Jordan’s central bank cuts bank reserves to inject liquidity

Jordan’s central bank cuts bank reserves to inject liquidity

AMMAN (Reuters) – Jordan’s central bank cut compulsory reserves for commercial banks to 5% from 7% on Sunday to inject more than 500 million dinars ($705 million) of extra liquidity to mitigate the negative impact of coronavirus on the debt-straddled economy.

Central Bank Governor Zaid Fariz told Reuters that Jordan’s commercial banks were also asked to delay payments of loan instalments by companies and to allow rescheduling of retail loans without penalties to ease losses incurred by the private sector and to help individual borrowers.

The kingdom has seven confirmed cases of the virus. On Saturday it announced a tighter lockdown to contain the spread of the epidemic, with a ban on all incoming and outgoing flights to the country as of Tuesday.

It has also closed border crossings with Syria, Egypt, Israel and Iraq but kept commercial traffic open and officials say the country has a six month strategic stockpile of basic commodities.

Officials are worried the crisis that has hit the thriving tourist sector, which generates around $5 billion annually, will slash growth projections and deepen an economic downturn and a slowdown in domestic consumption.

The International Monetary Fund (IMF) expects Jordan’s economy to grow around 2.1% in 2020 but gradually rise in the next few years to 3.3%.