(1)

Relations between the European Union (the ‘Union’) and the Hashemite Kingdom of Jordan (‘Jordan’) are developing within the framework of the European Neighbourhood Policy (ENP). Jordan signed an Association Agreement (2) with the Union on 24 November 1997, which came into force on 1 May 2002. Under that agreement, the Union and Jordan gradually established a free trade area over a transitional period of 12 years. In addition, an agreement on further liberalisation of agricultural products (3) entered into force in 2007. In 2010, an Advanced Status partnership was agreed between the EU and Jordan that entails expanded areas of cooperation. A protocol on Dispute Settlement Mechanisms for trade between the EU and Jordan initialled in December 2009 entered into force on 1 July 2011. Bilateral political dialogue and economic cooperation have been further developed within the framework of the Association Agreement and the Single Support Framework adopted for 2014-2017.

(2)

Since 2011, Jordan has embarked on a number of political reforms to strengthen parliamentary democracy and the rule of law. A Constitutional Court and an Independent Election Commission have been set up and a number of major laws, including the Election Law and the Law on Political Parties as well as laws on decentralisation and municipalities, have been passed by the Jordanian Parliament.

(3)

The Jordanian economy has suffered significantly from the ongoing regional unrest, notably in neighbouring Iraq and Syria. Together with a weaker global environment, this regional unrest has taken a heavy toll on external receipts and has strained public finances. Tourism and foreign direct investment inflows have been negatively affected, trading routes blocked and the flow of natural gas from Egypt disrupted. In addition, the Jordanian economy has also been impacted by a large inflow of Syrian refugees, which has increased pressure on its fiscal position, public services and infrastructure.

(4)

Since the outbreak of the conflicts in Syria in 2011, the Union has expressed its unequivocal commitment to supporting Jordan as it addresses the economic and social consequences of the Syrian crisis, and in particular of the presence of a large number of Syrian refugees in its territory. It has increased its financial support to Jordan, strengthening its cooperation in many fields, including the civil society, the electoral system, security, regional development and social and economic reforms. In addition, the Union has offered the possibility to Jordan of concluding a Deep and Comprehensive Free Trade Area agreement.

(5)

In this difficult economic and financial context, the Jordanian authorities and the International Monetary Fund (IMF) agreed in August 2012 on a first economic adjustment programme, which was supported by a 3-year Stand-By Arrangement (SBA) in the amount of USD 2 000 million. That programme was successfully completed in August 2015. Under that programme, Jordan made considerable progress with fiscal consolidation, also helped by the decline in oil prices, and with a number of structural reforms.

(6)

In December 2012, Jordan requested complementary macro-financial assistance from the Union. In response, a decision providing macro-financial assistance of EUR 180 million in the form of loans was adopted in December 2013 (4) (MFA-I). The Memorandum of Understanding defining the policy conditions related to this first macro-financial assistance entered into force on 18 March 2014. Following the implementation of the agreed policy measures, the first tranche of MFA-I was disbursed on 10 February 2015 and the second tranche was disbursed on 15 October 2015.

(7)

Since the outbreak of the Syrian crisis, the Union has allocated almost EUR 1 130 million to Jordan. This includes, in addition to the EUR 180 million from the first macro-financial assistance operation, EUR 500 million in regular programmed bilateral cooperation for Jordan financed under the European Neighbourhood Instrument, about EUR 250 million from the humanitarian budget and more than EUR 30 million from the Instrument contributing to Stability and Peace. Moreover, the European Investment Bank has made loans in the amount of EUR 264 million available since 2011.

(8)

The intensification of the Syrian crisis in 2015 severely affected Jordan through its effects on trade, tourism and investor confidence. Jordan was also affected by a decline in financial support from the Gulf Cooperation Council countries, affected by the decline in oil prices. As a result, economic growth has slowed down again, unemployment has increased and new fiscal and external financing needs have emerged.

(9)

In this challenging context, the Union has reaffirmed its commitment to supporting Jordan in its economic and social challenges and reform process. In particular, this commitment was expressed at the conference ‘Supporting Syria and the Region’, held in London on 4 February 2016, where the Union pledged EUR 2 390 million in 2016-2017 in financial support for the countries most affected by the refugee crisis, including Jordan. Political and economic support from the Union to Jordan's reform process is consistent with the Union's policy towards the Southern Mediterranean region, as set out in the context of the ENP.

(10)

Following the deterioration in Jordan's economic and financial situation, the IMF and Jordan have also started discussions on a successor arrangement, which could take the form of an Extended Fund Facility (‘IMF programme’) and would likely cover a period of 3 years, starting in the second semester of 2016. The new IMF programme would aim to alleviate Jordan's short-term balance of payment difficulties while encouraging the implementation of strong adjustment measures.

(11)

In March 2016, in view of the worsening economic situation and outlook, Jordan requested additional macro-financial assistance from the Union.

(12)

Given that Jordan is a country covered by the ENP, it should be considered to be eligible to receive macro-financial assistance from the Union.

(13)

The Union's macro-financial assistance should be an exceptional financial instrument of untied and undesignated balance-of-payments support, which aims to address the beneficiary's immediate external financing needs and should underpin the implementation of a policy programme containing strong immediate adjustment and structural reform measures designed to improve the balance-of-payments position in the short term.

(14)

Given that there is still a significant residual external financing gap in Jordan's balance of payments over and above the resources provided by the IMF and other multilateral institutions, the Union's macro-financial assistance to be provided to Jordan is, under the current exceptional circumstances, considered to be an appropriate response to Jordan's request to support economic stabilisation, in conjunction with the IMF programme. The Union's macro-financial assistance would support the economic stabilisation and the structural reform agenda of Jordan, supplementing resources made available under the IMF's financial arrangement.

(15)

The Union's macro-financial assistance should aim to support the restoration of a sustainable external financing situation for Jordan, thereby supporting its economic and social development.

(16)

The determination of the amount of the Union's macro-financial assistance is based on a complete quantitative assessment of Jordan's residual external financing needs, and takes into account its capacity to finance itself with its own resources, in particular the international reserves at its disposal. The Union's macro-financial assistance should complement the programmes and resources provided by the IMF and the World Bank. The determination of the amount of the assistance also takes into account expected financial contributions from multilateral donors and the need to ensure fair burden sharing between the Union and other donors, as well as the pre-existing deployment of the Union's other external financing instruments in Jordan and the added value of the overall Union involvement.

(17)

The Commission should ensure that the Union's macro-financial assistance is legally and substantially in line with the key principles and objectives of the different areas of external action, with the measures taken in respect of those areas, and with other relevant Union policies.

(18)

The Union's macro-financial assistance should support the Union's external policy towards Jordan. Commission services and the European External Action Service should work closely together throughout the macro-financial assistance operation in order to coordinate, and to ensure the consistency of, Union external policy.

(19)

The Union's macro-financial assistance should support Jordan's commitment to values shared with the Union, including democracy, the rule of law, good governance, respect for human rights, sustainable development and poverty reduction, as well as its commitment to the principles of open, rule-based and fair trade.

(20)

A pre-condition for granting the Union's macro-financial assistance should be that Jordan respects effective democratic mechanisms, including a multi-party parliamentary system, and the rule of law, and guarantees respect for human rights. In addition, the specific objectives of the Union's macro-financial assistance should strengthen the efficiency, transparency and accountability of the public finance management systems in Jordan and should promote structural reforms aimed at supporting sustainable and inclusive growth, employment creation and fiscal consolidation. Both the fulfilment of the preconditions and the achievement of those objectives should be regularly monitored by the Commission and the European External Action Service.

(21)

In order to ensure that the Union's financial interests linked to the Union's macro-financial assistance are protected efficiently, Jordan should take appropriate measures relating to the prevention of, and fight against, fraud, corruption and any other irregularities linked to the assistance. In addition, provision should be made for the Commission to carry out checks and for the Court of Auditors to carry out audits.

(22)

Release of the Union's macro-financial assistance is without prejudice to the powers of the European Parliament and of the Council, as budgetary authority.

(23)

The amounts of provisioning required for macro-financial assistance should be consistent with the budgetary appropriations provided for in the multi-annual financial framework.

(24)

The Union's macro-financial assistance should be managed by the Commission. In order to ensure that the European Parliament and the Council are able to follow the implementation of this Decision, the Commission should regularly inform them of developments relating to the assistance and provide them with relevant documents.

(25)

In order to ensure uniform conditions for the implementation of this Decision, implementing powers should be conferred on the Commission. Those powers should be exercised in accordance with Regulation (EU) No 182/2011 of the European Parliament and of the Council (5).

(26)

The Union's macro-financial assistance should be subject to economic policy conditions, to be laid down in a Memorandum of Understanding. In order to ensure uniform conditions of implementation and for reasons of efficiency, the Commission should be empowered to negotiate such conditions with the Jordanian authorities under the supervision of the committee of representatives of the Member States in accordance with Regulation (EU) No 182/2011. Under that Regulation, the advisory procedure should, as a general rule, apply in all cases other than as provided for in that Regulation. Considering the potentially important impact of assistance of more than EUR 90 million, it is appropriate that the examination procedure be used for operations above that threshold. Considering the amount of the Union's macro-financial assistance to Jordan, the examination procedure should apply to the adoption of the Memorandum of Understanding, and to any reduction, suspension or cancellation of the assistance,