The Central Bank is an independent, non-profit institution whose main mission is to maintain monetary stability, manage foreign reserves, and contribute to achieving economic growth priorities.
However, the Central Bank’s annual report provides an important opportunity to review the bank’s financial performance. After all, the central bank is charged with managing the kingdom’s portfolio of foreign currency reserves, and it also accepts deposits from the government and banks, and lends to commercial banks and financial institutions within the framework of its broader objectives set by law.
The most important financial indicator shown in the annual report for the year 2023 is the Central Bank’s achievement of foreign currency revenues exceeding $700 million, or 1.5% of the gross domestic product.
That is, the Central Bank’s investment in foreign reserves amounting to more than $18 billion in risk-free bonds, safe deposits, and gold has generated additional income for the Kingdom in foreign currency. This income is sufficient to cover approximately half of the Kingdom’s foreign currency deficit. If we take into account the rise in the value of the central bank’s gold assets, the bank’s revenues alone become sufficient to cover the Kingdom’s entire foreign currency deficit and keep reserves from declining, without the need to borrow a single additional dollar from abroad.
Even after excluding the Central Bank’s various expenses, the most important of which are those related to maintaining a comfortable margin between the dinar’s interest and the dollar, the Central Bank achieved a profit of 450 million dinars in 2023, a tenfold increase over the year 2022, when it achieved a profit of only 16 million dinars.
It is true that a large portion of the 2023 profit results from the revaluation of the Central Bank’s strategic gold assets, which rose (along with international prices) by about 325 million dinars. However, these profits remain realizable and transferable to the treasury, when the Central Bank deems so based on its strategic calculations of monetary policy objectives. They also (profits from valuing gold assets) constitute an integral part of foreign reserves that the Central Bank can liquidate when needed.
The annual report of the Central Bank was prepared with a high degree of professionalism and transparency, and it is an important reference for many economic and banking issues, including: old Iraqi debts to the Central Bank worth 750 million dinars, the export credit support program worth 100 million dinars, and Corona loan guarantee packages worth 300 million dinars. million dinars, advance loans to small and medium-sized companies amounting to more than 800 million dinars, and dollar-dinar swap contracts amounting to 750 million dinars.
Non-specialists will wonder why the Kingdom’s foreign reserves are not being used in the local economy. The answer is that these reserves are actually offset by funds that entered the Jordanian economy in dinar currency. That is, it is a corresponding balance for the dinars circulating in the economy, and it is not permissible to use it locally again.
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