More Jordanians owe money to banks as living standards decline

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Central Bank of Jordan data shows that there were 1.22 million borrowers in 2021, compared to 1.17 million borrowers in the previous year, an increase of 4.3 percent. (Photo: Unsplash)

AMMAN — Increasingly more Jordanians owe money to banks, recent Central Bank of Jordan (CBJ) data showed, with total loans owed to banks by individuals reaching JD11.8 billion ($16.64 billion) at the end of last year, compared to JD10.9 billion at the end of 2020. 


Financial analysts attributed this 8.6 percent increase to the decline in living standards and the inability of many to provide basic needs. The COVID-19 pandemic was also cited as a reason for the rise in debt.   


According to Jo24, CBJ data showed that there were 1.22 million borrowers in 2021, compared to 1.17 million borrowers in the previous year, an increase of 4.3 percent.


Individual indebtedness has seen a successive increase since 2017 when it reached JD9.45 billion. However, the CBJ stated that the rise in indebtedness during the past two years does not represent an actual increase in debt; rather, it is a result of banks postponing the payment of debts of customers affected by the pandemic.


Regarding the distribution of borrowers by gender, the number of male borrowers stands at about borrowers, while the number of female borrowers stands at about 224,000.


Only resort

Despite high-interest rates in Jordan, banks remain the only resort available to citizens who apply for loans to meet basic needs, especially in light of the high poverty rate, eroding incomes, and low salaries, offset by a rise in prices and the cost of living in general.


The CBJ’s report on rising indebtedness by individuals in 2021 coincides with renewed calls to extend the decision to prevent the imprisonment of debtors, which is supposed to expire at the end of December.


The government made amendments to the Judicial Execution Law, according to which cases of non-imprisonment were expanded, especially for debtors whose debts are less than JD5,000.


The number of those wanted by the judiciary for failing to pay debts exceeded 153,000 until this December, according to official data. This number is not inclusive as many of those who have debts of less than JD5,000 were not counted. 


More than just banksاضافة اعلان

The total indebtedness of individuals is much higher than simply of those who owe money to banks, financial experts contend, as many owe debts to shops and various facilities, in addition to personal loans owed to institutions other than banks.


As for the distribution of individuals according to fixed or variable interest rates, the number of individuals borrowing from banks based on fixed interest rates reached 763,000, constituting 61.7 percent of the total number of borrowers. Meanwhile, the number of individuals borrowing from banks based on variable interest rates reached 473,000 borrowers constituting 38.3 percent of the total.


According to the CBJ, the monthly burden of indebtedness for individuals in 2021 amounted to 45.1 percent due to the decrease in individual income caused by the pandemic.


The largest share of debt belongs to housing loans, which constituted about 39.9 percent of individual loans at the end of last year, compared to 41.1 percent at the end of 2020, followed by personal loans, which constituted 35.1 percent of total loans, and consumer loans, including the purchase of cars, at 13.1 percent.


According to data issued by the Department of Statistics, the average monthly wage for Jordanians is JD543 ($765.6) for workers in the public and private sectors.

In a recent report, the World Bank estimated that the percentage of those living below the extreme poverty line in Jordan would reach 27 percent in 2021, as they live on less than JD1.3 per day.


According to the classification of the World Bank, Jordan is one of eight developing economies in the region that show the highest rates of poverty among the population, mainly as a result of the negative effects of the pandemic.



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