US embassy cable - 04AMMAN4410

UNCLAS SECTION 01 OF 02 AMMAN 004410 
 
SIPDIS 
 
DEPT PASS TO USAID 
 
E.O 12958: N/A 
TAGS: EFIN, ECON, JO 
SUBJECT:  Jordan's Public Debt: Government Continues to Make Progress 
 
 
1.  Summary: According to a Ministry of Finance quarterly 
bulletin on public debt, Jordan's total public debt at end of March 
2004 stood at $9.84 billion, 92.4% of estimated GDP for 2004, down 
from a figure as high as 111% in 1999. Of the total debt, about 76%, 
$7.47 billion, consists of foreign obligations. Foreign debt 
servicing for Q1 2004 was $241 million, of which $197.3 million was 
for principal payments. End Summary. 
 
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Foreign vs. domestic debt 
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2.  According to this new bulletin, Jordan's total public debt 
stands at JD 6,975 million ($9.84 billion). Of this total, JD 5.296 
billion ($7.47 billion) is for foreign obligations (76% of the 
total), and JD 1.68 billion ($2.37) is for domestic obligations 
(24%). Loan guarantees are 2.3% of the total public debt, and are 
included in the foreign obligations numbers. As a percentage of GDP, 
total public debt is 92.4 % of the estimated GDP for 2004; it was 
101.5% and 100.5% for 2003 and 2002, respectively, and reached as 
high as 111% in 1999.  (Comment: The GDP figure used in the debt/GDP 
ratio is the estimate for 2004.  It assumes that Jordan continues to 
follow its proposed privatization schedule, including privatizing the 
electricity generation company.  End Comment.) 
 
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Debt Servicing 
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3.  Foreign debt servicing for Q1 2004 was JD170.8 million ($241 
million), of which JD139.9 million ($197.3) was for payments toward 
principal and JD30.9 million ($43.6 million) was for interest 
payments. Fortunately for Jordan, 56.1% of its foreign obligations 
are at fixed interest rates. 
 
Of the public debt: 
-- 56% is at fixed interest rates; 
-- 37.6% is subject to 2% or lower interest rates; 
-- 30% is subject to 2-4% interest rates; 
-- 19.8% is subject to 4-6% interest rates; and 
-- 12.6% is subject to interest rates higher than 6%. 
 
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Maturity 
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4.  As of March 31, 2004, maturities of public debt were: 
-- 46.6% at 20 years or longer; 
-- 42.5% within 15-20 years; 
-- 10.5% within 5-15 years; and 
-- 0.4% within 5 years 
 
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Breakdown by currency 
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5.  As of March 31, 2004, obligations of public debt by currency 
were: 
-- 28.9% in US Dollars; 
-- 22.6% in Japanese yen; 
-- 19.9% in Euros; 
-- 10.2% in Kuwaiti Dinars; 
-- 8.2% in Pounds Sterling; 
-- 3.7% in other currencies; and 
-- 6.4% in SDRs. 
 
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Breakdown by source 
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6.  As of March 31, 2004, obligations of public debt by source 
were: 
-- 31.1% to industrial countries  Non-Official Development Assistant 
    loans (NODA); 
-- 30.3% to industrial countries  Official Development Assistant 
    loans (ODA); 
-- 31.3 % to multilateral institutions; 
-- 5.5% to Arab funds; and 
-- 1.8% to other sources. 
 
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Domestic Debt 
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7.  As of March 31, 2004, obligations of domestic debt were 
in the following instruments: 
-- 42.2% in T-Bonds; 
-- 28.9% in T-Bills; 
-- 16.2% as Central Bank extraordinary advances; 
-- 6.8% from banking and non-banking sources; and 
-- 5.1% development bonds. 
 
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Comment 
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8.  The local Arabic daily Al-Arab Al-Yawm quoted the Prime 
Minister on April 10 asserting that Jordan would repay its debt 
obligations by the end of 2007.  When contacted by ECON FSN, 
officials at the Prime Minister's office said the Prime Minister 
had been misquoted and what he had actually said was that Jordan 
would start servicing its debt by 2007 as required under its 
commitments to lenders. 
 
9. Jordan's improving debt situation is another indication of the 
current health of the Jordanian economy.  With trade booming, growth 
estimates being revised upwards, and inflation staying under control, 
Jordan is enjoying the results of earlier economic reforms, 
continued firm control over government expenditures and improved 
tax administration.  End Comment. 
 
10.  Note:  The new quarterly on debt is in addition to the 
Ministry's monthly financialbulletin. Both are available on the 
Ministry's website: www.mof.gov.jo.  End note.