Saudi Arabia, Kuwait, UAE to give Jordan financial support deal

The finance ministers of Saudi Arabia, the United Arab Emirates (UAE) and Kuwait will on Thursday sign an agreement to provide credit guarantees and grants to Jordan, state-run Kuwait News Agency reports.

The agreement, which also provides for deposits by the Gulf states in Jordan’s central bank, will be signed in Amman, the agency said on Wednesday.

The three Gulf states in June pledged $2.5bn to help Jordan implement austerity measures which had sparked massive protests.

The protests worried Gulf states who fear instability in staunch US ally Jordan, which has long backed their foreign policy positions, could have repercussions on their own security.

Hundreds of Jordanians took to the streets of the capital, Amman, for protests against IMF-backed price increases and proposed tax reforms

Protesters had responded to a call by trade unions to demand the fall of the government.

The protests led to the resignation of Prime Minister Hani al-Mulki.

The country’s much-anticipated tax reform proposal has been labelled not “substantive”.

Economic measures

In May, the government proposed a draft income tax law aimed at raising taxes on employees by at least five percent and on companies by between 20 and 40 percent.

Since January, Jordan – which suffers high unemployment and has few natural resources – has seen repeated price rises, including on staples such as bread, as well as extra taxes on basic goods.

The price of fuel has risen on five occasions since the beginning of the year, while electricity bills have shot up 55 percent since February.

The IMF-backed measures have sparked some of the biggest economic protests in five years.

Jordan’s key role in protecting geopolitical stability in the Middle East already makes it one of the highest per capita recipients of foreign aid in the world, according to figures from USAID, the US aid agency.