For decades, U.S. financial
assistance has played a pivotal role in sustaining Jordan’s economic stability
and fostering its development. The funds have supported critical sectors,
including infrastructure, education, healthcare, and water management.
اضافة اعلان
Additionally, the assistance has been instrumental in maintaining
macroeconomic
stability by supplementing the national budget. In 2024, the United States
provided approximately $1.65 billion in aid to Jordan, including $770.9 million
in direct budgetary support, $439.1 million allocated to development projects,
and $425 million in military financing to enhance Jordan’s defense
capabilities.
Fiscal
Consequences of Aid Suspension
Given that U.S. aid constitutes a
significant portion of Jordan’s revenue, any disruption in these funds would
have immediate fiscal repercussions. The annual budgetary support of $771
million (equivalent to 550 million Jordanian dinars) accounts for nearly 5.7%
of government revenues. Additionally, U.S. assistance finances essential
development projects implemented through the United States Agency for
International Development (USAID).
Should this funding be suspended,
Jordan would likely face a widening budget deficit, forcing the government to
resort to borrowing from domestic or international markets. This, in turn,
could increase the national debt and elevate borrowing costs due to potential
downgrades in the country’s credit rating. A rise in debt servicing obligations
would place further strain on public finances, making economic recovery more
challenging.
Economic
and Sectoral Impact
The suspension of U.S. aid would
also have far-reaching implications beyond fiscal concerns. Many development
projects in Jordan are dependent on USAID funding, and a prolonged freeze could
lead to significant economic and social disruptions. Key sectors, including
construction, healthcare, education, and services, could experience job losses,
particularly among middle-class professionals in high-value jobs. Small
businesses and local suppliers reliant on USAID-funded initiatives would face
financial hardship, further exacerbating unemployment.
To mitigate these adverse effects,
Jordan must explore alternative financing mechanisms and economic strategies to
support affected workers and businesses. While the aid suspension poses a
serious challenge, it also presents an opportunity for Jordan to advance
economic reforms, enhance public spending efficiency, and strengthen the role
of the private sector.
Alternative
Funding Sources and Economic Resilience
Despite the significant impact of
the aid freeze, Jordan has various alternatives to bridge the financial gap.
Given the strong regional and international support for Jordan’s stability, the
government can bolster cooperation with Arab nations—particularly Gulf
Cooperation Council (GCC) countries—and leverage Arab financial institutions to
secure direct financial aid and investment. Redirecting investments toward
strategic sectors such as infrastructure, water, and tourism could enhance
economic resilience.
Furthermore, Jordan’s longstanding
partnerships with the European Union, and International Finance Institutions
(IFIs) such as the World Bank, the European Bank for Reconstruction (EBRD), the
Asian Infrastructure Investment Bank (AIIB) and the Islamic Development Bank
among others provide additional avenues for securing financial assistance. Intensifying
collaboration with these institutions would ensure the continued funding of
essential development projects and mitigate the adverse effects of reduced U.S.
aid.
Moreover, both Arab and European
countries have a vested interest in strengthening Jordan's position,
particularly as it stands firmly against the forced transfer of Palestinians
from Gaza. This geopolitical alignment enhances Jordan’s strategic leverage in
securing financial and diplomatic support from key regional and international
partners.
Turning
Crisis into Opportunity
While the current situation presents
a formidable challenge, it also offers Jordan an opportunity to enhance
economic self-reliance and implement long-overdue reforms. By optimizing public
sector efficiency, expediting administrative reforms, and fully implementing
the Economic Modernization Vision, Jordan can reduce its dependence on foreign
aid while fostering sustainable growth.
This strategy is not merely about
addressing the immediate impact of the aid suspension but also about laying the
groundwork for a more resilient and self-sustaining economy. If managed
effectively, the current crisis could catalyze reforms that fortify Jordan’s
economic foundation and reduce its long-term reliance on external assistance.
In the face of uncertainty, Jordan’s
leadership must adopt a proactive and strategic approach, ensuring that
short-term disruptions do not derail long-term economic stability. By
diversifying its funding sources, accelerating structural reforms, and enhancing
private sector participation, Jordan can emerge from this challenge stronger
and more self-sufficient, as it always did.
