AMMAN — A new
World Bank report predicted that around 50 percent of Jordan's businesses will be in
arrears, warning that private debt will become public debt, according to
Al-Mamlaka TV.
اضافة اعلان
The report, which was issued
Tuesday, indicated that companies in Jordan experienced a 50 percent decline in
their sales due to the COVID-19 pandemic and that 40 percent of local companies
were expected to be late in paying their obligations.
Despite the sharp decrease in
revenue caused by the crisis, the proportion of nonperforming loans is still
largely normal or below expectations, and this may be due to debtor grace
policies and the mitigation of accounting standards that mask significant
hidden risks that will only become apparent once the support policies end, according
to the World Bank.
President of World Bank Group
David Malpass said: “The risk is that the economic crisis caused by high inflation
and interest rates will spread due to financial fragility. The tightening of
global financial conditions and the shallowness of domestic debt markets in
many developing countries could lead to crowding out private investment and
weakening recovery.”
The need to expand growth-focused
access to credit and capital allocation will enable smaller and dynamic firms —
and sectors with higher growth potential — to invest and create jobs, said
Malpass.
The report notes that the global
public health crisis caused by the COVID-19 pandemic, has quickly turned into
the largest global
economic crisis in more than a century, which led to
significant relapses in the growth path, increased poverty rates, and widening
inequality.
The report called for universal
access to finance to support recovery from this unprecedented pandemic; in low
and
middle-income countries, around 50 percent of households cannot maintain
the same basic consumption level for more than three months in the event of
loss of income, while average companies report that their cash reserves are
sufficient to cover only two months’ worth of expenses.
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