevated budget deficit (5.1% of GDP in 2023), and a persistent external deficits (average of around 6.5% of GDP over the last five years). It also aims to mitigate the fiscal constraints exacerbated by recent crises, such as the COVID-19 pandemic and regional instability.

The political and economic conditions necessary for granting the proposed MFA are fulfilled, as confirmed by the Commission’s evaluation of Jordan’s current situation. The loan will be provided under the External Action Guarantee with a provisioning at a rate of 9%, which will be programmed under the NDICI-GE, for a total amount of EUR 45 million. To ensure risk coverage, the EU will provision 9% of the total amount, or €45 million, under the External Action Guarantee.

The MFA will have a validity period of two and a half years following the entry into force of the Memorandum of Understanding (MoU). The disbursement of funds will occur in three tranches, contingent upon the full and timely implementation of the agreed-upon economic policies outlined in the MoU. These policies include ambitious reforms in key areas such as public governance, fiscal management, and anti-corruption efforts, ensuring that the assistance supports Jordan’s long-term economic resilience.

This assistance complements the ongoing IMF program approved in January 2024, which provides $1.2 billion over four years, and aligns with support from other international partners, including substantial U.S. grants. It also builds on Jordan’s track record with macro-financial assistance, being the fourth MFA operation since 2014, totaling €1.08 billion to date. These successive programs underscore the EU’s ongoing commitment to strengthening Jordan’s institutional capacity and promoting economic stability.

By addressing Jordan’s immediate financing needs and supporting reforms in key areas, the MFA reinforces the country’s economic resilience while contributing to regional stability. Subordinated to clear economic policy conditions, this assistance ensures accountability and progress. The full and timely implementation of these policies will remain a prerequisite for the disbursement of each tranche, ensuring that Jordan continues to meet its reform commitments.

Jordan is a key partner in the region, able to engage in dialogue with the various geopolitical players in the Middle East. It is important to give Jordan due consideration and not to take its support for granted. It is therefore important to build a global and strategic partnership with Jordan, alongside and in addition to this MFA, in order to quickly lay the foundations for tomorrow's collaboration.

ANNEX: ENTITIES OR PERSONS FROM WHOM THE RAPPORTEUR HAS RECEIVED INPUT

Pursuant to Article 8 of Annex I to the Rules of Procedure, the rapporteur declares that she received input from the following entities or persons in the preparation of the draft report:

The list above is drawn up under the exclusive responsibility of the rapporteur.

Where natural persons are identified in the list by their name, by their function or by both, the rapporteur declares that she has submitted to the concerned natural persons the European Parliament's Data Protection Notice No 484 (https://www.europarl.europa.eu/data-protect/index.do), which sets out the conditions applicable to the processing of their personal data and the rights linked to that processing.