AMMAN. The economy is on a steady course of growth with inflation tamed at two per cent and the currency maintaining its stability, Central Bank of Jordan (CBJ) Governor Umayya Touqan said in a lecture late Monday.
 
“Maintaining currency and financial stability is one of the CBJ's top priorities for upholding an appropriate environment for economic activity,” Touqan said.
 
Touqan highlighted the Central Bank's success in raising the volume of foreign currencies to an unprecedented level of JD4.7 billion.
 
He also pointed out that the liquidity growth rate reached nine per cent noting that the liquidity of banks increased by 8.9 per cent during last year.
 
Touqan underlined the importance of the law banning the government borrowing money from the Central Bank. He described this legislation as “the best financial policy in the Jordanian history, as it helped the country gear towards growth.”
 
“Generally speaking, the national debt was reduced if one considers the changes in the trading value of the euro and the yen,” he indicated. The Jordanian dinar is fixed against the US dollar.
 
“Linking the dinar with the US dollar is the best choice we have now,” he said.” We tried the currency basket and other means, but experience proved that the dollar link serves our national economy the best.”
 
He explained that the Central Bank's main role is to safeguard the national economy through various measures that strengthen the financial situation.
 
Although the CBJ was able to develop a structure of interest rates in harmony with the regional and international economic developments, Touqan admitted that the CBJ failed to persuade banks in the Kingdom to reduce interest rates.
 
The governor attributed this shortcoming to cumulative credit extensions and related high costs.
 
In 2003, total assets of Jordanian banks assets represented 239 per cent of the gross national product.
 
The CBJ requested Jordanian banks to raise their capital from at a minimum of JD20 million to at least JD40 million by 2007 to encourage small banks to merge. It also raised the capital adequacy rate from eight to 12 per cent to help banks gain more competitiveness.
 
He stressed that the bank will not allow any bankruptcy of any bank and will help prevent that, giving as an example the Jordan Gulf Bank which was on the verge of bankruptcy before the Central Bank took immediate measures to save it and reinvigorate its operations “even better than before.”
 
He said that the issue of Philadelphia Bank is still to be solved noting that the Depository Insurance Company will provide up to JD10,000 to every depositor in case of any bank's bankruptcy.
 
The CBJ governor also said that the Shamaileh case, which had roots in the mid 1990s, was being monitored by the CBJ which, in the right time, brought it out to the public and put everything under control.
 
“We cannot end corruption cases like that, but we can prevent it from spreading and affecting the national economy,” he concluded.

By Rami Abdelrahman

© Jordan Times 2004

 

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