Central Bank Governor of the Year, MENA

The Jordanian Central Bank has received hefty praise for the way it has handled the economic response to the coronavirus crisis.

With the economy expected to contract for the first time in many years (by up to 6% this year), the Central Bank stepped up and began making smart decisions to support the economy, which have helped to set it apart from others in the region that are facing the prospect of falling into the grips of a complete crisis.

At the start of the pandemic, in March, authorities cut key benchmark interest rates from 3.5% to 2.5%, which proved to be a critical move in stabilising economic activity.

“The Jordanian Central Bank Governor, Ziad Fariz, was able to swiftly provide liquidity to the banking system, while reducing interest rates to support the economy during the pandemic,” says Garbis Iradian, chief economist MENA at the Institute of International Finance in Washington.

A stimulus package targeting banks and small and medium-sized enterprises was released, helping to limit the impacts of the coronavirus.

Those measures included: permitting bank lenders to postpone the loan repayments of clients in affected sectors, providing liquidity of equivalent to $776m by reducing reserve ratios on bank deposits, expanding sectoral coverage and reducing interest rates on its refinancing programme, while simultaneously increasing loan maturities and limits, and reducing the cost and expanding coverage of guarantees provided to small and medium-sized enterprises.

Jordan, which brings in about $5bn of revenue every year through tourism, also benefited from the provision of credit facilities for borrowers in the tourist sector, which was regulated by the central bank.

Alongside decisions from the Ministry of Finance to reduce sales and service taxes in affected sectors, such as hospitality, the central bank provided critical lifelines to the Jordanian economy.

Jordan successfully issued a $1.75bn bond in July in a testament to the country’s resilience in difficult times. Market-watchers say that would have been far more difficult without the central bank’s leadership and proactive stance towards supporting the economy since the pandemic erupted earlier this year.