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The government affirmed its commitment to continuing the monetary policy led by the Central Bank of Jordan to maintain monetary and financial stability, and to continue pegging the dinar exchange rate to the US dollar, in parallel with implementing reforms aimed at strengthening the banking sector, developing financial markets, and integrating climate risks into the supervisory framework.
According to the documents of the fifth review of the Extended Facility (EFF) program that I monitored, “Kingdom“The government confirmed that linking the dinar’s exchange rate to the US dollar will remain the main pillar of monetary policy, as it provides confidence in the Jordanian economy and maintains price stability, even in light of regional developments.
She explained that the central bank will continue to align local interest rates with the decisions of the US Federal Reserve, while being prepared to take any additional measures when needed to maintain the attractiveness of the dinar, the stability of financial markets, and sufficient levels of foreign reserves.
The government added that the Central Bank will continue to monitor developments in local and global markets on an ongoing basis, and use all available tools to ensure maintaining monetary and financial stability.
The documents I monitored indicated:Kingdom“, pointed out that the regional war prompted the Central Bank to intensify monitoring of liquidity conditions in the banking sector and financial markets, stressing that no indications of financial pressures or banking disturbances had emerged.
The government explained that, despite this, the Central Bank took temporary precautionary measures to support liquidity, which included reducing the mandatory reserve ratio on demand deposits by two percentage points, to 5% for commercial banks and 4% for Islamic banks until the end of 2026.
The Central Bank also provided low-cost financing for a specific period through licensed banks to support the economic sectors most affected by the war, with the aim of maintaining the availability of liquidity in the economy, while reducing the risks of irrational behavior and maintaining financial discipline.
The government confirmed that the Jordanian banking sector still enjoys high levels of capital, liquidity, profitability, and asset quality.
She indicated that the capital adequacy ratio reached 17.8% by the end of 2025, while the percentage of non-performing loans stabilized at 5.5%, and the provision coverage ratio reached 75.7%, and foreign reserves remained at strong levels, reaching about 132% of the reserve adequacy standard during the year 2025, and continued to rise during the first months of 2026.
The government affirmed that the Central Bank will continue to strengthen risk-based banking supervision, analyze systemic risks, conduct stress tests, develop crisis management frameworks, and enhance cooperation between supervisory authorities.
The Central Bank also continues to develop the regulatory framework for climate risks and implement climate-related disclosure requirements, in line with the best international standards, and within the framework of the Resilience and Sustainability Facility (RSF) programme.
The government explained that in January 2026, the Central Bank issued secondary instructions on disclosure and reporting related to climate risks, in accordance with the principles of the 2022 Basel Committee and the standards of the International Sustainability Standards Board (ISSB), which is one of the reform measures completed within the program.
These instructions provide a framework for banks’ disclosure of climate risks, thus enhancing the ability of investors, customers, and regulatory authorities to assess the impact of these risks on the banking sector.
The documents indicated that compliance with reporting requirements will become mandatory at the end of 2026, while disclosure requirements will begin to be implemented voluntarily until the end of the same year, before becoming fully mandatory by the end of 2027. Reporting on green financing volumes according to the national green classification will also become mandatory as of June 2026.
The government confirmed that the Central Bank will continue to develop its information systems to enable the collection and analysis of data related to climate-related financial risks, including risks resulting from extreme weather events.
Within the framework of developing financial markets, the government pledged to deepen the primary market for issuing sukuks and develop the secondary market for government securities. She explained that the Central Bank is working, based on the recommendations of the Middle East Technical Assistance Center (METAC), to prepare and publish bond documents in accordance with international standards in Arabic and English by September 2026.
The government added that it requested the International Monetary Fund to provide technical assistance to complete the development of the primary market for issuing sukuks.
As part of diversifying funding sources, the government pledged to adopt a green sovereign bond framework, in line with the principles of the International Capital Markets Association (ICMA), after completing the external review, with the Council of Ministers adopting this framework by July 2026.
The documents confirmed that all of these reforms aim to maintain monetary and financial stability, enhance the strength of the banking system, develop capital markets, diversify financing tools, and enhance the financial sector’s ability to manage risks, including risks related to climate change.
