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(1) Relations between the Union and the Hashemite Kingdom of Jordan (Jordan) are developing within the framework of the European Neighbourhood Policy (ENP). On 24 November 1997, Jordan signed the Euro-Mediterranean Agreement establishing an Association between the European Communities and their Member States, of the one part, and the Hashemite Kingdom of Jordan, of the other part (the ‘Association Agreement’), which entered into force on 1 May 2002. Under the Association Agreement, the Union and Jordan gradually established a Free Trade Area over a transitional period of 12 years. In addition, an Agreement in the form of an Exchange of Letters between the European Community and the Hashemite Kingdom of Jordan concerning reciprocal liberalisation measures and amending the EC-Jordan Association Agreement as well as replacing Annexes I, II, III and IV and Protocols 1 and 2 to that Agreement entered into force in 2007. In 2010, an Advanced Status partnership was agreed between the Union and Jordan that entails expanded areas of cooperation. A protocol between the European Union and the Hashemite Kingdom of Jordan establishing a dispute settlement mechanism applicable to disputes under the trade provisions of the Euro-Mediterranean Agreement establishing an Association between the European Communities and their Member States, of the one part, and the Hashemite Kingdom of Jordan, of the other part , was initialled in December 2009 and 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 EU-Jordan Partnership Priorities adopted for 2022-2027.

(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 Electoral Act and the Political Parties Act, as well as laws on decentralisation and municipalities, have been passed by the Jordanian Parliament. In addition, legislative improvements as regards the independence of the judiciary and women’s rights have been adopted.

(3) The Jordanian economy has suffered significantly from protracted conflicts in the region, in particular in neighbouring Syria, and most recently also in Israel-Gaza and in the Red Sea area. Since the commencement of the war in Syria, the Jordanian economy has been impacted by a large inflow of Syrian refugees, which has increased pressure on Jordan’s fiscal position, public services and infrastructure. In addition to regional instability, the macroeconomic and fiscal challenges related to the COVID-19 pandemic in 2020-2021, commodity price developments following Russia’s invasion of Ukraine in 2022, high exposure to trade fluctuations and the increase in borrowing costs for emerging markets globally continued to weigh on the Jordanian economy. As a result, Jordan experienced an economic contraction in 2020, followed by a slow economic recovery, as unemployment increased significantly in 2020 and remained high, and new fiscal and external financing needs emerged.

(4) The war in Israel-Gaza that commenced in October 2023 brings with it very substantial downside risk to the economic outlook, in particular due to the increased level of uncertainty in the region and the possible impact on the important tourism sector and consumer sentiment. The ongoing Houthi attacks on cargo and energy vessels in the Red Sea hinder vessel traffic to Asia, impacting Jordan’s exports, in particular those of minerals and chemicals, and its imports. In January 2024, the Jordanian authorities and the International Monetary Fund (IMF) agreed on a new economic adjustment programme supported by a four-year Extended Fund Facility (EFF) in the amount of USD 1 200 million, which followed a USD 1 700 million four-year EFF from 2020-2023, including a loan under the Rapid Financing Instrument. The IMF Executive Board approved the new four-year EFF in January 2024. The first review mission was conducted in April and May 2024 and the mission report was published in July 2024.

(5) In January 2020, the Union adopted a third macro-financial assistance programme (MFA-III) of EUR 500 million in the form of loans, in response to a request from Jordan in July 2019 and following the completion of the second macro-financial assistance programme of EUR 200 million in 2019. MFA-II came as a follow-up to MFA-I of EUR 180 million implemented in 2015. In May 2020, MFA-III was topped up by EUR 200 million pursuant to Decision (EU) 2020/701 of the European Parliament and of the Council in response to the socio-economic fallout from the COVID-19 pandemic. The first instalment of MFA-III was released on 25 October 2020, the second instalment on 20 July 2021 and the third instalment on 3 May 2023, following the implementation of the agreed policy measures. The assistance was fully disbursed during 2020-2023.

(6) MFA-III included a joint statement by the European Parliament, the Council and the Commission in which the Commission, in light of the fiscal challenges and extraordinary circumstances Jordan faced, committed to submit, if appropriate, a new proposal for extending and increasing macro-financial assistance to Jordan, provided that the usual requirements for that type of assistance, including its exceptional character, political preconditions, complementarity, conditionality and financial discipline, and an updated assessment by the Commission of Jordan’s external financing needs, were met.

(7) In that challenging context, the Union and the international community expressed their commitment to supporting Jordan on several occasions, in particular during annual Brussels Conferences on Supporting the future of Syria and the region, and at the EU-Jordan Association Council in June 2022.

(8) Since the beginning of the Syrian crisis in 2011, the Union has made available approximately EUR 3 500 million to Jordan under various instruments, including EUR 1 080 million under the three macro-financial assistance operations, to help Jordan preserve economic stability, sustain political and economic reform and address its related humanitarian, development and security needs. In addition, the European Investment Bank has allocated approximately EUR 1 100 million in project loans to Jordan since 2011.

(9) For the period 2021-2024, the Union bilateral indicative allocation (grants) to Jordan under the Neighbourhood, Development and International Cooperation Instrument – Global Europe (NDICI-GE) established by Regulation (EU) 2021/947 of the European Parliament and of the Council amounted to EUR 364 million, and was complemented by the Union support to help Jordan address the impact of the Syrian crisis (EUR 214 million from 2021 to 2023), in addition to assistance from other regional and thematic programmes. During the period 2014-2020, the Union support to Jordan, provided mainly through the European Neighbourhood Instrument, amounted to EUR 765 million. During the same period, Jordan also benefitted from an additional EUR 126 million channelled via the Neighbourhood Investment Platform, which leveraged approximately EUR 580 million in investments.

(10) In October 2023, in view of the persisting difficult economic situation and outlook, Jordan requested additional macro-financial assistance from the Union.

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

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

(13) Given that a residual financing gap remains in Jordan’s balance of payments over and above the resources provided by the IMF and other multilateral institutions, the provision by the Union of macro-financial assistance to Jordan is, under the current exceptional circumstances, considered to be an appropriate response to Jordan’s request to the Union to support Jordan’s 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.

(14) 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.

(15) The Union’s macro-financial assistance is expected to go hand-in-hand with the implementation of budget support operations under NDICI-GE.

(16) The determination of the amount of the Union’s macro-financial assistance should be based on a complete quantitative assessment of Jordan’s residual external financing needs, and should take into account Jordan’s 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 should also take into account expected financial contributions from bilateral and 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 Union’s overall involvement in Jordan.