Jordan Times
Thursday, July 29, 2004
Soft, long-term $20m US loan
to finance Jordan's purchase of American wheat
By Rami Abdelrahman
AMMAN — Under an agrement signed Wednesday, the United States will provide the
Kingdom with a soft $20 million long-term loan to purchase approximately 130,000
tonnes of US wheat, equivalent to one fifth of the country's annual wheat
demand.
The loan is being extended with a “concessional” interest rate of one per cent
over 30 years, with a 5-year grace period during which no payments are required
from the government, the US Charge d'Affaires David Hale told the local press
after signing the agreement.
Representing the government, Finance Minister Mohammad Abu Hammour told The
Jordan Times that the government “does not have any intention“ to increase the
price of wheat products.
Jordan consumes around 600,000 tonnes of wheat each year — the bulk which is
used to make bread, a basic food staple in the country.
Local production ranges between 50,000 to 70,000 tonnes. Currently, the
government is purchasing produced wheat and barley from Jordan's 6,000-wheat
farmers at the international rate.
According to Jordan Farmers Union Chairman Sharary Shakhanbeh, local wheat
production this year is expected to be a mere 10,000 tonnes, the lowest in six
years.
Out of the 3.5 million dunums of arable land in the Kingdom, 850,000 dunums are
planted annually with wheat.
Abu Hammour reiterated Prime Minister Faisal Fayez's description of wheat as a
“red line” foodstuff, noting that the government continues to pay JD24 million
as a wheat subsidy to keep bread prices at the current rate of 160 fils per
kilogramme.
The government reduced the prices of wheat and flour last April to enable the
country's 1,700 bakeries to offset an increase in operational costs that
resulted from a surge in the prices of fuel and electricity.
Wheat and cereals represent the largest volume of imported products from the US.
Hale said Jordanian consumers, through this agreement, would still “enjoy the
American wheat, while the financing allows the purchase of this product at
minimal-financial impact.”
He noted that proceeds from the sale contribute to Jordan's overall
developmental efforts.
Along with Azerbijan, Peru and the Philippines, Jordan is eligible for the
PL-480 concessional sales programme in US fiscal year 2004. The programme aims
to assist developing countries to enhance food security and meet the nutritional
needs of their citizens.
The programme, according to the US embassy, enables developing countries to
purchase US wheat by providing export financing covering payment periods of up
to 30 years, low interest rates and grace periods up to five years on payments
of principal.
Last year, the US provided Jordan with $20 million loan to buy 136,000 tonnes of
American wheat. With a one per cent interest rate and four more years grace
period left on the loan, 25 annual installments are still required for repayment
of the loan.
The difference between last year and this year's deals is that the loan in 2003
provided Jordan with 6,000 extra tonnes, but obliged the country to repay the
loan within 26 years rather than 30.