The recent Goldman Sachs report on US foreign assistance to Egypt and Jordan offers a compelling quantitative breakdown of aid flows. The data confirms what many policymakers and economists in Jordan already know—US aid is far more material to Jordan than it is to Egypt. However, while the numbers are useful, the report falls short in analyzing the broader economic, geopolitical, and fiscal implications of US aid for Jordan.
As a Jordanian investor and private sector worker, I believe it is crucial to move beyond the numbers and examine the strategic importance of this aid, the risks associated with its potential reduction, and the steps Jordan must take to reduce reliance on foreign assistance in the long run.
The Importance of US Aid to Jordan’s Economy
The report highlights that US aid to Jordan totaled $1.7 billion in 2023, accounting for:
3.4% of GDP
28% of the gross external financing requirement (GEFR)
$1.3 billion in economic assistance (2.5% of GDP), directly supporting budget stability
Unlike Egypt, where US aid is mostly military-focused, Jordan receives the majority of its assistance in the form of economic aid, which plays a direct role in sustaining public finances. This aid supports public sector salaries, social services, infrastructure projects, and refugee programs, making it integral to Jordan’s economic stability.
In a country with high public debt and a large fiscal deficit, the removal or reduction of this aid could create serious budgetary pressures and force the government to seek alternative financing sources at higher costs.
A Strategic Tool, Not Just a Financial One
Beyond the fiscal impact, US aid is a strategic tool that strengthens Jordan’s:
Macroeconomic Stability – By supporting Jordan’s balance of payments, US aid helps maintain foreign reserves and supports the Jordanian dinar’s peg to the US dollar.
Regional Diplomacy & Security – Jordan is a key US ally in the Middle East, playing a stabilizing role in counterterrorism, regional diplomacy, and intelligence cooperation. Continued US aid ensures the continuation of security partnerships.
Investor Confidence – Foreign assistance signals international support for Jordan, encouraging foreign direct investment (FDI) and lowering the cost of borrowing in international markets. A sudden withdrawal of US aid could increase borrowing costs and strain investor sentiment.
While the report correctly states that the US cannot unilaterally block IMF disbursements, it does not emphasize the influence Washington holds over multilateral financial institutions. The US is the largest shareholder in the IMF, meaning its political stance can shape lending decisions, impacting Jordan’s access to concessional financing.
The Gaza Factor
Perhaps the most critical omission from Goldman Sachs’ report is the geopolitical risk associated with US aid conditionality, particularly regarding Gaza.
The Trump administration’s suggestion that US aid to Jordan and Egypt could be withheld if they refuse to accommodate Gazan Palestinians is not just an economic issue—it is a matter of national security and social stability. Jordan already hosts a significant Palestinian refugee population, and any suggestion that Jordan should absorb more refugees would be highly controversial domestically.
A disruption in aid tied to this issue could lead to:
Political instability – A strong public backlash against any move perceived as compromising Jordan’s national identity and sovereignty.
Economic strain – Increased pressure on social services, which are already struggling to support Jordan’s refugee population.
Diplomatic tensions – A shift in Jordan’s regional alliances as it seeks alternative economic partners.
The assumption that Jordan would comply with such conditions underestimates the political realities on the ground.
Looking Forward
While US assistance remains critical, Jordan must proactively work towards reducing dependence on external aid by:
Diversifying Economic Partnerships – Strengthening economic ties with the EU, GCC countries, and China to reduce reliance on US funding.
Boosting Domestic Revenue – Enhancing tax reforms, curbing tax evasion, and incentivizing new industries such as technology, pharmaceuticals, garment manufacturing and renewable energy.
Expanding the Private Sector – Creating an investment-friendly environment that reduces the role of government spending as a primary economic driver.
Strengthening Public-Private Partnerships (PPPs) – Encouraging infrastructure investments that do not rely on direct government financing.
These reforms are already underway, but they will take time to materialize. A sudden cut in US assistance would place undue pressure on Jordan’s fiscal strategy, forcing emergency measures rather than well-planned economic restructuring.
A Delicate Balance
The Goldman Sachs report is useful in providing a quantitative perspective, but it overlooks the broader strategic and geopolitical dimensions of US aid to Jordan.
While US assistance is vital, Jordan must not allow itself to be placed in a position of economic coercion. The country’s leadership should continue working towards fiscal self-sufficiency while maintaining strong diplomatic ties to ensure that any discussions on aid remain mutually beneficial, not politically driven.
Foreign aid is not just about money; it is about national sovereignty, economic independence, and strategic alliances. Jordan must strike the right balance between maintaining critical partnerships and building a more resilient, self-sustaining economy.
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