international bank for reconstruction...
TRANSCRIPT
Document of
The World Bank
FOR OFFICIAL USE ONLY
Report No. 58114-JO
INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT
AND
INTERNATIONAL FINANCE CORPORATION
COUNTRY PARTNERSHIP STRATEGY
FOR
THE HASHEMITE KINGDOM OF JORDAN
FOR THE PERIOD FY12-FY15
February 1, 2012
Jordan Country Management Unit
Middle East and North Africa Region
The International Finance Corporation
Middle East, North Africa Region
This document has a restricted distribution and may be used by recipients only in the performance of their
official Duties. Its contents may not otherwise be disclosed without World Bank authorization.
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The date of the last Country Assistance Strategy Progress Report was April 8, 2009.
CURRENCY AND EQUIVALENT
January 1 – December 31
Unit of Currency = Jordanian Dinar
1$ = 0.708 JD (As of December 31, 2010)
Fiscal Year
January 1 – December 1
ABBREVIATIONS AND ACRONYMS AFD
CAS
CBJ
CIDA
CPS
DPL
e4e
EDP
EDSDP
ERFKE
EIB
EU
FDI
FY
GAM
GDP
GEF
GENTF
GOJ
IBRD
IDF
IFC
IMF
JICA
LMIC
MENA
MDGs
MIC
MIGA
MOPIC
NAF
NEPCO
OTF
PCF
PFM
PPP
REEE
SMEs
SPF
SSC
TA
TFP
USAID
WBG
Agence Française de Développement
Country Assistance Strategy
Central Bank of Jordan
Canadian International Development Agency
Country Partnership Strategy
Development Policy Loan
Education for Employment
Executive Development Program
Employer-Driven Skills Development Project
Education Reform for Knowledge Economy
European Investment Bank
European Union
Foreign Direct Investments
Fiscal Year
Greater Amman Municipality
Gross Domestic Product
Global Environment Facility
Gender Trust Fund
Government of Jordan
International Bank for Reconstruction and Development
Institutional Development Fund
International Finance Corporation
International Monetary Fund
Japan International Cooperation Agency
Lower Middle-Income Country
Middle East and North Africa
Millennium Development Goals
Middle Income Countries
Multilateral Investment Guarantee Agency
Ministry of Planning and International Cooperation
National Aid Fund
National Electrical Power Company
Ozone Trust Fund
Post-Conflict Fund
Public Financial Management
Public-Private Partnership
Renewable Energy and Energy Efficiency
Small and Medium Enterprises
State and Peace-Building Fund
Social Security Corporation
Technical Assistance
Total Factor Productivity
United States Agency for International Development
World Bank Group
ACKNOWLEDGEMENTS
This Country Partnership Strategy was prepared under the guidance of Hedi Larbi, Country
Director, by a team led by Pilar Maisterra, Country Program Coordinator, and Janette Uhlmann,
Country Officer, as well as Ahmed Attiga, Principal Country Officer for IFC. The CPS Core
Team comprised: Anwar Aridi, Ziad Badr, Mary Eunice Barroso, Ndiame Diop, Wael Mansour,
Marian Saleh, Haneen Sayed (World Bank), and Rapti Goonesekere (IFC). The preparation of this CPS involved contributors from many units of the World Bank Group
(WBG), particularly members of the Jordan Country Team, whose country experience and
knowledge have been extremely valuable in shaping the strategy. The following members made
important contributions: Mark Ahern, Ghassan Alkhoja, Ana-Maria Aviles, Alexander Bakalian,
Aseel Barghuti, Husam Beides, Chadi Bou Habib, Francois Boulanger, Rome Chavapricha, Bjorn
Ekman, Mona El-Chami, Gustavo Demarco, Mourad Ezzine, Jaafar Friaa, Abdelmoula Ghzala,
Anthony Gorman, Tracy Hart, Guenter Heidenhof, Christianna Johnnides, Nandini Krishnan,
Catherine Laurent, Laszlo Lovei, William Mako, Jean-Michel Marchat, Juan Manuel Moreno,
Sabah Moussa, Eileen Murray, Douglas Pearce, Madhu Raghunath, Omar Razzaz, Susan Razzaz,
Kanta Rigaud, Lia Sieghart, Olaf Smulders, Moukim Temourov, Caroline Van den Berg, Dorte
Verner, Tara Vishwanath, Jonathan Walters, and Mona Ziade.
IBRD
IFC
Vice President: Director: Task Team Leader: Co-Task Team Leader:
Inger Andersen Hedi Larbi Pilar Maisterra Janette Uhlmann
Dimitris Tsitsiragos Mouayed Makhlouf
Ahmed Attiga
COUNTRY PARTNERSHIP STRATEGYFOR FY12-FY15
―Laying a Foundation for Sustainable Growth and Job Creation‖
CONTENTS
Executive Summary ....................................................................................................................................... i
I. Country Context .................................................................................................................................... 1
A. Political and Social Context .............................................................................................................. 1
B. Economic Context ............................................................................................................................. 3
II. Building Long-Term, sustainable Growth ............................................................................................ 7
A. Building Stronger Growth Resilience through Fiscal Consolidation ................................................ 8
B. Strengthening Governance, Transparency and Accountability ......................................................... 9
C. Supporting Sustainable Growth through Investments in Core Infrastructure and Improvements in
the Business Climate ...................................................................................................................... 10
D. Supporting Sustainable Growth through Enhancing Human Capital and Competitiveness ........... 13
E. Fostering Inclusion through Effective Social Protection and Local Development ......................... 15
III. The Government’s Development Program ......................................................................................... 16
A. National Agenda (2006-15) and Executive Development Program (2011-13) ............................... 16
IV. World Bank Group Partnership Strategy ............................................................................................ 17
A. Lessons Learned .............................................................................................................................. 17
B. Current Portfolio ............................................................................................................................. 18
C. World Bank Group Assistance Strategy ......................................................................................... 21
V. Consultation ........................................................................................................................................ 33
VI. Monitoring and Evaluation ................................................................................................................. 34
VII. Managing Risks .................................................................................................................................. 34
BOXES
Box 1: International Comparison of Jordan’s Governance Indicators ........................................................ 10 Box 2: IFC’s Education for Employment (e4e) for Youth in the Arab World ........................................... 29
FIGURES
Figure 1: Sectoral Distribution of Active Portfolio, including Trust Funds ............................................... 19 Figure 2: Laying a Foundation for Sustainable Growth and Employment ................................................. 21 TABLES
Table 1: Jordan’s Medium-Term Outlook .................................................................................................... 7 Table 2: Comparisons of Labor Market Outcomes for Jordanian Youth, By Gender and Age .................. 14 Table 3: Jordan—Active Projects Financed by IBRD ................................................................................ 19 Table 4: Jordan—Active Projects Financed by Trust Funds ...................................................................... 20
ANNEXES
Annex 1: Jordan CPS Results Matrix (FY12-FY15) ............................................................................... 37 Annex 2: Jordan Country Assistance Strategy Completion Report (CASCR) FY06-FY10 ...................... 44 Annex 3: Development Partners ................................................................................................................ 77 Annex 4: Consultation Report ................................................................................................................... 82
CAS TABLES
Annex A2: Jordan At-a-Glance.................................................................................................................. 86 Annex B2: Selected Indicators of Bank Portfolio Performance and Management .................................... 89 Annex B5: Social Indicators ...................................................................................................................... 90 Annex B6: Key Economic Indicators ........................................................................................................ 91 Annex B7: Key Exposure Indicators ......................................................................................................... 93 Annex B8: Operations Portfolio (IBRD, IDA and Grants) ........................................................................ 94 Annex B8: Statement of IFC’s Committed and Outstanding Portfolio ..................................................... 95
Map: IBRD 33424
i
EXECUTIVE SUMMARY
1. Jordan is sensitive to the economic and political volatility of the region. The political
upheaval that swept the Arab region this year has had a significant impact on Jordan, taking the form of
economic shocks as well as demands for stronger citizen voice, greater accountability and improvements
in living conditions. Lower foreign direct investment (FDI), remittances and tourist revenues resulting
from the regional turmoil and interruptions in the gas supply from Egypt have coincided with higher
international grain and energy prices. At the same time, the Government has faced public protests
demanding reforms to the constitution and to the electoral system. The Government has responded by
adopting constitutional reforms and creating an enabling environment for an effective political party
democratic system.
2. Jordan’s vision is to pursue a knowledge-based economy, leveraging the country’s strong
human capital base and creating jobs. The Government’s Executive Development Program (EDP) for
2011-13 underscores the importance of exports to Jordan’s economic future and the role of education and
skills development in tailoring the country’s human capital to the needs of the private sector. Along these
lines, the EDP emphasizes the need for an improved enabling environment for business and investment
with the objective of enhancing the competitiveness of the economy. In addition, increased transparency
and accountability are highlighted as necessary conditions to bring Jordan to the next level of economic
and social development. In its presentation to the Deauville Partnership, Government drew heavily on the
EDP as its medium-term socio-economic development plan and noted that events in the region have
underscored the need to accelerate the political reform agenda and to ensure that the dividends of
economic reforms are shared across the country. In addition to improved governance, job creation and
private sector development are primary goals, along with addressing challenges in the energy and water
sectors.
3. In the short to medium-term, the Government’s key challenge, in addition to implementing
the political reform agenda, is to create fiscal space in order to protect against external shocks and
to safeguard growth-enhancing capital spending while also enhancing the efficiency and
effectiveness of social protection systems. The substantial public deficit—caused largely by
expansionary spending on recurrent budget items during the 2000-10 period and more recently by social
expenditures in 2011 in response to the recent shocks—leaves limited fiscal space to make capital
investments for growth. As a small, open economy, Jordan will continue to be vulnerable to external
shocks because of the significant role played by FDI and remittances in growth and because of the
reliance on foreign aid to help finance the fiscal deficit. FDI and remittances tend to track together with
the price of oil and have recently been affected by the regional turmoil, and foreign grants are
unpredictable.
4. The Government took decisive measures to reduce the fiscal deficit in 2010 to 5.6 percent;
however, an increase in expenditures in 2011, responding to unexpected exogenous factors has
diverted Jordan from its fiscal consolidation path. Despite significant progress in deficit reduction
(from 8.9 in 2009 to 5.6 percent in 2010), social pressures resulting from the regional popular revolts
prompted the Government in early 2011 to revise the budget, increasing civil service wages and
introducing additional food and fuel subsidies. Together these measures will cost 2.1 percent of gross
domestic product (GDP), most of which is being financed by a decrease in capital expenditures.
Additional social expenditures (amounting to 2.3 percent of GDP) were incurred after the budget was
approved. This package was fully covered by a $1 billion grant received from Saudi Arabia in the end of
July 2011, and the projected fiscal deficit, including grants, remains close to the 2010 level, at 6.5
ii
percent. The public debt-to-GDP ratio surpassed the 60 percent debt ceiling in the autumn of 2011
because of loan guarantees provided to the National Electricity Company as the latter had to switch to 4
times more expensive fuel to generate electricity when the gas supply from Egypt was disrupted.
5. In an effort to minimize the burden on the budget while at the same time facilitating
growth-enhancing investments, Government is looking to leverage private capital for investment in
key infrastructure. Government has renewed its emphasis on strengthening the framework for
investment development and growth across regions (through new Investment Promotion and Economic
Zone laws) and has developed legislation to facilitate Public Private Partnerships (PPPs). Jordan will
seek to become globally competitive and less vulnerable to changes in regional demand. To help in this
process it will need not only investments but policies and institutions that will further boost total factor
productivity (TFP). Jordan’s TFP growth was good during 2000-08, but pales when compared to that of
countries like Malaysia or Chile. This can improve with the continuation of educational reforms that
close skills gaps and improve education quality and with the development of an innovation policy,
increased focus on private sector competitiveness, and services to promote small and medium-sized
enterprises (SMEs).
6. Finally, in order for Jordan to be able to address the needs of its most vulnerable
population, while also maintaining fiscal discipline and investing in longer term growth and job
creation, efforts must be made to increase the efficiency of the social protection system. In this
regard, Government is exploring the potential for a more targeted subsidy system while at the same time
examining ways to ensure that the benefits of economic development, including the creation of jobs,
reach people in the less privileged areas of the country.
7. The World Bank Group (WBG) and Jordan have built a strong and flexible partnership
that has enabled frank and substantive discussion about the country’s development challenges as well as
about the areas where the WBG can bring the most value to Jordan, especially in the context of other
donor assistance and IFC’s mobilization of additional funding for the private sector. As of November 30,
2011, Jordan’s total active portfolio was valued at $279.1 million of which 87 percent ($243.5 million for
seven investment lending projects) is financed by IBRD and 13 percent ($35.6 million for twelve projects,
including one technical assistance project executed by the Bank) is financed by Bank-administered trust
funds. In addition, there are two guarantees valued at $60 million: (i) $45 million from IBRD for the
Amman East Power Guarantee Project; and (ii) $15 million from the Carbon Fund for the Amman
Landfill Gas Recovery Project. IFC has scaled up its investment activities in Jordan considerably during
the last few years; its portfolio has grown from $50 million at end-FY05 to about $524 million at end-
September 2011. IFC has also mobilized around $310 million over the past three years and has
undertaken extensive program of Advisory Services to support private sector development.
8. Taking into consideration the challenges facing Jordan at this time, the World Bank
Group’s Country Partnership Strategy (CPS) for FY12-FY15 is designed to help lay the foundation
for sustainable growth and job creation through a three-pronged approach:
(i) Strengthen fiscal management and increase accountability. The Bank will support efforts to improve
public financial management, including increased efficiency of public expenditures and revenue
generation, and will support the Government’s ambition to increase accountability. Relevant instruments
include the programmatic series of development policy loans that will support fiscal management, public
sector spending efficiency, private sector-led growth and governance, including strengthening the Anti-
Corruption Commission. Technical assistance (TA) on subsidy targeting, a fiscal consolidation study,
and TA on governance reform will complement the Development Policy Loan (DPL) series. WBG
advisory services and interventions at sectoral levels will be guided by the need to strengthen
transparency, accountability, and broader consultation with the private sector and civil society
organizations.
iii
(ii) Strengthen the foundation for sustainable growth with a focus on competitiveness. The Bank Group
will support priority infrastructure, including by leveraging private sector investment, supporting
improvements in the business environment, and supporting education and skills development. Towards
this end, the Bank Group stands ready to provide technical assistance, IFC advisory services, and
investments to attract private sector participation in infrastructure funding and management. Support for
a better business environment will focus on removing obstacles to innovation and investment at the firm
and sector levels; streamlining and reducing the procedures and cost required to create and operate
businesses; and enhancing SMEs’ and microenterprises’ access to finance to boost private sector growth
and competitiveness. To develop skilled human resources, the Government has been investing in
education quality with Bank support and has recognized the need for enhancements both on the
vocational and higher education side and on the labor market side in order to create skills more in line
with private sector demand. The Bank will remain involved through its ongoing portfolio of projects and
TA and will support a number of new regional education initiatives; IFC will facilitate improvements in
the quality and relevance of post-secondary education and vocational training through its Education for
Employment (e4e) initiative, where work in Jordan is currently more advanced than elsewhere in the
region. Pilot labor market programs will be evaluated and scaled up, targeting youth including women at
the secondary and post-secondary levels.
(iii) Enhance inclusiveness through social protection and local development. Building on past support to
the reform of Jordan’s safety net system, the Bank will continue assisting the Government in better
targeting its social assistance and subsidies to the poor and vulnerable. The Bank will also support
Jordan’s Social Security Corporation in implementing the new Social Security Law. The Bank Group
will build on the ongoing Regional and Local Development Project to expand a performance-based block
grant system that targets infrastructure interventions to municipalities and communities based on their
needs and abilities. The Bank Group will help strengthen the capacity of local communities and proposes
to build local economic and social assets through community-based approaches in order to reduce poverty
pockets and empower communities. The community-based approaches could focus on overall social
inclusion, particularly of youth and women.
9. The strategy and the scope of WBG support reflect consultations with the Government and
other stakeholders and are aligned with the priorities articulated in the Executive Development
Program, specifically those focusing on fiscal consolidation, growth, job creation, private sector
development, governance and social inclusion. The CPS also reflects the Bank and IFC’s regional
framework and strategy for the Middle East and North Africa (MENA) Region which has evolved to
respond to the events of the Arab Spring and focuses the WBG engagement on supply- and demand-side
governance, economic and social inclusion, job creation and sustainable private sector-led growth. The
Bank Group will seek to optimize the various instruments available and will emphasize the provision of
solid analytical work and selected advisory services and technical assistance; development policy loans
and guarantees. In addition, IFC’s lending, equity investments, mobilization, and guarantees (Risk-
sharing) and selected IBRD investment loans to will help leverage private sector investment in growth-
enhancing infrastructure. The IBRD lending envelope will be $500-$650 million, depending on the
sequencing and mix of instruments. IFC’s current investment portfolio stands at $523 million and is
expected to grow to approximately $750 million during this CPS period. The program for FY12-15 is
indicative and will be adapted to respond to country and private sector demands and to the WBG’s ability
to service this demand in the context of its comparative advantages.
10. Risks to the successful implementation of the Government’s agenda stem in part from the
increasing social pressures in Jordan and the associated risks to the pursuit of economic reforms
that are needed to stimulate long-term growth and job creation. The pressure for populist policies
and demands for subsidies and public sector employment could further strain the budget and squeeze out
capital investment. Relatedly, lack of consensus on the depth and relevance of political reforms could
iv
prolong the movement of protests and create uncertainty about Jordan’s stability with consequences on
domestic and foreign direct investments and hence growth. The Government will submit four draft laws
to Parliament before end 2011, including laws that govern elections and the political party system and that
establish an independent commission to oversee parliamentary polls. Government made use to a large
extent of recommendations submitted by the National Dialogue Committee, which comprises
representatives of political parties and civil society organizations tasked with reaching a consensus over
legislation governing political reforms. As such, the Government is taking steps to address the mounting
social pressures, but appropriate legislation to regulate the political party system and the election process
will be needed to further mitigate this risk.
11. In addition to the risks originating in the domestic political realm, there are risks that stem
from the strong links Jordan’s economy has with the other countries in the region as well as with
the global economy. Over the past several months, popular uprisings in a number of Middle East and
North African countries have shaken the political stability of the region as a whole and have increased the
risk premium as perceived by investors. Foreign Direct Investment, as well as tourism receipts, fell
dramatically in 2011 by 32 percent and 16 percent respectively in the first half of the year, despite high oil
prices. Since February 2011, repeated disruptions in the Egypt gas pipeline, which supplies 70 percent of
Jordan’s gas, have resulted in a four-fold increase in Jordan’s energy bill due to the need to substitute
costly heavy fuel for gas. If there is a prolonged transition period in surrounding countries, the risk of
slower growth resulting from these factors will persist. In addition, Jordan’s heavy reliance on imported
energy and food (98 percent of the country’s energy and 90 percent of its food supply is imported) make
it vulnerable to increases in international commodity prices. As long as food and fuel prices continue to
rise, this risk will also persist. While in the past the adverse impact of high commodity prices on the
current account deficit has been mitigated by cyclically higher FDI and sustained remittances from the
Gulf, this has not been the case in 2011, and Jordan has had to rely heavily on foreign grants. The
reliability of foreign aid flows is affected by downturns in the global economy as well as by changes in
geopolitics, and as such, dependence on this source of financing is inherently risky. As discussed further
in the CPS, Government will work to minimize Jordan’s vulnerability to external shocks and to lessen its
reliance on foreign grants by building up fiscal space and by setting the stage for endogenous, private-
sector led growth.
1
I. COUNTRY CONTEXT
1. Jordan is an upper middle-income country with a population of 6 million and a per-capita
GNI of $4,390. The population is around 80 percent urban and is one of the youngest among upper-
middle income countries, with 38 percent being under the age of 14. The country is not rich in natural
resources (potash and phosphate are its main export commodities). Agricultural land is limited, and water
is considerably scarce—indeed, Jordan ranks as the world’s fourth poorest country in this regard.
Services account for more than 70 percent of gross domestic product (GDP) and more than 75 percent of
jobs. As one of the most open econonmies of the region, Jordan is well integrated with its neighbors
through trade, remittances, foreign direct investment (FDI), and tourism and has especially strong links to
the Arab Gulf economies. Jordanian policymakers seek to use the demographic opportunity of a well
educated, young population to build a dynamic, knowledge-based economy.
2. Jordan is vulnerable to the economic and political/social volatility of the region. The
political upheaval that swept the Arab region this year has had a significant impact on Jordan, taking the
form of economic shocks as well as demands for stronger citizen voice, greater accountability and
improvements in living conditions. Tourism receipts, FDI and, to some extent, remittances fell
dramatically in the first half of 2011, while the import bill increased as a result of higher commodity
prices. In addition, numerous interruptions in the gas supply from Egypt have coincided with higher
international grain and energy prices. At the same time, Government has faced public protests demanding
reforms to the constitution and to the electoral system. The Government has responded to these demands
by adopting constitutional reforms and creating an enabling environment for an effective political party
democratic system. In addition, Government has increased current expenditures—in the form of
increased public sector wages and subsidies, especially in the energy sector. Like other countries in the
Region, Jordan will have to balance short-term needs, related to external shocks and current political
demands, with the need for fiscal stability and capital investments, both of which are necessary
ingredients for long-term, sustainable growth.
A. Political and Social Context
3. Since January 2011, Jordan has seen demonstrations with calls for political reforms,
including fighting corruption and putting in place new election and political parties laws along with
greater political and press freedom. H.M. King Abdullah responded by ordering political reforms that
address voice and participation and create an enabling environment for an effective two-three party
system. Towards this end, two committees were formed in February 2011: (i) the Royal Committee for
Constitutional Reforms which was charged with creating constitutional amendments to enhance the power
of the Judiciary, the Parliament, and civil liberties, thereby improving the balance of power between the
King, the Parliament and the citizens; (ii) the National Dialogue Committee which was tasked with
preparing a new Municipal Law, a new Electoral Law and a new Political Parties Law. These laws are
expected to strengthen the legislative body and provide for greater Government accountability while
paving the way for the formation of stronger political parties. The Municipal law was approved on
September 8, 2011 by parliament; the new Electoral law and Political Parties law are expected to be
submitted to Parliament before the end of 2011. Some Government actions to date, such as the
strengthening of the anti-corruption commission, the first ever publication of the anti-corruption report,
the limits imposed on the jurisdiction of the State Security Court, and the restriction on bypassing
Parliament through the temporary laws mechanism reflect the commitment of policy makers to tackling
these concerns.
2
4. While political and structural reforms have been contemplated for many years in Jordan,
the degree to which they have been pursued has varied. Among other factors, frequent cabinet
changes and fragmented structures with overlapping mandates have affected the Government’s ability to
implement reforms with consistency. Beginning with the National Agenda in 2005 which contained
initiatives to open up elections, prevent discrimination against women, and encourage freedom of the
press, there have been attempts to build a strong multi-party political system and to develop a free,
independent and professional media. Galvanized by the most recent events in the Region, these ideas are
being re-invigorated by H.M. King Abdullah II and a newly appointed Prime Minister, and they are
beginning to bear fruit, especially with regard to modernizing the elections process.
5. Jordan has achieved impressive progress in education, health, and technological readiness compared to other middle-income countries (MICs) and Middle East and North African (MENA)
countries. The maternal mortality rate stood at 59 per 100,000 live births in 2008, compared to 210 and
80 in MICs and MENA countries respectively. Similarly, the infant mortality rate is 18.4 per 1,000 live
births compared to 38 and 25.6 in MICs and MENA countries. Jordan’s educational record is impressive
with a 100 percent primary school completion rate and a 111 percent ratio of female-to-male tertiary
enrollment. Mobile phone subscriptions per 100 people have risen to 101 in 2010 compared to 79 among
MENA countries overall.
6. Jordan is on track to reach most of the Millennium Development Goals (MDGs), yet
regional disparities persist. Though overall poverty incidence has been reduced from around 20 percent
in the late 1990s to 13.3 percent in 2008, higher poverty incidence occurs in rural areas, especially in the
Mafraq, Karak, and Tafileh governorates.1 Jordan’s primary and secondary enrollment, primary
completion, illiteracy rates, and female enrollment have already reached their goals for 2015. In terms of
the MDG gender indicators, Jordan lags behind in female representation in parliament (despite efforts
undertaken in this regard) and employment in nonagricultural sectors. In addition, although Jordan has
made major improvements on both indicators relating to access to an improved water source and
sanitation services, targeted policy actions are required to achieve the environmental stability MDG by
2015. Water will continue to be a major challenge given the very limited water resources in the country.
In addition, although Jordan has achieved major improvements on both indicators related to the percent of
the population that has access to an improved water source and sanitation services, Jordan still requires
decisive and targeted policy actions and political will to achieve the environmental stability MDG goal by
2015. Water will continue to be a major challenge given the very limited water resources in Jordan.
7. Though Jordan invests heavily in human capital, it sees its best trained people migrate
abroad while foreign laborers take many of the available jobs. Commensurate with high growth in
investments and GDP, job creation in Jordan has been strong.2 However, unemployment among nationals
has remained high, at 12.5 to 14.5 percent over the last decade. Part of the reason is the mismatch
between labor supply and demand, and the high expectations of the unemployed—caused in part by the
existence of high wage jobs in Gulf countries—and the low wages paid in Jordan.3
Unemployment is
highest among young graduates, particularly among young women. Although women are at least as
educated as men, their participation in the labor force is among the lowest in the region, at around 15
percent.
1 It is important to note that although few of the residents of Amman are poor, there are more poor people in Amman than in
other governorates due to the concentration of the country’s population in Amman. 2 The Jordanian economy created between 24,000 and 44,000 additional jobs per year from 2000 to 2005, rising to 60,000-70,000
in 2008. 3 ―Jordan’s Labor Market Paradox,‖ World Bank, 2008.
3
B. Economic Context
8. Following almost a decade of strong macroeconomic performance, Jordan’s economy was
knocked off course by the global crisis, and has struggled to regain its footing ever since. Supported
by a favorable external environment and capital inflows, growth averaged 6.5 percent in 2000-2009. This
dynamic was halted by the global crisis, which led to a sharp decline in growth in 2010 (down to 2.3
percent). Initial efforts to get back on track were sidetracked as Government struggled to respond to
public demands, leading to a widening public sector deficit, rising public debt and a further shift in
spending priorities from investment to subsidies. This is stifling private sector growth and, together with
rising import prices, is putting pressure on external accounts. A grant from Saudi Arabia helped ease the
fiscal pressure in 2011, but Government now hopes that reforms on the political front will allow it to
regain the initiative on the fiscal front, and steer the economy away from what could otherwise be a
downward trajectory.
The Period 2009-2010
9. When growth slumped in 2009, the Government’s initial reaction was to pump the economy
back to life through public investment (+ 50 percent in 2009). 4
But this attempt was quickly scaled
back in 2010 in the face of disappointing revenue performance and dwindling foreign grants.
Government shifted its efforts towards reviving private sector growth instead, with fiscal retrenchment
and a shift in Government borrowing towards foreign sources, creating ample room for private sector
credit. By late 2010, promising signs were beginning to appear of a fledgling supply response to the
easing of credit conditions, including in the real estate, financial, retail trade and construction sectors.
10. Not surprisingly, the downturn significantly affected public finances. Significant spending
cuts helped narrow the fiscal deficit (excluding grants) by 3 percentage points of GDP in 2010, from 11
percent of GDP in 2009. Faced with an already deteriorating social climate, the Government chose to
reduce capital spending significantly in 2010 (mainly delaying projects scheduled to be launched). A
drop in international prices nonetheless helped the Government to keep consumer subsidies at a low level.
As foreign grants continued to disappoint, however, such fiscal retrenchment proved insufficient to arrest
the rise of public debt. The ratio of (net) public debt, which had reached a low at 57 percent of GDP in
2009, crossed the 60 percent line in 2010.5
11. On the external front, although FDI declined in 2009, it comfortably financed the current
account deficit and allowed Jordan’s official foreign reserves to reach a record high by end-2009. The current account deficit stabilized at around 5 percent of GDP in 2010 and was easily financed by FDI
and remittances. As a result, external reserves reached $12.2 billion (about 7.6 months of imports) at the
end of 2010.
12. On the monetary policy side, the fiscal retrenchment allowed the Central Bank (CBJ) to
shift to a more expansionary stance. From November 2008 onwards, the CBJ has pursued a policy of
monetary easing to stimulate the economy through cuts in the policy interest rate,6 a reduction of reserve
4 The Government officially revised its GDP figures in June 2011, raising the 2009 GDP and bringing down slightly the 2010
GDP. The statistics department indicated that they needed to update the numbers based on updated firm surveys and corrected
errors found in calculating net taxes. 5 Jordan’s debt law stipulates that the public net debt to GDP should not pass 60 percent as a rule. However, the general
provisions of the law stipulate that the debt limit rule article would come into force only if specifically and separately approved
by the Council of Ministers. Such approval has never materialized. So, de facto, the 60% debt limit is not binding legally. 6 Policy interest rate dropped by 200 basis points (bpt) between August 2008 and January 2010 and by 50 bpt between February
2010 and end-2010.
4
requirements,7 and a halt in the issuance of certificates of deposits. As a result, lending to the private
sector, which had been previously contracting, registered an 8 percent growth in 2010 (though remaining
below pre–global crisis level).
The Period January – August 2011
13. Since the beginning of 2011, Jordan has faced a series of exogenous and endogenous shocks.
First, the political revolutions sweeping the Arab World have significantly reduced short-term growth
prospects for Jordan through sharp declines in FDI (-32 percent in the first semester of 2011), tourist
revenues (-16 percent) and remittances (- 3.1 percent). Instead of the gradual recovery hoped for, growth
stood at about 2 percent in the first semester of 2011, leading to a shortfall in fiscal revenues estimated at
1 percentage point of GDP. Second, in a context of high international prices of oil and food commodities,
the Egyptian gas pipeline, which supplies 70 percent of the energy needed to generate electricity,
exploded nine times since February, forcing Jordan to switch to more expensive heavy fuel and diesel to
maintain electricity supply. Finally, demonstrations demanding political reforms and improvements in
social conditions erupted and challenged the Government to address a host of short-term demands from
different segments of the population, chiefly political reforms, reduced corruption and social transfers
from the state.
14. The Government has initiated a number of political reforms while at the same time
suspending the adjustment of domestic prices to global developments and introducing additional
social spending. A first package, equivalent to 2 percent of GDP, was included in the official 2011
budget, and a second one, equivalent to 2.7 percent of GDP, was adopted in August 2011, as part of a
supplemental budget. This recent package includes higher fuel and grain subsidies ($400 million due to
subsidies given to gasoline, octane 90 and kerosene users by temporarily suspending the application of the
end-user oil price adjustment formula and $141 million due to the impact of higher fuel and grain prices
on the wheat and cooking gas cylinder subsidies), a one-time cash transfer to public sector employees, the
armed forces and the beneficiaries of the National Aid Fund on the occasion of the holy month of
Ramadan ($112 million), additional investment in small-scale infrastructure projects in lagging regions in
partnership with the private sector ($35 million) and the clearance of arrears to private contractors and for
land acquisition ($141 million).
15. The Government successfully mobilized additional grants to cover these additional
expenses, without swelling public borrowing requirement. On July 28, 2011, a $1 billion (3.2 percent
of GDP) grant from Saudi Arabia was announced. This came in addition to the $400 million which was
received in June and incorporated in the initial 2011 Budget. As a result, the Government’s remaining
gross financing requirement for 2011 was left more or less as envisaged in the initial 2011 budget, at
around $2.5 billion. While the deficit including grants increased only slightly in 2011 (from 5.6 percent
to 6.3 percent), when grants are excluded, the deficit has risen substantially, from 7.7 percent to 12.2
percent. In addition, net public debt is expected to rise to 65.6 percent as a result of the loan guarantee
granted by the Government to the National Electric Power Company (NEPCO) to cover part of its losses
resulting from the shift to heavy fuel for electricity generation.
Macroeconomic Outlook, External Financing Needs, Debt Sustainability and Risks
16. The outlook for 2011-12 has become increasingly challenging in light of growing social
pressures and uncertainty in the region. It is expected that growth will gradually recover in 2012-2014
(2.5 percent in 2011, 3 percent in 2012 and 3.5 percent in 2013) against a backdrop of regional and
7 Reserves requirement was reduced from 10 percent in October 2008 to 7 percent currently.
5
domestic turmoil, high imported food and fuel prices, and rising sovereign financing costs.
Macroeconomic prospects hinge in large part on the Government’s renewed commitment to fiscal
consolidation but also on potential investments from the GCC countries as well as continued growth in
neighboring Iraq.
17. The Draft Budget Law for 2012 aims to scale the budget deficit back to 8.6 percent (a 3.5
percentage of GDP fiscal adjustment) by increasing domestic revenues while capping current
expenditures. Debt interest payments are projected to increase by 11 percent, capital spending is
scheduled to decline, and recurrent spending is being held constant (declining in real terms). Underlying
the medium-term fiscal framework is a number of new fiscal measures which the Government has
indicated it will undertake in 2012. These include re-targeting oil derivatives subsidies to the neediest of
the low and middle income consumers, limiting electricity and water tariff subsidies to the neediest of the
low and middle income consumers and ensuring better tax collection among other measures.
18. Jordan’s total external financing needs for 2011, 2012 and 2013 are expected to amount to
about $3.2, $3.1 and $2.9 billion respectively. This reflects the large increase in the current account
(e.g. quasi doubling in 2011 to 9.1 percent of GDP), driven by increased prices of imported commodities
and lower tourism receipts. It is envisaged that reserves will decline in 2011 (-$689 million) before
recovering in 2012 and 2013. The outstanding amount of foreign reserves at year-end 2011 would
however remain sizeable around $12.1 billion, enough to finance more than seven months of imports and
maintain the stability of the currency peg. External financing needs will be financed, by and large, by
FDI and portfolio inflows (about 70 percent of financing sources) and external borrowing/disbursements
from bilateral, multilateral and private creditors (about 30 percent).
19. The foreign debt is expected to remain under control and total debt growth will be mainly
driven by domestic borrowing. Growth of foreign debt (which represents about 36 percent of total debt)
has remained low and contained thanks to large FDI and portfolio inflows and deliberate Government
strategy. In sharp contrast, domestic borrowing has ballooned due to stubborn fiscal deficits and
contingent liabilities in the energy sector in 2011. For instance, for the year 2011, an amount of $620
million debt guarantees was granted to the electricity company NEPCO by August 2011. As a result, the
net public debt-to-GDP ratio is expected to rise from 61 to 65.6 percent by end-2011, its highest level
since 2007 (see below). External debt was reduced in 2008 by 20 percentage points of GDP following a
Paris debt buyback operation. Its ratio to GDP increased by only 1.9 percentage point of GDP in 2010 to
23.6 percent of GDP. Jordan’s external debt vis-à-vis bilateral and multilateral creditors, is on relatively
favorable terms.
20. The pace of debt growth experienced in 2011 is unsustainable, and Jordan has become more
vulnerable to shocks than in the recent past. Bank and Fund analyses conducted in 2010 showed that a
shock (of one-half standard deviation from the baseline) to real growth, interest rates, and the primary
balance was unlikely to bring the debt-to-GDP ratio above its 2007 level (65.1 percent in net terms).
2007 was selected as a benchmark because it had the highest net public debt ratio between 2004 and
2010. Now, with net debt-to-GDP projected at 65.6 percent in 2011, Jordan’s vulnerability to shocks and
contingent liabilities has become more significant. A key factor to reduce this vulnerability is a renewed
commitment to fiscal consolidation that addresses, inter alia, the contingent liabilities in the energy
sector, the fuel subsidies (that were eliminated in 2008 and reversed in January 2011), and the lack of
targeting of consumer subsidies. Complementary reforms to boost growth are also important. Bank
simulations show that if the Government fails to implement the announced fiscal consolidation measures
in 2012 and the NEPCO’s financial situation continues to deteriorate, the debt-to-GDP ratio will climb to
72 percent in net terms (77 percent in gross term in 2012). In that scenario, gross public debt will remain
around 77 and will only start to decline in 2014. It is noteworthy that Jordan has a track record in
improving debt sustainability over the past decade; for instance, the debt-to-GDP ratio was successfully
6
brought down by about 55 percentage points of GDP between 1999 and 2008. As such, while the needed
debt reduction is ambitious, it is not unprecedented in Jordan’s history.
21. Jordan’s base case macroeconomic scenario is subject to other substantial risks, one of
which is a strong social pressure for populist policies. Despite a good track record in 2010, efforts to
reign in expenditures in 2012 may be challenged by increases in international oil and food prices and
continued expressions of discontentment by some groups in the society. For instance, augmenting
electricity tariffs may be delayed and additional social spending may be inevitable politically. At the
same time, credible progress on political reforms could help reduce pressure for populist policies.
Political reforms are a top priority for the new Government, led by a reputed international judge.
22. Other risks relate to the external environment. One has to do with the world price of oil.
Aggregate demand, inflation as well as fiscal and current account balances are all highly sensitive to the
price of oil. If oil prices remain high, and if Iraqi and international demand for Jordan’s goods and
services remain strong, then growth and inflation are likely to be high while the fiscal and current account
balances may deteriorate. To the extent that the sovereign debt crisis spreads to the US and emerging
markets and undermines global demand, Jordan will be affected indirectly through lower demand for its
goods and services. In particular, the United States, Iraqi and Gulf economies (Jordan’s main trading
partners) will be crucial in this regard. Relatedly, Jordan’s dependence on external grants exposes it to
the vagaries of politics and economic fortunes of its partners. For instance, external grants dropped from
4.5 to 1.9 percent of GDP between 2008 and 2009, causing a dramatic widening in Government’s
borrowing requirement. To mitigate this risk, the Government has used a more conservative approach to
predicting external grants than before the crisis: $290 million each year through 2013. In comparison,
external grants totaled $1 billion in 2008, $469 million in 2009, $565 million in 2010, and more than $1.5
billion in 2011. Finally, the regional political and economic environment is far from stabilized as many
of Jordan’s neighbors are undergoing civil strife or difficult transitions, and it is difficult to predict how
these developments will affect Jordan.
7
TABLE 1: JORDAN’S MEDIUM-TERM OUTLOOK
II. BUILDING LONG-TERM, SUSTAINABLE GROWTH
23. Jordan needs to secure sustainable growth to reduce unemployment, especially among
youth and women. This goal poses a two-fold challenge: to build resilience to shocks, and to put in
place policies and institutions that promote good governance and boost domestic investment,
employment, and productivity. In addition to political reforms promoting participation, transparency and
accountability, fiscal consolidation is a key element in Jordan’s growth challenge in the near term and a
key building block for longer-term growth. In addition, it will be crucial for Jordan to find ways to better
protect vulnerable groups without permanently compromising the fiscal position, and to increase
accountability, transparency and efficiency in the use of public resources. Long-term growth also hinges
on Jordan’s ability to leverage private capital for investment in infrastructure and to increase productivity
at the firm and sector level. Further educational reforms are needed to close skills gaps and improve
education quality. Reforms are also needed to address the inefficiencies inherent in the current structure
of economic activity, including the lack of flexible labor markets, the burden of inefficient employment-
Percent 2008 2009 2010 2011 2012 2013 2014
Actual Actual Preliminary
National Accounts and Prices
Real GDP Growth 7.2 5.5 2.3 2.5 3.0 3.5 4.0
Nominal GDP (US$ million) 22,018 23,880 26,492 28,512 31,012 33,798 37,013
GDP Deflator (Change in Percent) 19.9 2.8 8.4 5.0 5.6 5.3 5.3
Consumer Price Index (change in percent) 14.9 -0.6 5.0 5.5 4.5 4.0 4.0
Money & Banking
Growth of Money Supply 17.3 9.3 11.5 7.8 8.8 9.0 9.5
Total Deposits-Resident (% of GDP) 100.3 102.5 103.7 103.3 103.3 103.3 103.3
Lending to the Public Sector to Total Banks Assets (in percent) 19.7 19.5 18.8 20.6 23.4 25.3 24.9
External Accounts
Balance of Trade in Goods & Services (% of GDP) -31.0 -23.2 -21.8 -24.3 -22.1 -20.2 -18.6
Current account balance (% of GDP) -9.3 -4.7 -5.0 -9.1 -7.4 -6.2 -5.6
Net Foreign Direct Investments (% of GDP) 12.8 9.9 6.3 7.4 8.3 9.6 9.2
Net Portfolio Investments (% of GDP) 2.6 -2.6 2.9 0.7 0.8 0.9 0.9
Remittances (US$ million) 3,166 3,126 3,173 3,187 3,395 3,530 3,672
International Reserves (US$ million) 8,568 11,471 12,845 12,156 13,022 14,408 16,038
Fiscal Accounts
Total revenues 32.7 26.7 24.8 27.7 26.5 26.3 26.0
Domestic revenues 28.1 24.8 22.7 21.7 22.5 22.7 22.8
Grants 4.6 2.0 2.1 5.9 4.0 3.6 3.2
Total expenditures 34.8 35.7 30.4 33.9 31.2 30.3 29.5
Primary current expenditures 26.4 24.8 23.2 26.5 24.1 22.7 21.4
Total interest expenditures 2.3 2.3 2.1 2.4 2.5 3.0 3.4
'Interest expenditures on domestic debt 1.6 1.8 1.7 1.9 2.0 2.4 2.9
'Interest expenditures on foreign debt 0.7 0.5 0.5 0.5 0.5 0.6 0.5
Capital expenditures 6.1 8.5 5.1 5.0 4.6 4.7 4.7
Fiscal balance excluding grants -6.8 -10.9 -7.7 -12.2 -8.6 -7.6 -6.7
Fiscal balance including all grants -2.2 -8.9 -5.6 -6.3 -4.7 -4.0 -3.5
Primary balance excluding grants -4.5 -8.6 -5.6 -9.8 -6.1 -4.7 -3.3
Primary balance including all grants 0.1 -6.6 -3.5 -3.8 -2.2 -1.1 -0.1
Gross Public Debt over GDP 60.2 64.8 67.1 71.2 70.1 68.3 65.9
Net Public Debt over GDP (*) 54.8 57.1 61.1 65.6 65.0 63.6 61.6
Memo items
Revenues Including Grants (US$ million) 7192.2 7885.6 6582.5 7885.6 8219.3 8901.9 9616.4
Primary Balance of Stabilisation -14.1 -2.4 -4.3 -3.1 -3.3 -3.3 -3.2
Projected
(*) Public Sector Deposits are assumed to be constant at the 2010 level. Debt figures include the JD515 mln guarentee for NEPCO in 2011.
Source: Government of Jordan for fiscal trend and bank staff calculations. Prices data are taken from DEC Commodity Forecast
8
related social safety net obligations borne by small and medium enterprises, and the market-distorting
effects of the large public sector on wages and young people’s employment expectations. Ultimately, it is
job creation and economic and social inclusion that are the priorities for Jordan right now -- these goals
will be advanced by ensuring a stable macroeconomic framework that is resilient to shocks, by fostering
sustainable, private-sector led growth, and by improving the governance framework.
A. Building Stronger Growth Resilience through Fiscal Consolidation
24. The impact on Jordan of the 2009 economic crisis and of the recent political events in the
region illustrates the need to build resilience against external shocks. Jordan will need to buffer
declines in external demand and capital inflows through counter-cyclical policies that maintain and/or
boost domestic demand and domestic private investment. In the long term, growth resilience depends on
building a fiscal position that provides a self-sustaining foundation for growth, with robust domestic
private investments that complement FDI inflows and contribute a growing share of capital accumulation
and growth.
25. The Government recognizes the need to build fiscal space and plans to return to its path of
fiscal consolidation in 2012. As noted above, in 2010 Government made considerable strides, reducing
the deficit from 8.9 percent of GDP in 2009 to 5.6 percent. However, significant deviations from the
fiscal consolidation path occurred in the first half of 2011 in the context of the regional turmoil and rising
international prices on food and fuel. Going forward, the Draft Budget Law for 2012 aims to scale the
budget deficit back to 8.6 percent (a 3.5 percent of GDP fiscal adjustment) by increasing domestic
revenues, while capping current expenditures. Debt interest payments are projected to increase by 11
percent, capital spending is scheduled to decline, and recurrent spending is being held constant (declining
in real terms). The alignment of salaries and wages between independent institutions (which enjoy higher
salaries) and the public administration (which will be allocated the savings from cuts in independent
institutions’ salaries) will increase overall salaries. This will be compensated by cuts in other operations
spending. Underlying the medium-term fiscal framework is a number of new fiscal measures which the
Government has indicated it will undertake in 2012. These include re-targeting oil derivatives subsidies
to the neediest of the low and middle income consumers, limiting electricity and water tariff subsidies to
the neediest of the low and middle income consumers, and ensuring better tax collection among other
measures. The strategy underlying these measures is reflected in the Medium-Term Expenditure
Framework 2011-2014 and the Budget Preparation and Priority Paper, both of which were submitted for
approval by the Council of Ministers before the adoption of the 2012 Budget Law.
26. The pursuit of deficit reduction points to the need for spending efficiency and for
prioritization of expenditures. This is important in order to ensure efficient use of scarce resources and
to maintain growth-enhancing capital expenditures as well as critical spending on maintenance of
productive assets. Jordan is currently exploring different financing schemes to finance priority capital
investments. This is particularly relevant to the consideration of a number of infrastructure mega-projects
(national railways, nuclear energy, and the Red-Dead Sea conveyance project) that will require huge
investments, including from the public sector.
27. In addition to prioritizing capital expenditure, the Government has indicated its willingness
to ensure greater efficiency and prioritization of recurrent expenditures. Reform is needed in the
pension system, which now accounts for 11 percent of total public spending, and in other social safety
nets, to target them better to the most vulnerable populations. Also, given that the public sector makes up
45 percent of GDP in Jordan, there is a strong justification for reducing the duplication of agency
functions, increasing productivity and efficiency, and improving service delivery. In this context,
leveraging the existing e-Government infrastructure and encouraging the re-use of successful applications
9
across different agencies is a priority. The Government has begun to examine the scope for enhancing tax
revenues through improved administration and rationalization of exemptions; it is placing greater
emphasis on the administration of the larger files, merging the income tax department with the sales tax
department, and simplifying tax rules and aligning them with European regulations.
28. The Government continues to make public financial management (PFM) reform a priority. While many reform elements have been introduced or are underway in fiscal transparency and the control
of expenditures, progress has been uneven, and not all of them have yet yielded tangible improvements on
the ground. Accounting, auditing, and the internal control framework are particular areas where further
improvement is needed. The remaining agenda also includes strengthening coordination to reduce
fragmentation in policy and budget management; strengthening the analytical basis for expenditures; and
addressing capacity constraints. Full implementation of the Government’s financial management
information system and reforms of the internal control framework are critical for successful
implementation of Government-wide public sector reform, including PFM reform.
B. Strengthening Governance, Transparency and Accountability
29. The Government recognizes that Jordan’s continued economic and social advancement
depends greatly on the quality and effectiveness of its public administration. Government
acknowledges the need to reform the public sector to turn it into a public service that is focused on
delivering results and that is accountable for such results. Key objectives include enhancing public
participation in decision making, strengthening the role of civil society institutions, building trust between
citizens and institutions, and adopting principles of transparency, good governance, and accountability.
The recent National Dialogue initiative and the recently proposed political reforms, including expected
changes in the representation system (through the political parties and election laws) are also necessary
elements of a new governance practice that promotes transparency, participation and accountability.
30. Over time, different parts of an enabling environment for increased public sector
performance, accountability and transparency have been developed. Jordan has since 2006 enacted
an Access to Information Law and passed an Anti-Corruption Law, and Government has established or
sought to strengthen institutions that support a results focus and enhance transparency, accountability, and
good governance. These institutions include the Audit Bureau, the Ombudsman Bureau, the Anti-
Corruption Commission, and the King Abdullah II Center of Excellence (which conducts assessments of
ministries and institutions’ performance and service quality). Accountability in the public sector is
further supported by the Government’s Performance Administration Unit (attached to the Prime Ministry)
which measures public sector performance. Mechanisms have been developed to strengthen the voice of
citizens through the Complaints Hotline.
31. Nevertheless, there are a number of areas where further work is needed. More effort is
needed to enhance access to information and to ensure that the quality of regulations and their application
are in line with international standards. Along these lines, the implementation of Jordan’s anti-corruption
legislation needs strengthening. In addition efforts are needed to build a performance-based, client-
focused public sector that delivers high quality services. The public sector reforms being considered by
the Government should contribute to improving the Government’s ability to develop, implement and
manage policies. Additional efforts will be undertaken to enhance transparency of Government operations
and the accountability relationship between the Government and its citizens.
10
Global Integrity Jordan Indicators Jordan Overall Performance and
Implementation Gap
BOX 1: INTERNATIONAL COMPARISON OF JORDAN’S GOVERNANCE
INDICATORS
Jordan has traditionally been one of the strongest performers in the region and among countries at a similar level of development on
many aspects of governance. However, a review of governance indicators over the past several years shows that governance
ratings for Jordan have declined relative to other countries and that institutions need to be further strengthened in order to support
the country’s ambitions to compete on a global basis.
The 2010 World Economic Forum’s Arab World Competitiveness Review shows that Jordan, while a good performer in the region,
saw its ratings deteriorate in relative terms from 2005 to 2010, and the country now stands at 65 out of 139 countries worldwide.
This decline can be attributed to poorer assessments of public sector institutions, incentive structure in the workplace, transparency
of Government policy making and the burden of Government regulation.
Scores from the 2010 Open Budget show that Jordan’s budget process is relatively transparent. Jordan’s score of 50 is the highest
in the region and above the worldwide average. At the same time, the scores point to the need to strengthen dissemination of
related budget and financial activities to the public to include information on outputs and outcomes; budget oversight; and public
participation in budget discussions.
Data from Global Integrity shows that between 2007 and 2009, Jordan’s ranking on a number of governance indicators has slipped,
namely in the areas of: oversight and regulations; and administration and civil service. A comparative regional assessment of
overall rankings on these indicators shows that, while 2007 numbers positioned Jordan well above the regional average, the decline
of recent years has repositioned it at par vis-à-vis other countries in MENA, and Jordan’s overall ranking has moved from moderate
to very weak. Figure 2 illustrates that while Jordan has a strong legal framework compared to other countries, actual
implementation and enforcement of legislation and regulations needs to be strengthened to enable more effective implementation of
policies.
C. Supporting Sustainable Growth through Investments in Core Infrastructure and
Improvements in the Business Climate
32. In addition to creating the fiscal space necessary to respond during external shocks, it is important
to address the requirements for long-term sustainable growth, including investment in critical
infrastructure and improvements in the business climate.
11
Water, Energy, Climate Change and Transport
33. Reducing water scarcity and increasing the efficiency of water use are critical for Jordan.
Jordan is one of the ten most water-stressed countries in the world. Its per capita annual renewable
resources of 145 cubic meters per capita are far below the threshold of severe water scarcity of 500 cubic
meters. About 64 percent of its water was withdrawn by agriculture in 2007, which accounted for only
2.1 percent of gross domestic product (GDP). The water needs for irrigation, industrial and domestic uses,
wetland protection and in-stream habitat needs; the deterioration of water quality and control of water-
borne diseases, continue to pose serious challenges. Demographic and economic growth has added
further strain on the very limited water supply of the country. The Government has laid out its long-term
strategy for the country. It is constructing the last small dams and the Disi-Amman system to mobilize
additional water. It is exploring additional sources of supply such as deep aquifers and brackish and
large-scale seawater desalination. Efforts are being made to optimize the use of existing resources by
reducing physical and commercial losses. Efficiency improvements are part of the strategy as currently
16 percent of the country’s energy resources are consumed by water delivery.
34. Climate variability and change are challenging economic growth and livelihoods in Jordan. Findings drawn from global assessments of climate change show a significant increase in the number of
dry days, heat waves, warm nights and length of growing seasons as well as fewer frost days by 2080.
Jordan will become a hot spot of severe water stress by 2050: water yield is likely to be reduced by 40-60
percent by 2050 as a result of a 10 percent reduction in precipitation and a temperature increase of two
degrees. Water scarcity and climate variability will further increase Jordan’s dependence on food
imports, particularly wheat and barley as 97 percent of Jordan’s consumption of these grains is imported.
This raises concerns about exposure to international food price volatility. Going forward, it is critical for
Jordan to address water scarcity and climate variability challenges through investments in adaptation to
climate change. Better management of exposure to international food price volatility will require the
development of financial hedging instruments and possibly grain storage capacity.
35. Jordan is very dependent on energy imports, mainly in the form of crude oil and natural
gas which account for more 98 percent of the country’s energy needs and represent about 20
percent of GDP. Though Jordan has been diversifying its sources of supply by importing natural gas
from Egypt, the volume available for such imports remains small, and recent disruptions of the pipeline
point to the uncertainty around this supply source. Implementation of energy efficiency programs and
changing the energy mix though the gradual development of renewable and other non-conventional
energy resources are now part of the Government’s priorities.
36. Jordan was one of the first countries in the region to initiate fundamental reforms in the
electricity sector and has made significant progress. The Government has set an ambitious 10 percent
target for renewable energy as part of the total energy mix by 2020 with a particular focus on the
development of wind and solar power plants. To promote investments in renewable energy and energy
efficiency, the Government approved in February 2010 the Renewable Energy and Energy Efficiency
(REEE) Law which required the creation of the Jordan REEE Fund. Government will work on
developing the necessary regulations required by the new law.
37. Transport accounts for about 11 percent of GDP and earns foreign exchange through the
provision of transshipment services via the Port of Aqaba and overland transport routes. Jordan
has a well developed highway and roads network that extends beyond the Amman urban area. The roads
infrastructure has adequate capacity but requires enhanced maintenance. Certain links in the trunk road
system are missing, particularly a complete ring road in the rapidly urbanizing Greater Amman Area.
Another priority need in the transport sector is for an integrated urban public transport system in the
12
Amman metropolitan area to alleviate congestion and improve mobility. The Government has reformed
transport services, including privatizing public enterprises and liberalizing the trucking industry.
Together with the European Investment Bank, it is preparing a National Highway Master Plan that will
serve as the basis for all major inter-urban highway sector developments in Jordan in 2010-30.
38. The Government is contemplating the preparation of three mega-projects: the National
Railways project, the Nuclear Energy project, and the Red-Dead Sea conveyance project. These
projects hold the potential to provide the necessary supply for water, energy, and transport services to
meet medium- and long-term demand. Their sheer size may make them attractive for private sector
participation if their financial viability can be guaranteed. While the private sector is expected to play a
role in financing these projects via public-private partnerships (PPPs), the Government is refining its
feasibility studies to determine the level of Government contribution needed to attract the private sector
and the best sequencing of implementation over time.
39. Jordan recognizes that promoting environmentally and socially sustainable growth creates
economic value and opportunities for its citizens, while also improving the environment and protecting
global public goods for future generations. Enhancing Jordan’s environmental management will not only
improve the well being of Jordanians but will also enable the country to compete better in increasingly
environmentally conscious markets. Recognizing the strategic relevance of the municipal solid waste
sector, the Government has established a number of targets for improved management of municipal solid
waste in the Greater Amman Municipality. However, municipalities outside of Amman are still suffering
from poor waste disposal practices with a negative impact on the environment, natural resources, public
health, and tourism.
Business Climate
40. Beyond public investment in infrastructure, an environment conducive to private sector
investment and entrepreneurship is key. As shown in analytical work undertaken by the WBG over
the last several years (Jordan’s Investment Climate Assessment (2007), Jordan Financial Sector
Assessment Program Development Module (2010); ―Doing Business 2012‖ (2011); and ―Making a
Difference for Entrepreneurs‖ (2010)), Jordan needs to further simplify regulations affecting private
businesses, strengthen the legal framework for private sector participation in Government projects, and
enhance SMEs’ access to finance to foster growth and employment. With regard to the latter, a national
program was launched in 2011 to support SMEs through loan guarantees, technical assistance and
targeted grants that aim to enhance female employment, innovation and competitiveness.
41. The Government has been working on improving business regulation over the last four
years, and a Committee headed by the Ministry of Planning and International Cooperation has devised a
strategy to improve the business environment on the basis of the framework provided by the ―Doing
Business‖ report and key areas of concern that were underlined by the 2007 Investment Climate Survey.
Major improvements have been observed in some areas; for example, the required paid in minimum
capital went from 795.4 percent of Gross National Income (GNI) in 2007 down to zero percent in 2011,
and the cost of obtaining construction permits was reduced by 42 percent between 2007 and 2011.
Notwithstanding these achievements, Jordan has been overtaken in the Doing Business rankings by other
countries that have more active and effective business regulation reform programs, and Jordan’s ranking
in the ―Doing Business 2012‖ report has dropped from 95 in 2011 to 96 today. In a number of areas,
including registering property, official fees remain relatively high compared to other regional and global
practices.
42. The SME sector is a leading source of exports, employment, and incomes in Jordan, yet it
faces both new and long-standing constraints to its development. SMEs will be a key player in the
13
shift to high-value growth sectors, initially through enterprise creation and subsequently through
providing services and inputs, and increasing productivity through adopting and applying innovations.
Efforts will need to be made to remove constraints and to encourage innovation, apply new technologies,
and support the development of these enterprises, especially those among them that are capable of moving
up the value chain. Facilitating SMEs’ access to credit through adequate guarantees and collaboration
with local banks is instrumental in this regard. The Central Bank has strengthened banking supervision
and introduced measures under the Basel II Capital Accord to reduce its risks while easing monetary
policy to stimulate credit to the private sector. In addition, the Government is in the process of launching
a program to support SMEs through loan guarantees, technical assistance and targeted grants with a
special emphasis on the periphery of the country where work opportunities have been most limited.
43. The Government has initiated wide-ranging legal and financial reforms to broaden access
to financial services. Credit reporting and information sharing is being improved through the public
credit registry and a newly adopted Credit Bureau Law. Collateral constraints have also to be eased, and
a framework for Secured Transactions is being developed to allow the use of movable assets as collateral
and out-of-court collateral enforcement. Telecoms and payments innovations also show promise for
improving access to finance.
D. Supporting Sustainable Growth through Enhancing Human Capital and Competitiveness
44. While total factor productivity growth was good over the period 2000-08, and Jordan’s
performance is good in the context of the region8, it pales when compared to that of countries like
Malaysia and Chile. Jordan can do better if it implements reforms to close skills gaps in its education
system, improves education quality, and anchors its innovation policy on private sector competitiveness.
45. Modernizing the education system and harmonizing curriculum and teacher skills with the
objectives of science and technology excellence is critical. Numerous efforts are underway to improve
educational quality, enhance technical and vocational training, better link the education system to the
labor market, and raise the prestige of the vocational/non-academic stream of learning. By modernizing
the education system overall and improving the quality, relevance, and coherence of higher education
institutions, Jordan can reduce the mismatch between labor market needs and available skills.
46. To attract foreign investment and compete successfully in markets beyond the region,
Jordan needs to raise its students’ skills to international levels and address lagging areas. Key
education sector challenges include: (i) overcrowded schools in urgent need of upgrading and expansion;
(ii) the need to expand access to early childhood education, especially in poor urban areas and rural areas;
and (iii) the high percentage of the education budget spent on wages and salaries which leaves little room
for the needed capital and quality-enhancing investments; and (iv) the low enrollment in vocational
education (between 12 to 14 percent)—which suggests a need to realign vocational education to the
demands of the labor market.
47. In higher education, Jordan has made significant progress and is addressing remaining
challenges including: (i) very high enrollment growth rates which are increasingly becoming difficult to
accommodate while maintaining quality; (ii) declining public financing for higher education amidst rising
tuition fees and the absence of a significant student aid scheme; (iii) misalignment between community
colleges’ curricula and the demands of the labor market; (iv) a rigid governance system that restrains
universities’ ability to respond to emerging needs of the labor market; (v) lack of university autonomy,
8 The Investment Climate Assessment (World Bank 2007) shows that ―Jordanian manufacturing firms are as efficient as Turkish
firms and nearly 40 percent more efficient than Indian manufacturers.‖
14
which is hindering innovation; and (vi) a weak relationship between universities and research institutes on
one side, and the industrial and service sectors on the other.
48. Unemployment continues to be high, standing at 13 percent of the labor force overall, 21
percent among women and 30 percent among university graduates. This points to several issues
relating to both the educational system and the labor market. At the macro level, the Jordanian economy
is not generating enough jobs to absorb the more than 60,000 young citizens who enter the labor market
annually.9 Major constraints arise from the structure of economic activity, the lack of flexible labor
markets, and a large presence of the public sector with market-distorting effects on wages and youth
expectations.
49. Jordan’s rate of female labor force participation, at around 15 percent, is among the lowest
in the region and in the world. This is especially paradoxical given Jordan’s huge investments in
female education. Female enrollment in tertiary education has exceeded that of male enrollment, and
while females represent about 40 percent of the employees in the public sector, they do not exceed 13
percent in the private sector. The situation is particularly difficult for young women, whose
unemployment rate is 36 percent compared to 19 percent among young men. Young women account for
only nine percent of the economically active population. The structure of the economy offers few
opportunities for unskilled and semi-skilled women (who make up most of the economically inactive
population). For married women with children, the cost and availability of daycare alternatives is an
important element in the decision to participate in the labor force. Moreover, in the past, employers
tended to prefer hiring men (or single women) to avoid paying for maternity leave; while the Social
Security Law has introduced a socialized payroll deduction in place of the direct payment from
employers, the effects of the previous disincentive can still be seen in the unemployment figures today.
Finally, the fact that educated women are more likely to be unemployed than uneducated women suggests
that women face considerable barriers to employment entry across a wide range of educational choices.10
TABLE 2: COMPARISONS OF LABOR MARKET OUTCOMES FOR JORDANIAN YOUTH, BY
GENDER AND AGE
Age group 15-29
(percent)
Age group 29-65
(percent)
Female Male Female Male
Unemployment rate 36 19 9 5
Labor force participation rate 16 54 14 72
Share of unemployed 27 45 8 20
Source: Jordan Employment-Unemployment Survey (EUS), 2009 and 2010.
9 Recent projections show that the number of Jordanian entrants into the labor market over the next five years will be 50,000 to
75,000 annually. This reflects annual growth in the labor force of about 3.2 percent. See Arouri (2010), ―Labor force migration
in Jordan,‖ mimeo. Assuming that about 20 percent of jobs will be filled by foreign workers, the economy will need to create
60,000 to 90,000 jobs every year. In recent years, the best job creation performance, which was accompanied by high GDP
growth (as in 2007 when growth was 7.6 percent and 56,000 jobs were created), was still only able to absorb the new entrants,
thus leaving the unemployment rate unchanged at 13 percent. 10 According to the Jordan Employment-Unemployment Survey (EUS), 2010, 62% of unemployed women hold a Bachelor’s
degree or above, and the unemployment rate among women with this education level is 25%, whereas it is 15% among women
with less than a high school degree. The unemployment rate among men is the same (11%) in both these categories.
15
50. The Government has begun implementing a National Employment Strategy focused on
addressing the above constraints and on increasing female participation by: (i) targeting several of
its vocational and micro-finance programs toward unskilled and semi-skilled females; (ii) approving the
new Social Security Law which provides for a new maternity insurance scheme which is financed by both
male and female payroll contributions to eliminate discrimination in hiring decisions; and (iii) expanding
public kindergarten schooling and the provision of day care franchises to address the acute shortage of
day care spaces and quality issues.
51. Jordan’s investments in education, its highly skilled diaspora, and its location near large
markets make the country ripe for pursuing innovation. While the Government has put in place a
number of programs to encourage innovation, there is need for greater cohesion among these initiatives
and for an integrated innovation policy that will help support long-term productivity growth. This policy
should expand beyond a focus on science and technology and be driven by firm competitiveness. In
addition, the institutions involved in innovation policy need adequate funding and experienced staff and
the innovation services provided by Government entities should be demand-driven. A recent assessment
of innovation policies and performance recommended the establishment of a central anchor for innovation
policy and a mechanism for funding risk.
E. Fostering Inclusion through Effective Social Protection and Local Development
52. Another crucial dimension of resilience and of political stability is the effectiveness of
measures to address the population more inclusively and to protect vulnerable groups. While
Jordan made substantial progress in poverty reduction between 1997 and 2006 (poverty declined from 21
percent to 13 percent over this period), the impact of local development initiatives has been
geographically uneven. Moreover, during the past few years, sharp increases in oil and food prices, the
removal of fuel subsidies, and the global economic downturn have put pressure on the living standards of
many Jordanians, particularly those at the bottom of the income distribution. In 2010, ten additional
poverty pockets, i.e., areas where 25 percent of the population or more fall below the poverty line,
showed up in the poverty map, raising the total number to 32 from 22 in 2006.
53. Jordan’s social protection system consists of the social insurance system, which covers 36
percent of the labor force at an annual cost of 5.7 percent of GDP; social safety net programs,
which cover about 8 percent of the population at a cost of about one percent of GDP; and active
labor market programs and policies, which include mainly vocational training and in-service
training. Reforms to the social insurance system were introduced in Social Security Law Number 7,
2010, and work is underway to improve the targeting of the social safety net programs, but there is scope
to further improve the efficiency and effectiveness of the system, with a view to putting in place fiscally
affordable safety nets that are designed flexibly to be deployed in the event of an economic shock and
phased out after the end of a crisis. The recent shocks that have impacted Jordan so heavily have
demonstrated the need to combine: (i) income support to the unemployed with (ii) social assistance
targeted to the chronically poor. Income support in the form of unemployment benefits helps laid-off
workers and could also have macroeconomic benefits through stabilizing aggregate demand.
54. Stronger local governance and greater responsiveness to citizen needs can help address
Jordan’s regional disparities and reduce pockets of poverty. By moving resources and
responsibilities for service delivery to local Governments and by supporting community-driven
development, the governance of public institutions and project-level administration can be strengthened.
Expanding microfinance is another way to help promote local development and create job opportunities
where these are desperately needed. With a view to fostering local development, the Government has
improved the mechanism for capital investments at the municipal level through the introduction of
16
performance-based incentives. However, many municipalities (though to a lesser extent the Greater
Amman Municipality) still need to improve their municipal management capacity and budgeting. To
jumpstart development at the local level, a three-pronged approach needs to be implemented to: (i)
increase local participation in decision making, implementation and monitoring of programs; (ii) develop
the capacity of sub-national institutions to plan, carry out, and manage their development programs; and
(iii) exploit local endowments and assets as a means of catalyzing local economic development through
tourism and small industries.
55. Tourism is Jordan’s largest export sector and can also serve as a vehicle for local economic
development. Travel and tourism account for about 12 percent of GDP and provide both direct and
indirect employment opportunities, including in some of the poorer parts of the country. Many of
Jordan’s most significant cultural and historic assets are located in secondary cities, and their potential
needs to be further developed to ensure local development benefits accrue throughout the country.
III. THE GOVERNMENT’S DEVELOPMENT PROGRAM
A. National Agenda (2006-15) and Executive Development Program (2011-13)
56. The National Agenda was initiated in 2005 as a holistic approach to the reform process and encompassed a wide variety of political, economic and social policies that were to be linked to the
budget and include timelines and performance indicators. The overall objective of the National Agenda is
to improve the quality of life of all segments of the Jordanian society; it envisages three distinct phases in
Jordan’s socioeconomic development. Phase I (2007-12) centers on job creation through the development
of labor-intensive and export-oriented industries while reshaping the skills of the labor force. It also
envisages public sector reforms and liberalization of state-controlled markets. Phase II (2013-17)
includes the promotion of capital-intensive industries and the expansion of the service sectors as well as a
transition to higher value-added occupations. Phase III (2018-onward) envisages Jordan becoming a
world-class knowledge economy.
57. The Government’s new Executive Development Program (EDP) for 2011-13, introduced in
the summer of 2010, and updated in December 2010 and 2011, builds on the National Agenda and
serves as an action plan for the Government for the next stage. The EDP responded to the consequences
of the global crisis with a comprehensive work plan that set out detailed economic objectives, policy
initiatives, projects, and indicators to measure outcomes. The EDP was prepared using a participatory
approach, drawing from sectoral strategies as well as from the recommendations of Parliament regarding
fiscal and economic reforms.11
Its main objectives are: (i) strengthen the independence and integrity of
judicial authorities and develop the legislative framework; (ii) maintain financial and monetary stability
and increase self-reliance; (iii) reform the public sector as well as human resources and increase their
productivity; (iv) enhance the knowledge-based economy and harmonize education outputs with labor
market requirements; (v) create an appropriate environment for business and investment and promote the
national economy’s competitiveness; (vi) increase local exports and open up new markets to support
Jordanian producers; (vii) promote tourism and preserve Jordanian cultural heritage; (viii) enhance the
agricultural sector’s competitiveness and raise its quantitative and qualitative productivity; (ix) promote
local development to achieve a high level of developmental balance between governorates, protect the
middle class, reduce poverty and reduce unemployment; (x) expand the base of social services, provide
infrastructure including appropriate housing and focus on poverty pockets; (xi) develop water sources and
upgrade their management efficiency; (xii) secure energy supply and diversify energy sources; (xiii) raise
11 The 2011 draft Budget Law was prepared in accordance with the final draft of the Program agreed upon by the ministerial
committees.
17
the competitiveness of information technology and knowledge transfer; and (xiv) encourage the private
sector to enter into partnerships to undertake major development projects, particularly in the fields of
energy, water, transportation and industrial zones.
58. Most recently, in its presentation to the Deauville Partnership in the Fall of 2011, the
Government drew heavily on the EDP as its medium-term socio-economic development plan and
noted that events in the region have underscored the need to accelerate the political reform agenda and to
ensure that the dividends of economic reforms are shared across the country. In this context, in addition
to improved governance, job creation and private sector development are primary goals, along with
addressing challenges in the energy and water sectors.
IV. WORLD BANK GROUP PARTNERSHIP STRATEGY
59. The WBG and Jordan have built a strong and flexible partnership that has enabled frank and
substantive discussion about the country’s development challenges as well as the areas where the WBG is
seen to bring the most value to Jordan, especially in the context of other donor assistance. The WBG
program has been demand-driven, and has proved its ability to respond flexibly to unanticipated changes
in Jordan’s circumstances and needs, including for budget support during the crisis of 2009. The
momentous changes now taking place in MENA emphasize the need for continued flexibility. For its
part, the WBG recognizes the importance of listening and responding to opportunities to add value when
asked by the Government to do so and where it is well placed to do so. Given the strong presence of a
number of other development partners in Jordan, the Bank’s support is often complemented by the work
of others. For example, USAID has a large technical and financial assistance program in the areas of
fiscal management, SME development and competitiveness, PPPs, and water. The European Union (EU)
is providing support to local development, especially in lagging areas and is also supporting fiscal
sustainability along the same lines as the Bank. The European Investment Bank (EIB) is one of the
largest lenders to the private sector, especially in infrastructure, and has also engaged in support of SME
development. The focus of the Agence Française de Développement (AFD) has been on financing
infrastructure and tourism development, often in parallel with the WBG, and may also support fiscal
sustainability, growth and jobs. Against this backdrop, and in light of the relatively small size of the
Bank’s lending program, it is important for the Bank to coordinate its support with other partners with a
view to maximizing the impact of its contribution to Jordan’s development goals.
A. Lessons Learned
60. The CPS takes account of lessons that have emerged in the Bank Group’s work in Jordan
over the last several years. First, it recognizes that the Bank Group must be able to respond quickly to
changing country circumstances. It uses a flexible framework whereby the WBG will respond to
Government and private sector requests for financing and analytical and advisory services insofar as this
support is aligned with the main objectives of the strategy. Second, since Government and other
stakeholders have underscored that selectivity is an important guiding principle, the Bank will focus on a
few of Jordan’s strategic priorities, with a view to ensuring complementarity and coordination with other
donor assistance. These priorities will be determined over the CPS period in coordination with the
authorities to ensure the Government’s ownership and engagement. IFC has considerably scaled-up its
program in Jordan over the last five years. In doing so, the Corporation has become a key player in
supporting the private sector and in particular advancing Jordan’s PPP agenda.
18
61. The WBG recognizes the need for continued strong analytical work and technical assistance
as well as for broad consultation on challenging reforms. The Completion Report of the 2006-2010
Country Assistance Strategy (CAS) showed that a strong analytical foundation positively influenced the
mobilization of political and financial support for key reforms (see Annex 2 below). The WBG’s high
quality analytical and advisory work has made important contributions to the Government’s development
agenda, especially in economic diversification and competitiveness, access to finance, investment climate
reforms, and public-private partnership. The WBG’s TA and advisory services have also had a
significant impact on reform (for example in the area of social insurance). Because experience shows the
need to ensure broad consultation among all affected stakeholders before beginning to design a difficult
reform program, the WBG will continue to use its convening power to help sustain collaboration,
consistency, and communication among the actors involved in reform.
62. The CPS results matrix reflects the need to be realistic. The results matrix from the 2006
CAS now appears to have been overly ambitious. The results matrix associated with the new CPS
presents a selected set of indicators, derived from the WBG’s ongoing program of support and from those
planned activities that will produce tangible outcomes within the next two to three years. At the time of
the CPS mid-term review (when the CPS Progress Report is presented to the Board), additional indicators
will be added as needed to capture any new program elements that will produce results within the
remaining CPS period.
B. Current Portfolio
63. As of November 30, 2011, Jordan’s total active portfolio was valued at $279.1 million of
which 87 percent ($243.5 million for seven investment lending projects) is financed by IBRD and 13
percent ($35.6 million for twelve projects, including one technical assistance project executed by the
Bank) is financed by Bank-administered trust funds. In addition, there are two guarantees valued at $60
million: (i) $45 million from IBRD for the Amman East Power Guarantee Project; and (ii) $15 million
from the Carbon Fund for Amman Landfill Gas Recovery Project. Urban and Tourism Development
account for the largest share of the portfolio at 34 percent followed by Transport and Education at 21
percent and 20 percent respectively (Figure 1). The quality of the portfolio during the last CAS period
(FY06-FY10) was generally satisfactory, with one problem project.12
64. Beginning in FY11, however, the portfolio started showing some signs of weakness, which is
reflected today in five problem projects: the Regional and Local Development Project; the Employer-
Driven Skills Development Project; the Social Protection Enhancement Project; the Amman Solid Waste
Project; and the Second Education Reform for the Knowledge Economy Project. 47.8 % of total IBRD
commitments are at risk. Several implementation issues have emerged mainly concerning complex
project design, lack of ownership, interruptions in counterpart financing, and low capacity of
implementing agencies. Frequent change of leadership within ministries has also affected project
performance. In all these cases, the Bank is working with counterparts to develop action plans to improve
performance, including restructuring as needed. In addition, work is underway on a Country Portfolio
Performance Review which will address the systemic issues that cut across the portfolio and will involve
the Ministry of Planning and International Cooperation, the Ministry of Finance, and relevant line
ministries.
12 From FY06-FY09, the Public Sector Reform Capacity Building Project was in problem status. It was cancelled in March 2008
at the request of the Government.
19
FIGURE 1: SECTORAL DISTRIBUTION OF ACTIVE PORTFOLIO, INCLUDING
TRUST FUNDS
TABLE 3: JORDAN—ACTIVE PROJECTS FINANCED BY IBRD
(as of November 30, 2011)
Project Name Closing
Date Grant Amt
(US$) Percent
Disbursed
Amman Development Corridor 12/31/2012 71,000,000 89
Amman Solid Waste Management 6/30/2014 25,000,000 16
Employer-Driven Skills Development 9/30/2013 7,500,000 9
Education Reform for Knowledge Economy II 12/31/2015 60,000,000 2
Regional and Local Development 12/31/2013 20,000,000 45
Cultural Heritage, Tourism and Urban Development 3/31/2013 56,000,000 63
Social Protection Enhancement 8/31/2013 4,000,000 15
Total 243,500,000 47
Amman East Power Project (Guarantee) N/A 45,000,000
Grand Total 288,500,000
65. In addition to the investment portfolio, Jordan has a substantial trust fund portfolio
totaling $50.6 million which reflects the emphasis of the Bank’s strategy on Government accountability,
environmental sustainability, education and jobs (in particular for women), private sector-led growth and
local development/inclusion (Table 4). The trust fund portfolio comprises thirteen active grants and is
financed by a range of Bank-administered trust funds, including the Institutional Development Fund
(IDF), the Global Environment Facility (GEF), the Ozone Trust Fund of the Montreal Protocol (OTF), the
Gender Trust Fund (GENTF), the United States Agency for International Development (USAID), Cities
Alliance (CITIES), the State and Peace Building Fund (SPF), the Japan Social Development Fund
(JSDF), and the Carbon Fund (CF). In addition, Jordan benefits from a Regional GEF grant that finances
the improvement of local and transboundary water resources and agricultural management in countries
Transport21%
Urban Development
34%
Education20%
Social Protection1%
Energy15%
Environment4%
Financial/Private Sector
3%
Public Sector Governance
1.4%Gender and
Development0.4%
20
around the Mediterranean Sea.13
Jordan's trust fund portfolio performance has been generally good. The
implementation of grants has been satisfactory with an overall disbursement rate of 56 percent (excluding
the Carbon Fund guarantee). To date, two GEF projects are in problem project status. The Integrated
Ecosystem Management in the Jordan Rift Valley Project showed signs of weakness and became a
problem project by the second half of FY11. Most recently, the Promotion of a Wind Power Market
Project was downgraded due to substantial delays in a major component which affected project
implementation. The Bank is reviewing progress with Government and will recalibrate the action plans,
including restructuring, as needed.
TABLE 4: JORDAN—ACTIVE PROJECTS FINANCED BY TRUST FUNDS
(as of November 30, 2011)
Project Name TF
Program
Closing
Date
Grant
Amt
(US$)
Percent
Disbursed
Ombudsman Capacity Building Support IDF 7/10/2014 250,000 0
Promotion of a Wind Power Market GEF 12/31/2012 6,000,000 16
Energy Efficiency Investment Support GEF 6/1/2013 1,000,000 0
Ozone Depleting Substances (ODS) Phase-out II OTF 12/31/2012 6,000,000 88
Integrated Ecosystem Management in the Rift
Valley GEF 7/14/2013 6,150,000 49
Employment for Young College Graduates in
Jordan GENTF 12/31/2011 1,050,000 72
Measuring the Impact of National Policies &
Strategies on Gender Equality Project IDF 11/9/2012 294,050 62
Regional Network for Education Research IDF 9/8/2012 488,280 52
Economic Reform & Development Technical
Assistance / Privatization TA USAID* 12/31/2011 9,500,000 99
Secondary Cities Development Strategy CITIES 9/30/2012 476,000 32
Enhancing Legal Aid Services to Iraqi &
Palestinian Refugees SPF TBD 1,800,000 0
Community-Driven Development of Legal Aid
Services JSDF TBD 2,600,000 0
Total 35,608,330 56
Amman Ghabawi Landfill Gas to Energy Project
(Guarantee) CARBON 6/30/2015 15,000,000
Grand Total 50,608,405
* The USAID TF project will close on December 31, 2011 with 4 months of grace period to disburse (April 30,
2012) after which it will be considered legally closed.
66. WB-financed projects do not yet rely on Jordan’s own financial management information
system. As this system (GFMIS) becomes more functional, the Bank plans to rely on it for preparing
project-specific requests. It intends to utilize single treasury accounts over time, and to rely on the Audit
Bureau as the external auditor of WB-administered resources, initially on a pilot basis for auditing grants.
The Bank expects to fully utilize various aspects of Jordan’s public financial management system for
WB-financed projects by the end of the CPS period. Overall, the level of fiduciary risk is currently
assessed as moderate/substantial.
13
Coordination on Improved Water Resources Management and Capacity Building Program in the amount of $1.05 million
(Regional GEF Project).
21
67. IFC has scaled up its investment activities in Jordan considerably during the last few years. Its portfolio has grown from $50 million at end-FY05 to about $524 million at end-September 2011. In
addition, IFC mobilized $310 million in additional funding to a number of its key projects. In expanding
its activities, IFC’s strategy focused on supporting infrastructure development, access to finance, and
Public-Private Partnership. Despite the difficult environment in the second half of the fiscal year, IFC
committed $141 million in five projects and mobilized $90 million in the chemicals sector in Jordan in
FY11. These investments were primarily in the financial sector (trade finance), and a $215 million
investment ($125 million IFC account and $90 million in mobilization) in a chemicals project. In FY10,
IFC committed $77 million in seven companies primarily in the financial sector (trade and microfinance),
and $50 million in investments in a fertilizer project (see Annex B8 for the details of IFC’s investment
portfolio). MIGA’s portfolio has grown from zero at end-FY05 to $4 million gross exposure at end-June
2011, all in the waste water sector.
C. World Bank Group Assistance Strategy
68. The World Bank Group will support Jordan in its efforts to lay a foundation for inclusive
growth and job creation through a three-pronged strategy: (i) strengthen fiscal management and
increase accountability; (ii) strengthen the foundation for sustainable growth with a focus on
competitiveness; and (iii) enhance inclusion through social protection and local development. In light of
the Government’s increased focus on transparency, public participation, and Government accountability,
the World Bank Group will also seek opportunities to support these efforts across the portfolio (Figure 2).
In this regard, support will be provided to involve relevant stakeholders in policy development,
implementation and monitoring and to strengthen the existing institutional framework relating to
performance, transparency (including information disclosure in user-friendly formats) and accountability
within the public sector. WBG advisory services and interventions at sectoral levels will also mainstream
a sectoral governance and social accountability agenda (such as through the Affiliated Network of Social
Accountability – Arab World), aimed at strengthening transparency, accountability, and systematic
consultation with the private sector and civil society organizations regarding policy reforms and
Government programs.
FIGURE 2: LAYING A FOUNDATION FOR SUSTAINABLE GROWTH AND
JOB CREATION
22
69. In response to Government’s request for more targeted WBG support, the Bank Group will
focus its activities on areas of its comparative advantage and will seek opportunities to complement
other donor financing and to leverage resources from the private sector. This will be done by
providing targeted analytical work, advisory services, and technical assistance supporting key structural
reforms through a series of programmatic development policy loans; and by providing guarantees and
IFC’s lending and equity investments to leverage private sector resources in growth-enhancing
infrastructure.
Pillar I: Strengthen Fiscal Management and Increase Accountability
70. A primary goal of the Government is to maintain financial stability and to enhance
Government administration so that it becomes transparent and subject to accountability at the
central and local levels.
To support this goal the Bank will focus on: (i) improving public financial management; (ii) increasing
the efficiency of public expenditures; and (iii) strengthening mechanisms for both internal and external
accountability.
Results area I.1: Improve public financial management, improve efficiency of public expenditures;
and strengthen accountability Government objectives (EDP): Maintain financial and monetary stability and increase self-reliance;
Enhance Government’s performance efficiency and effectiveness and empower it to use transparency and
accountability tools; Protect public money and enhance monitoring over it
CPS outcomes:
1. Improved targeting of subsidies
2. Modern Internal Audit function established in line ministries in accordance with international good practice
3. Increased effectiveness of Access to Information Law
71. Support will be provided through the forthcoming programmatic series of development
policy loans and through technical assistance on governance, fiscal consolidation and subsidy
targeting. In coordination with the IMF, USAID, and JICA, the Bank has focused on building the
technical capacity of the Ministry of Finance and the General Budget Department to formulate and
implement appropriate fiscal policies and medium-term expenditure frameworks (MTEFs) and to increase
efficiency in public expenditure management. The Bank will continue to help improve budget
management, including through better alignment of policy decisions with budget preparation. Going
forward, given the strong presence of USAID in the PFM arena and the extensive analysis recently
completed on public expenditures across a range of sectors, the Bank’s contribution will focus on the
revenues side of public finance through a fiscal consolidation study and a review of public expenditures in
the energy/electricity sector. Through a Governance Reform TA additional support could be provided to
assist the Government in increasing fiscal transparency by extending the presentation of the budget to
include a fuller discussion of the risks and assumptions behind budget projections. The DPL series will
support improved transparency and accountability including through strengthening the effectiveness of
the Anti Corruption Commission. In this connection, support will focus on the development of a
regulatory an institutional framework that is effective and responds to the requirements stipulated in the
United Nations Convention against Corruption (UNCAC), including those relating to application of the
Anti-Corruption Law. The DPL also supports better access to information, and the establishment of a
modern Internal Audit function in line ministries. Finally, with a view to reducing the fiscal burden of
consumer subsidies while at the same time better serving the poorest segments of the population, the
Bank is providing technical assistance that analyzes the poverty impacts and policy implications of
changes in subsidy regimes (cash subsidies and tax exemptions) and is examining options for improved
targeting mechanisms.
23
72. Public sector reform can be an important factor in increasing the efficiency of public service
delivery and can also facilitate greater Government accountability. Towards this end, a key objective
of the Government’s EDP is to enhance Government’s efficiency and effectiveness and empower it to use
transparency and accountability tools as well as evaluation mechanisms. The Bank has provided some
advice and technical assistance with regard to streamlining the Government structure, setting up
performance-based management of human resources, and improving service delivery and stands ready to
support the Government’s recently adopted Public Sector Reform strategy at the appropriate time. The
Bank could also support the national e-Government strategy which, if well implemented, would allow
significant savings to the administration, better services to citizens, better decision making, and a more
transparent and accountable administration to citizens and investors. An Institutional Development Fund
grant will be used to support service delivery improvements in the recently established Ombudsman
Office which will allow for more efficient resolution of administrative complaints against public sector
entities. A regional TA program on public sector complaints mechanisms will provide capacity building
to the Complaints Hotline of the Ministry of Public Sector Development with the aim of collecting and
analyzing data related to complaints in order to better understand the demand side of services and to
prioritize services for reform. Discussions are ongoing with the Department of Lands and Survey
regarding the establishment of a proper legal and institutional framework for public land management and
the introduction of a one-stop shop for land transactions. The Bank stands ready to engage with other
agencies that are seeking to improve the effectiveness of their service delivery. Finally, in the area of
procurement, the Bank can provide assistance in the implementation of the new procurement law that it
helped develop in line with international best practice.14
IFC has started an advisory services program
with the Companies Controller Department and Jordan Securities Commission to provide support in
corporate governance targeted at listed companies and SMEs.
Pillar II: Strengthen the Foundations for Sustainable Growth with a Focus on Competitiveness
73. Sustained high growth is necessary for fiscal stability and job creation. To strengthen
Jordan’s foundation for inclusive growth, the CPS gives attention to priority infrastructure (energy,
environment, water, and transport); the business environment; and education and skills development.
Strategic capital investments and further efficiency gains are needed to address supply constraints to
growth in water, energy and transport. This will require greater collaboration with the private sector to
finance infrastructure projects, a well developed framework for Public-Private Partnerships, the
identification of economically viable projects, as well as a healthy investment climate. The World Bank
Group is well positioned to support the Government in these areas through technical assistance, IFC
advisory services, and investments (from both IBRD and MIGA) to attract private sector participation in
infrastructure funding and management. IFC will provide long term financing and equity investment to
private sectors in these sectors. Another key ingredient for private sector-led growth, especially growth
that is high value-added, is skilled human resources. The Bank is undertaking a Development Policy
Review (DPR) which analyzes Jordan’s key growth and competitiveness challenges and outlines policy
options to address them. Initial findings point to the need to build open and productive partnerships
between the private and public sectors in policy formulation and implementation; to further trade
integration and market diversification; to promote innovation; and to invest in high value-added industries
where Jordan has latent comparative advantage in order to help Jordan upgrade to a higher middle income
country and to create quality jobs for young men and women.
14
This work emerged from the OECD-DAC self assessment carried out by the Government-appointed task force and responded
to Jordan’s desire to gain accession to the World Trade Organization’s Agreement on Government Procurement.
24
II.1: Support selected priority infrastructure
74. The WBG will initially support two results areas—energy/transport and environment/waste
management—based on the intensity of the current engagement in these sectors. IFC in particular
will support private sector participation in renewal energy. The WBG engagement in these areas will be
assessed at the CPS mid-term review and might be expanded to include additional areas and activities.
Results area II.1: Support selected priority infrastructure (energy, transport)
Government objectives (EDP): Secure energy supply and diversify energy sources; Increase the share
of renewable energy resources in the total energy mix; Provide safe, effective and economic
transportation services which preserve the environment
CPS outcomes: 1. New electricity generation capacity developed to meet growing demand
2. Scale-up in implementation of renewable energy and energy efficiency activities
3. Efficient transport and logistics services supported by removing key infrastructure bottlenecks
75. Energy: The Government seeks to diversify energy sources and increase the share of
renewable resources in energy generation. Recent disruptions in the gas pipeline from Egypt have
highlighted the need for reliable sources of gas to avoid shortages and large price increases. In addition to
technical assistance, the Bank can provide financial support for a private sector investment in a gas supply
facility. The Bank will also support an increase in electricity generation capacity through Partial Risk
Guarantees for the Third and Fourth Independent Power Project, slated for late FY12. The Bank will
continue to support the Green Growth agenda through two GEF Trust Funds, namely on Wind Power and
on Energy Efficiency. It might also consider supporting the development of concentrated solar power
(CSP). A new transmission line would be needed for connecting new solar and wind power plants and for
enhancing the prospects of regional electricity integration between Mashreq countries and Europe. The
transmission project may be eligible for concessional financing from the Clean Technology Fund. The
Government is in the process of launching a feasibility study, financed by a grant from the EU
Neighborhood Investment Fund, for the project. Finally, the oil sector reform, including the rehabilitation
and expansion of the sole oil refinery, is now expected to move forward following some delays in the past
few years. The Bank group could provide technical assistance on developing downstream petroleum
sector regulations and building capacity in the line ministry. IFC is currently engaged in supporting the
energy sector, especially by exploring possibilities of financing wind and solar projects in the pipeline.
The Corporation could also play a role in supporting the development of LNG for electricity generation.
Finally, IFC will look for investment opportunities that support clean technology and energy efficiency
with private equity funds and some of IFC’s clients in Jordan. MIGA is actively looking to support
power sector projects through the provision of political risk guarantees.
76. Transport: The WBG is already involved in improving transport in Amman; going
forward the Bank and IFC will also support Jordan’s drive to enhance its role as a regional trade
and transport hub by developing cost-effective multimodal transport and logistics systems. The
Bank is currently co-financing (with EIB and the Arab Fund for Economic and Social Development) the
Amman Development Corridor Project (ADCP), which will reduce the cost of transit traffic, and alleviate
congestion. Once completed and supported by other public urban transport measures, this project will
help reduce CO2 emissions in Amman.15
In addition, several regional initiatives are underway as part of
the Arab World Initiative, including preparation of a Regional Cross-Border Trade Facilitation and
Infrastructure project for Mashreq countries which aims to improve transport infrastructure and services,
harmonize customs, and create more efficient logistics chains. In this context, the WBG is also providing
15
Jordan recently signed the Emissions Reduction Purchase Agreement (ERPA) through which the Bank, as Trustee of the
Carbon Fund for ERPA, will purchase about 300,000 tCO2e during the period 2012-2014.
25
technical assistance to Jordan to assess the feasibility of a national railway network connecting Jordan to
its immediate neighbors and beyond. In this context, the Technical Assistance Facility as well as the
public and private window of the joint World Bank, IFC and Islamic Development Bank (IsDB) Arab
Fund for Financing Infrastructure (AFFI) might be relevant for Jordan.
Results area II.1.2: Support selected priority infrastructure (environment/waste management) Government objectives (EDP): Manage solid waste in a comprehensive, effective and environmentally
friendly manner; Sustainable protection and management of the environment; Curb climatic change;
Protect ecosystems and biodiversity
CPS outcomes:
1. Better urban environment within Greater Amman region
2. Increased contribution of Jordan to the climate change mitigation agenda
3. Better conservation and harnessing of values from natural ecosystems
77. Environmental Quality and Green Growth: The Bank is supporting the improvement of
environmental quality in Jordan, which has been a pioneer in environmental management in the
region. The Amman Solid Waste Management Project is helping strengthen the operational, financial,
and environmental performance of Municipal Solid Waste Management in Amman. This project includes
finance for using landfill gas for power generation while mitigating green house gases. As a future
engagement, the Bank could support the Greater Amman Municipality (GAM) in modernizing their
Municipal Solid Waste Management (MSWM) systems in line with the findings of the ongoing MSWM
Strategy Planning study. IFC will help GAM bring private sector participation to its energy efficiency,
renewable energy, transport, and waste management programs. The Bank will support the Amman Green
Growth Program to improve the urban environment within the Greater Amman Region and to promote
low-carbon investments in urban services, particularly through the mobilization of a grant under the
Bank-managed Carbon Asset Development Facility. Because this is a multi-faceted process that will take
some time to fully materialize, it is not possible to define outcomes for the CPS period at this stage.
78. Climate Change: The WBG will coordinate with other donors to provide technical—and, if
needed, financial—support to help the Government mitigate the impact of and/or adapt to climate
change. TA is planned in transport (public transport system), energy (wind and CSP), water (demand
management and water productivity), and urban forestry, and for developing climate-friendly regulations
and incentive systems for existing and new buildings. TA will help position Jordan for climate-change-
related concessional finance. The Ozone Depleting Substance Phase-out Project, an instrument of the
Montreal Protocol, will continue to support Jordan’s climate-change-related agenda. The Integrated
Ecosystem Management in the Jordan Rift Valley project (supported by GEF) seeks to integrate climate
impacts into conservation planning and the management of protected areas as well as the Badia
Ecosystems and Livelihoods project (GEF). Through grant-based technical assistance, the Bank is
assisting Jordan in the process of defining and prioritizing its nationally appropriate mitigation actions
(NAMAs, and will also help the Government assess options for embedding a low-carbon approach into
development planning, prioritizing selected NAMAs ,and giving specific attention to the innovative use
of financial instruments and to public-private partnerships. Further, in accordance with the Governance
Framework of the Partnership of Market Readiness (PMR), Jordan was confirmed as one of the 15
Implementing Country Participants of the PMR. This program will provide technical assistance over five
years, aiming to provide a platform for technical discussions, South-South exchange, and collective
innovation on new market instruments.
79. Water: The Bank has recently been invited to renew the dialogue with Government and
stands ready to collaborate with other donors active in the sector, including USAID, KfW, AFD,
JICA and the European Investment Bank. The Bank is working on a Technical Assistance Program that
includes several activities. It is currently managing a multi-donor trust fund to prepare the feasibility and
26
environmental impact studies for the Red Sea/Dead Sea Water Conveyor. The Bank has agreed with the
Government on a small program of irrigation water productivity in the Jordan Valley. In addition, several
regional GEF grants are being prepared to support wastewater reuse and the use of quantitative and
spatially based decision making tools in the water sector. As part of IFC’s Water Resources Group
Initiative, the Corporation has provided analytical work to develop an investment plan for narrowing the
water demand-supply gap and will support the implementation of this plan. MIGA will look to support
further waste water projects, building on its support to the Samara waste water treatment facility signed in
FY06.
80. In all three areas of energy, transport and water, the Government is evaluating potential
strategic investments, including through major development projects such as the Red-Dead Sea
Desalination Project, the Nuclear Energy Project, and the National Railways Project. The Bank
Group can provide selective support through a range of instruments, including technical assistance (to
assess technical feasibility, fiscal impact, and optimal financing arrangements), access to the TA
component of the AFFI, as well as IBRD and MIGA guarantees to attract private participation. IFC
offers financing and facilitation of private participation in infrastructure with an emphasis on projects that
have large and long-term financing needs and on clients who have regional expansion plans. As such, it
is playing a key role in supporting most of the strategic projects in Jordan and is well positioned to
mobilize financing for a number of projects in power, ports (Aqaba Port relocation projects), and
chemicals (phosphate). IFC is already engaged with the sponsors of each of these projects.
II.2: Improve the business environment to enhance competitiveness and attract investments
81. The WBG is supporting Jordan’s private sector development through technical assistance
and through IFC investments and advisory services. The Bank has worked closely with the Executive
Privatization Commission to build a suitable legal environment to regulate PPPs and is supporting the
development of a legal framework for insolvency. IFC is supporting PPPs through advisory services,
helping to develop the financial market and mobilizing financial resources for project finance. MIGA is
actively looking to support FDI in the country, including through support to PPPs.
Results area II.2: Improve business environment
Government objectives (EDP): Improve and develop the business environment and promote its
competitiveness; Empower new, small and medium sized enterprises and build their capacities;
Encourage the private sector to enter into partnerships to undertake major development projects
CPS outcomes: 1. Streamlined regulatory environment and more equitable enforcement of rules
2. SME financing facilitated through support to legal and institutional reforms
3. Suitable legal environment to regulate PPPs
82. Going forward the Bank Group will focus on the enabling business environment, sector
competitiveness, SME financing and the framework for PPPs. The IFC will pursue dialogue on
improved access to finance and building the risk management capacity of credit institutions to better
engage with micro, small, and medium-sized enterprises (SME Credit Guarantee Scheme). The Bank’s
programmatic series of development policy loans will support SMEs’ access to finance, improving the
licensing procedures for new firms, and supporting the development of PPP by-laws in line with
international best practice. IFC will assist in harmonizing the Government’s PPP strategy with the new
law. This work will complement that of other donors such as AFD and USAID who are also supporting
the implementation of a PPP framework and the financing of PPP projects. The WBG will prepare a
competitiveness and private sector assessment (CPSA), provide related technical assistance and support
the Government in using the results to develop a competitiveness and innovation strategy to move up the
27
value chain, diversify the economy, and expand exports. The CPSA will have an SME focus and will
examine those sectors that are most likely to generate employment for young Jordanians. As part of the
process, the Bank Group will ensure the participation of women in the public-private dialogue around
competitiveness challenges and will encourage their greater participation in the private sector, both as
entrepreneurs and as workers.
83. With regard to MSME finance much work has been done with the support of the WBG. IFC has led the effort over the last four years to improve the business and regulatory environments for
access to finance. It supported efforts by the Government and financial regulators to develop the leasing
sector, establish a credit information law, develop the secured lending framework, and strengthen the
insolvency policies and regulations. IFC will continue supporting access to finance in Jordan through
investments in the financial and banking sectors and advisory services as well as supporting Micro-
finance institutions. In addition, the Bank has undertaken a survey of MSMEs with a view to
understanding key constraints from the firms’ point of view (including labor market, exporting
constraints, access to finance, etc.). The analysis of this data will help develop a roadmap for MSMEs.
The WBG TA for MSME finance, a joint effort with IFC, DfID and the EIB, can provide support for: (i)
policy and legal reforms; (ii) capacity building and advisory services to financial institutions; and (iii)
capacity building for MSMEs. The WBG’s work on MSMEs is complemented by the work of AFD, EU,
the Islamic Development Bank, USAID, the US Overseas Private Investment Corporation which are
providing loan guarantees, grants and advisory support to MSMEs and clients of the Jordan Enterprise
Development Cooperation. Finally, an Institutional Development Fund grant will be used to strengthen
the capacity of the Jordan Association for Certified Public Accountants (JACPA) to modernize its
accounting and financial reporting architecture. A qualified audit profession and a strong financial
reporting architecture are key pillars of sound corporate governance, required to build investor confidence
and support a strong business climate.
II.3: Improve education quality, develop skills, and address labor market constraints
84. The Government recognizes the need to improve the quality of education, including higher
education and vocational training, in order to produce a labor pool that can match the needs of the
private sector. The Bank has long been supporting investments in education quality and reform, and
under the CPS it will support the Government’s focus on enhancing skills and better addressing the needs
of the private sector. IFC is supporting improvements in post-secondary education quality and relevance
through its Education for Employment (e4e) initiative (see Box 2 below).
Results area II.3: Improve skills and enhance employability
Government objectives (EDP): Enhance the knowledge-based economy and harmonize education
outputs with labor market requirements; Provide a safe and sound educational environment; Reducing
unemployment and increasing job opportunities; Raising women’s economic involvement in the labor
market
CPS outcomes:
1. Learning environment improved
2. Response to labor market and employers’ requirement of labor skills improved
3. Enrollment in post-secondary technical training enhanced
4. Effective operation and financial coverage by the Jordan Student Aid Fund
85. The WBG will remain involved through the two ongoing investment projects (ERfKE II
and the Employer-Driven Skills Development Project) as well as TA in higher education. The
Education Reform for a Knowledge Economy II project (ERfKE II) is helping to improve the quality of
education and the learning environment in Jordan (including through school-based development,
vocational education, improvement of the physical learning environment, availability of learning
28
resources and materials, early childhood education, and special education). ERfKE II is combining
system-wide investments in education quality with targeted investments in remote and underprivileged
areas, notably construction and renovation of kindergartens and construction, extension and rehabilitation
of schools. ERfKE II is also supporting a Gender Unit within the Policy Planning and Strategic
Department of the Ministry of Education in order to prioritize data availability and evidence-based
decision making concerning the education of girls and women. The Employer-Driven Skills
Development Project (EDSDP) is addressing employment, technical and vocational education, and
training reform. EDSDP focuses on reforming governance, program development and financing of the
Vocational Training Corporation (VTC) which essentially serves students at risk of exclusion. Innovative
and employer-driven programs are succeeding in attracting more youth and in ensuring their transition
into the labor market. TA in higher education supports the creation of a community college system that
produces graduates with skills in high demand by the labor market, and is developing student aid
programs that combine financial need with merit. Both of these efforts facilitate access to education by
less fortunate populations, and the community college component addresses in particular the needs of
women, as female enrollment in these schools is high. In addition, TA is being provided for the
development of the Government’s National Employment Strategy which aims to increase labor
participation in Jordan ant to create more and better jobs.
86. The Bank Group is also supporting a number of regional education initiatives with Jordan
as a focal country. The Queen Rania Teacher Academy has been selected as the host institution for the
Regional Program on Teacher Policies in the context of the Arab Regional Agenda for Improving
Education Quality, a program initially financed by a Development Grant Facility grant. In addition, the
National Center for Human Resources Development is the host to the Regional Initiative for Education
Policy Analysis, a Bank-supported program financed with an IDF and with the support of the Islamic
Educational, Scientific and Cultural Organization (ISESCO). Jordan is one of the first pilot countries that
will take part in IFC’s Education for Employment (e4e) for Youth in the Arab World Initiative (Box 2).
A report on the challenges and opportunities of e4e in Jordan has been completed, and the findings will be
disseminated to all stakeholders in Jordan. Early business development work has also taken place, and
IFC is at an early stage of identifying investment opportunities in the vocational training areas.
87. In response to the difficulties facing women in Jordan’s labor market, the Bank is working
with the Government on interventions to improve gender equality and female labor market
participation. A pilot initiative under the patronage of Her Majesty Queen Rania al-Abdullah aims to
increase female labor force participation through: (i) job vouchers that provide an incentive for firms to
hire new female graduates; and (ii) training for women in interpersonal and soft skills that employers
identify as constraints. Studying the employment status of participants one year after the start of the
program will improve understanding of the barriers to women’s employment and help the Government
develop policy measures that promote women’s participation in the labor market. A follow-up activity
could involve designing a program to match the skills of female job candidates to the needs of firms.
Consistent with the recent commitment of the Bank’s MENA region, a Gender Assessment will be
undertaken over the course of the CPS period, and the Bank will work together with Government to
develop a Gender Action Plan to address the impediments that stand in the way of women’s economic
empowerment in Jordan. The Gender Assessment, tailored to the Jordanian context, will analyze
obstacles for increased female participation in the labor force. This analysis will be informed by the
results of the Young Women Graduate Employment Pilot, by a new Youth and Inclusion Poverty and
Social Impact analysis, which will examine the impact of labor laws on employment outcomes for young
men and women, and by an assessment of the impact of the new Social Security Law on employment
opportunities for women. In addition, the Development Policy Review and the Competitiveness and
Private Sector Assessment will use gender-disaggregated data in assessing the impact of policies on jobs
and growth. Looking ahead, outcomes developed in the context of the Gender Action Plan could be
considered for inclusion in the CPS at the time of the mid-term review.
29
BOX 2: IFC’S EDUCATION FOR EMPLOYMENT (E4E) FOR YOUTH IN THE ARAB
WORLD
This initiative is a critical component of IFC’s response strategy in the MENA region to address the
concerns of unemployment, especially of youth and women. IFC and IsDB are partnering in this initiative
with a view to providing Arab youth with the skills that are relevant to the marketplace. The overall
objective is to: (i) catalyze increased private sector investment; and (ii) help government stakeholders,
private sector employers, civil society, and the education sector work together to improve the quality and
relevance of the skills students take into the workforce. With an improved skills set, it is expected that
students in the Arab World will become more employable, which in turn will help reduce unemployment
and increase productivity levels in private sector firms. IFC, working with its partners, will invest and
serve as a catalyst, convener, and implementer of projects.
The e4e initiative is in its initial stages of implementation, with a dedicated team identified and partially
deployed in the region. Diagnostic needs assessments have been completed in Jordan and Tunisia, and
other countries in MENA will follow over the coming months. Early assessments in Jordan have
highlighted areas of engagement for IFC’s investment and advisory services, and the e4e team is currently
exploring investment opportunities in the vocational training area. The initiative will complement the
ongoing work of the World Bank on the role of policy and labor market reforms to enhance education
quality, and will include strong partnerships with the Bank, regional partners, and donors, among others.
Pillar III: Enhance Inclusion through Social Protection and Local Development
Results area III.1: Social protection Government objectives (EDP): Expand the base of social services, provide infrastructure including
appropriate housing and focus on poverty pockets; Provide an effective social safety net system for the
poor and social welfare services in line with best international practices; Improve targeting mechanisms
for beneficiaries of programs and projects to combat poverty; Expand umbrella of health insurance
CPS outcomes:
1. Adopt improved targeting mechanism by the National Aid Fund that reaches higher number of the poor
2. Better access to and quality of social care services
3. Expanded access to Social Security Coverage
88. Through the ongoing reform of social safety nets and social security, the Government has
taken key steps to improve its targeting systems and increase coverage of pensions and health
insurance. The WBG will support efforts to better target social assistance to the neediest while
simultaneously improving access to and quality of social care services and improving health insurance
coverage. Building on the past four years of programmatic TA for the development of new social security
reforms and legislation, the Bank will support the Social Security Corporation (SSC) in implementation
of the new Social Security Law which includes coverage extension, unemployment insurance, and
maternity benefits. A qualitative study will analyze the likely impact of the new Jordan Social Security
Law on employment opportunities for woman. The Bank will continue supporting the National Aid Fund
renewal, which includes enhancements in the targeting mechanism and provides a system for timely and
adequate support to poor households that would likely be affected by reforms such as subsidy removals.
Support is also being sought through a Japan Social Development Fund (JSDF) grant for integrated social
services for vulnerable groups. An IDF grant will support Government in measuring the impact of
national policies and strategies on gender equality, including the development of a gender disaggregated
website at DOS and manuals on gender-based indicators for monitoring and evaluation. Another
potential area of engagement is the Arab World Initiative for Food Security, a source of concessional
30
financing that could, once secured, minimize the impact of high food prices on the livelihoods of poor
urban and rural residents in Arab countries.
89. Policy advice and TA will be provided for the introduction of health insurance to Social
Security Corporation (SSC) beneficiaries. The Bank will assist the Government to develop and
implement a policy framework for reforming the health financing system and expanding health insurance
to the whole population through the programmatic social insurance TA. IFC will work to identify viable
investment opportunities that will enable existing health providers to grow and attract south-south
investments.
Results area III.2: Pursue local development and address poverty pockets Government objectives (EDP): Promote local development to achieve a high level of developmental
balance between governorates, protect the middle class, reduce poverty and reduce unemployment;
Promote tourism and preserve cultural heritage
CPS outcomes:
1.Enhanced operational performance and project implementation practices in municipalities other than
Amman
2.Improved local development in four historically and culturally important cities—Jerash, Karak, Madaba,
Salt, and Ajloun—through increased tourism activities
3. Development of a National Poverty Reduction Strategy with a comprehensive action plan and
implementation arrangements.
90. The Government recognizes the need to strengthen capacity at the local level to assume
greater responsibilities for administration and service delivery and to expand services to unreached
populations. The Bank will help the Government build on the momentum of the ongoing Regional and
Local Development Project and expand the successful performance-based block grant system to target
infrastructure interventions to municipalities according to their needs and abilities. A Cities Alliance trust
fund grant will further support municipalities to develop their municipal strategies. In addition, the Bank
stands ready to assist the Government in developing a strategy to help local communities exploit local
endowments, especially in the tourism sector, thereby creating economic opportunities and encouraging
shared sustainable growth across the country. The Bank also stands ready to advise on local development
efforts with a focus on increasing local participation in decision making and implementation, as well as
on enhancing the capacity of sub-national institutions to plan, implement, and manage their own
development programs. In addition, the Bank will support the Government in developing an urban
heritage and tourism development program for the historic areas of two secondary cities, Irbid and
Tafileh, with a view to helping local communities exploit local endowments and creating economic
opportunities in less advantaged regions of the country. Given the involvement of AFD and the EU in
local development, the Bank will coordinate closely to ensure complementarity of efforts in this area.
91. With a view to addressing poverty pockets throughout the country, the Government has
initiated the preparation of a National Poverty Reduction Strategy that will draw on a number of
Bank inputs over the coming months and years. The focus of the strategy is: (i) a deeper
understanding of who the poor and vulnerable populations are; (ii) why they are poor, sources of their
vulnerability and why some populations in Jordan have remained in poverty for some time; (iii)
recommendations for policies and programs to reduce poverty and vulnerability; and (iv) the drawing up
of an action plan including an institutional set up and mechanisms for the next 3-5 years. The Bank will
assist with the formulation of the overall strategy and will provide capacity building to the Department of
Statistics, the Ministry of Planning and International Cooperation and the Ministry of Social Development
in the tools of poverty and social protection analysis. The strategy will build upon ongoing work by the
Bank including: (i) an analysis of the relationship between growth, poverty and inequality (part of the
Development Policy Review) which will examine the extent to which growth has been inclusive in
31
Jordan, both over time and across socioeconomic groups; (ii) renewal of the National Aid Fund (NAF)
which includes the adoption of a new targeting mechanism that will enhance the poverty impact of the
NAF; (iii) analysis of consumption subsidies which examines the poverty impacts and policy implications
of changes in subsidy regimes and assesses options for improved targeting mechanisms; and (iv) the
National Employment Strategy which analyzes one of the main sources of vulnerability of the Jordanian
population – that of unemployment and underemployment. IFC will place greater emphasis on increasing
its investment and advisory engagements in poorer regions of Jordan, and also try to better target youth
and women in its access to finance and education interventions.
92. In addition through the use of several small grants, the Bank will support the provision of
key legal and economic services to vulnerable groups. Specifically, a grant from the State and Peace
Building Fund will finance the provision of legal information, counseling and representation to displaced
Iraqis and Palestinians, and a grant from the Japan Social Development Fund on Community-Driven
Development of Legal Aid Services will expand the provision of these services to reach poor Jordanians
living outside of Amman, covering three governorates in the North and three in the South. The services
will be delivered directly by CSOs in coordination with the Ministry of Justice and will include capacity
building for these CSOs. A GEF grant (Badia Ecosystems and Livelihoods Project) will help sustain
ecosystem services and livelihoods in four poverty pockets in the Badia through diversification of
community income sources and through the sustainable use of rangeland resources.
Financing of the Program
93. Jordan can access an indicative IBRD envelope of $500m - $650m for the four-year period
of the CPS, depending on the sequencing and mix of instruments (DPLs vs. investment loans vs.
guarantees), IBRD lending capacity, demand from the authorities, and performance under the CPS. The
proposed lending program for FY12-15 will be adapted to respond to country demand, country
circumstances, and the Bank’s ability to service such demand in the context of its comparative advantage.
In addition to this indicative lending program, and with a view to promoting regional cooperation and the
use of new financing arrangements, IBRD could also provide financing to Jordan for regional projects
supported by the Arab Financing Facility for Infrastructure or by the Micro, Small, and Medium
Enterprise Facility. During the CPS period FY12-15, IFC will continue investing in the private sector
with an indicative program of $100-150 million per year.
32
Amount
(US$ m) IBRD
Amount
(US$ m) IBRD
Amount
(US$ m)
Amman Development Corridor 71.0 Regional and Local Development 20.0
Amman Solid Waste Management 25.0 Cultural Heritage, Tourism, & Urban Devt. 56.0
Amman East Power Plant (Guarantee) 45.0 Social Protection Enhancement 4.0
Employer Driven Skills Development 7.5
Education Reform for Knowledge Economy II 60.0
Total 208.5 Total 80.0
Grants Grants Grants
Ombudsman Capacity Building Support (IDF) 0.25 Promotion of a Wind Power Market (GEF) 6.0
Measuring the Impact of Natl. Policies & Strategies
on Gender Equality (Gender Monitoring) (IDF) 0.29
Energy Efficiency Investment Support (GEF) 1.0 Secondary Cities Devt. Strategy Prog. (CITIES) 0.47
Ozone Depleting Substance Phaseout II (OTF) 6.0
Amman Landfill Gas Recovery (Guarantee)
(CARBON FUND) 15.0
Integrated Ecosystem Mgt. in the Rift Valley (GEF) 6.2
Coordination on Improved Water Resources Mgt. &
Capacity Bldg. Program (REGIONAL - GEF) 1.05
Employment for Young Women Graduate TA /
Pilots to Improve Youth Employment (GENTF) 1.10
Regional Network for Education Research (IDF) 0.48
Economic Reform and Development TA /
Privatization TA (USAID) 9.5
Total 0.25 Total 46.3 Total 0.76
Diagnostic & Technical Assistance Diagnostic & Technical Assistance Diagnostic & Technical Assistance
Governance Reform TA
Energy Sector TA (SmartGrid Tech. & Carbon
Capture & Storage) Programmatic TA on Social Insurance
TA to Greater Amman Municipality
Support to Higher Education TA
IBRD IBRD
FY12: First Programmatic DPL 250.0
FY13: Independent Power Producer Project - Partial
Risk Guarantee (PRG - IPP3 & IPP4) 100.0
FY13: Second Programmatic DPL 100.0
FY14: DPL 3 TBD
Total 350.0 Total 100.0
Grants Grants
FY12: FY12:
Amman Green Growth Program (Carbon Asset Dev't.
Fund) - until FY14 0.60
Enhancing Legal Aid Services to Iraqi and
Palestinian Refugees (SPF) 1.8
Capacity Building for the Promotion of Treated
Wastewater Reuse in the Mediterranean
(REGIONAL - GEF) TBD
Community-Driven Development of Legal Aid
Services (JSDF) 2.6
Jordan Asso. of Certified Public Accountants
(JACPA) Capacity Building (IDF) 0.25
FY13: FY13:
Red Sea & Gulf of Aden Strategic Ecosystem Mgt.
(REGIONAL - GEF) TBD Badia Ecosystem & Livelihoods Project (GEF) 3.3
FY14:
Amman Green Growth Program (CARBON FUND) TBD
Total 0.9 Total 7.7
Diagnostic & Technical Assistance Diagnostic & Technical Assistance Diagnostic & Technical Assistance
FY12: FY12: FY12:
Fiscal Consolidation Study (ESW) Development Policy Review (ESW) Poverty Reduction Prog./ Subsidies Targeting (TA)
Subsidies Targeting (TA) Competitive Industries, SME Growth (TA) Gender Assessment / Gender Action Plan (ESW)
Regional Program on Public Sector Complaints
Mechanisms (TA) National Employment Strategy (TA)
Social Security Law-Employment Opportunities for
Women (ESW)
Enterprise Survey / Financial Review (TA)
Tourism Dev't. Prog. for the Irbid Historic City Center
& Tafileh (TA)
Nationally Appropriate Mitigation Actions (TA)
Pricing Irrigation Water in the Jordan Valley (TA)
Youth & Inclusion Poverty & Social Impact
Analysis (TA)
Concentrated Solar Power (Clean Technology Fund) TBD
Regional Cross Border Trade Facilitation & Infras.
Project TBD
Micro, Small & Medium Ent. (MSME) Facility TBD
Arab Financing Facility for Infrastructure TBD
Total TBD
ONGOING ENGAGEMENT
NEW ENGAGEMENT UNDER CPS
POTENTIAL REGIONAL ENGAGEMENT
INDICATIVE ASSISTANCE PROGRAM
I. STRENGTHEN FISCAL MANAGEMENT AND INCREASE
ACCOUNTABILITY
II. STRENGTHEN THE FOUNDATION FOR SUSTAINABLE
GROWTH WITH A FOCUS ON COMPETITIVENESS
III. ENHANCE INCLUSION THROUGH SOCIAL PROTECTION
AND LOCAL DEVELOPMENT
33
V. CONSULTATION
94. To help prepare this CPS the World Bank Group held three rounds of consultations with a
range of development partners and stakeholders about the WBG’s programs in Jordan. The first
round was at the launch of the CPS process in February 2010, the second, more extensive, took place in
October 2010, and the final round was conducted with the new Government in March 2011. The
Government’s main interlocutor has been the Minister of Planning and International Cooperation, but line
ministries were also very involved. The consultations also included: (i) the banking and private sector;
(ii) non-Governmental organizations (NGOs) and grassroots organizations; (iii) academicians and
representatives of the civil society at large; and (iv) development partners. The dialogue with these
stakeholders helped shape the main pillars of the CPS and provided the Bank team with suggestions for
interventions that could support the Government’s reform agenda.16
95. The discussions covered a variety of sectors, including education, employability, health,
local/rural development, governance, fiscal management, and access to finance. They provided a critical
but constructive view directly from people affected by these programs. The issues raised covered almost
all aspects of the Bank’s engagement in Jordan and confirmed the new strategic thrust:
Representatives from civil society pointed to the quality of education and employability, especially in
rural areas, as main concerns. Low labor force participation of women was also highlighted. The
mismatch between labor market needs and the skills of graduates produced by educational institutions
was seen to be exacerbating unemployment, especially among the youth. Education in rural areas
was said to suffer from weak infrastructure and poor quality of delivery.
Need to focus the quality and management of education to improve employability and to
address underlying constraints for women
Representatives from civil society stressed that the high level of urbanization has deepened the
disparity between rural and urban development, contributing to increased poverty and unemployment,
especially among women and youth. Participating NGOs agreed that micro-finance as well as
Government support to job-creating businesses, instead of cash transfers, may provide better
incentives for social development not only in rural areas but also in urban centers. The participants
also expressed concerns about insufficiency of public services in health. Severe water shortages and
inferior electricity infrastructure were seen to discourage agricultural and industrial projects.
Need to address regional disparities by supporting local economic development and SMEs to
support local job creation
For private sector and banking sector representatives a key problem was the absence of dialogue
between the public and private sectors to produce viable solutions to economic and financial
problems. Private sector representatives stressed that the limitations placed by commercial banks on
credit to the private sector were constraining the growth of the private sector. Limited access to
finance by MSMEs was seen as a severe constraint. Banks were reluctant to offer credit because of a
general lack of confidence in the sustainability of small industries.
Need for better dialogue between the private and public sector, and better access to finance, in
particular for MSMEs
16 For more details on the discussions, see Annex 4.
34
Representatives noted that Jordan’s slow recovery from the financial and economic crisis was due to
its dependence on foreign aid. They believed Jordan’s fiscal management to be inefficient and that
donor aid should be allocated to capital investments rather than used to pay public sector salaries.
They saw the Government as determined to shrink the deficit without examining the impact on the
economy.
Need for expenditure rationalization, then expenditure cuts
Private sector representatives expressed their dissatisfaction with the competence of university
graduates. Jordan’s once renowned human capital was seen to be dwindling, so that the Gulf
countries that used to attract many Jordanian graduates would in ten years look elsewhere for
employees. For lack of competent Jordanian graduates, Jordan’s own private sector employers were
said to be resorting to foreign labor. Strengthening vocational education and training could help
reduce unemployment rates in the long run.
Need to address the quality of education both at the university and school level, and
encourage vocational training
NGO and private sector representatives saw corporate governance as a mirror of the public
administration and a serious concern. They felt that hiring decisions should be based on experience
and skills, not nepotism.
Need to strengthen transparency and accountability in the public administration
96. Jordan, through the Ministry of Planning and International Cooperation, takes the lead in
the dialogue with its development partners, but there is room for more coordination among donors.
To this end, the Bank Group regularly consults and coordinates with partners and seeks to complement
the activities they support. For a detailed overview of the activities of Jordan’s development partners,
including areas of collaboration with the WBG, see Annex 3.
VI. MONITORING AND EVALUATION
97. The CPS results framework is anchored in the Government’s Executive Development
Program for 2011-13 and derives from the Government’s development objectives while showing the
contribution of the Bank’s program to the achievement of selected indicators.
98. The CPS results framework is a live document. The CPS provides the overall framework
which responds to Government’s demand for a long-term flexible partnership developed around strategic
priorities. The current framework reflects activities through FY13 in which Government has officially
requested the Bank Group to take part. It is expected that activities may be added in response to
Government demand as we move through the CPS period. The Bank will update the results framework as
the program evolves and as agreements are made on assistance going forward. Specifically, the CPS
progress report will take stock of progress in two years, and the results framework will be updated
accordingly at that time.
VII. MANAGING RISKS
99. Risks to the successful implementation of the Government’s agenda stem largely from the
increasing social pressures in the country and the associated demands for the Government to spend
more on subsidies and wages. Recent demands for voice and accountability as well as for improved
service delivery and more jobs are likely to continue, challenging the Government’s ability to move ahead
with its fiscal consolidation plans. Increased recurrent expenditures and universal subsidies strain the
35
budget and leave little room for capital expenditures that are needed for growth and development and
little flexibility to cope with exogenous shocks. In addition, frequent Cabinet reshuffles could slow down
reform efforts and limit the Government’s capacity to implement long-term structural reforms. The
Government is addressing this risk in part by introducing a series of political reforms. In addition, the
Government is looking to move away from universal subsidies in favor of targeted programs that will
serve the neediest.
100. Jordan is highly vulnerable to external shocks, due to its heavy dependence on imported oil,
its reliance on foreign aid to address the fiscal deficit, and its dependence on FDI and remittances
for growth. Added to this is the fact that the country’s debt stock has grown and there is limited fiscal
space to counteract shocks or to invest in growth-enhancing capital. The WBG will support the
Government’s efforts to sustain fiscal stability and build adequate fiscal space through better
prioritization of investment and increasing efficiency of expenditures, and will work with the Government
to increase Jordan’s productivity and competitiveness with a view to broadening the sources of growth.
101. Jordan’s national security and economic wellbeing are affected by regional political
developments. As has been demonstrated by the impact on Jordan’s growth of the increased perception
of risk in the region due to the revolutions in neighboring countries and by the impact of the multiple
disruptions in the Egypt gas supply, Jordan is vulnerable to the political developments in the region. In
addition, repercussions caused by the Middle East conflict and geopolitical events (such as the situation in
Iraq, developments in the Palestinian territories, and the threat of terrorism in the region) continue to
challenge the authorities to maintain an ―oasis of stability.‖
102. Jordan’s heavy reliance on imported energy and food (98 percent of the country’s energy
and 90 percent of its food supply is imported) make it vulnerable to increases in international
commodity prices. As long as food and fuel prices continue to rise, this risk will also persist. While in
the past the adverse impact of high commodity prices on the current account deficit has been mitigated by
cyclically higher FDI and sustained remittances from the Gulf, this has not been the case in 2011, and
Jordan has had to rely heavily on foreign grants. The reliability of foreign aid flows is affected by
downturns in the global economy as well as by changes in geopolitics, and as such, dependence on this
source of financing is inherently risky. With the support of the World Bank Group, the Government will
work to minimize this dependence by building up fiscal and setting the stage for endogenous, private-
sector led growth.
36
37
ANNEX 1: JORDAN CPS RESULTS MATRIX (FY12-FY15) 17
PILLAR.1: STRENGTHEN FISCAL MANAGEMENT AND INCREASE ACCOUNTABILITY
Results Area 1.1: Improve Public Financial Management (PFM), Increase Efficiency of Public Expenditure, and Strengthen Accountability
Government Objectives (EDP):
Maintain financial and monetary stability and increase self-reliance;
Enhance government’s performance efficiency and effectiveness and empower it to use transparency
and accountability tools;
Protect public money and enhance monitoring over it
Enhance government administration so that it becomes financially stable, transparent and subject to
accountability at the central and local levels
Key Issues Targeted:
Growing budget deficit
Growing public debt
Outcomes the Bank Group expects to influence Milestones Bank Group Program
Instruments/Status
Improved targeting of subsidies
Indicator: Food, oil and water subsidies retargeted to poor and lower middle class
Baseline: Food, oil and water subsidies are universal (2010)
Target: Food, oil and water subsidies primarily benefit the poor and lower middle class (2014)
Adoption of new targeting mechanism that
enhances poverty impact of the National
Aid Fund (NAF).
Ongoing activities
Governance Reform TA
Fiscal Consolidation Study
(ESW/TA)
Social Protection
Enhancement Project
Ombudsman Capacity
Building Support ( IDF)
New activities:
Programmatic DPL
Subsidies Targeting TA
Regional Program on
Public Sector Complaints
mechanisms (TA)
Modern Internal Audit function established in line ministries in accordance with international good practice.
Indicator: PEFA indicators P-20 on Internal Control and P-21 on Internal Audit
Baseline: P-20 was C [2009]; P-21 was B [2009]
Target: P-20 rated B or higher [2013]; P-21 rated A [2013]
Undertake study that clarifies appropriate
balance between ex-ante and ex-post
controls and the organization required for
such arrangement.
Increased effectiveness of Access to Information Law (ATI), in line with international best practice
Indicator: Global Integrity Country Score for Jordan
Baseline: 55 out of 100 in 2010
Target: 60 out of 100 or higher by 2013
Adopt draft amendment to Access to
Information Law in view of making it
more effective
17 The outcomes and milestones in this matrix are expected to be achieved over the coming 3-4 years (implementation period of this CPS) and are therefore associated with the
WBG ongoing activities and those activities that will be under implementation within the next year. The matrix will be assessed at the time of the CPS mid-term review (in the
context of the CPS Progress Report) and new activities and outcomes will be added as appropriate at that time.
38
PILLAR 2: STRENGTHEN THE FOUNDATION FOR SUSTAINABLE GROWTH WITH A FOCUS ON COMPETITIVENESS
2.1. Support selected priority infrastructure
Results Area 2.1.1: Support selected priority infrastructure (Energy, Transport)
Government Objectives (EDP):
Secure energy supply and diversify energy sources;
Increase the share of renewable energy resources in the total energy mix
Provide safe, effective and economic transportation services which preserve the environment to make
Jordan a regional hub of transportation and logistics
Key Issues Targeted:
High dependency on imported energy (98% of country’s primary energy)
and limited diversity of sources.
Rise in energy consumption
Existence of key infrastructure barriers on major highways creating
bottlenecks
Outcomes the Bank Group expects to influence Milestones Bank Group Program
Instruments/Status
New electricity generation capacity developed to meet growing demand
Indicator: Added power generation capacity
Baseline: 2603 MW [2011]
Target: Minimum of 400 MW of new generation capacity under construction[2014]
Thermal IPP3 tender is concluded with
selecting of a winning bidder and financial
closure by end 2012
Ongoing activities:
Energy Efficiency
In-vestment Support (GEF)
Promotion of a Wind
Power Market (GEF)
Amman East Power Plant
(PRG)
Energy sector TA
Amman Development
Corridor Project
New activities:
PRGs IPP3/IPP4
IFC equity A, B & C loans
IFC PPP and advisory
Scale-up in implementation of renewable energy and energy efficiency activities
Indicator: Added renewable power generation capacity
Baseline: 1.4 MW18 [2011]
Target: Minimum of 70 MW of New Generation Capacity from renewable sources under Construction
[2014]
Fujiej Wind IPP tender is concluded with
selecting a winning bidder and financial
closure by end 2013
Efficient transport and logistics services supported by removing key infrastructure bottlenecks
Indicator : Travel time GAM to Zarqa improved through use of Amman Ring Road
Baseline: Travel Time to Zarqa 60 minutes [2010]
Target: Travel time to Zarqa 40 minutes [2014]
Partial Opening of Amman Ring Road for
public traffic
18
Grid connected renewable sources, excluding hydro power
39
Results Area 2.1.2: Support selected priority infrastructure (Waste Management, Environmental Sustainability)
Government Objectives (EDP):
Manage solid waste in a comprehensive, effective and environmentally friendly manner;
Sustainable protection and management of the environment;
Curb climatic change;
Protect ecosystems and biodiversity
Key Issues Targeted:
Poor waste disposal practices with significant impact on environment, public
health and economic development activities such as tourism
Shortage of technical environmental staff and modest managerial capacities in
institutions related to the environment
Outcomes the Bank Group expects to influence Milestones Bank Group Program
Instruments/Status
Better urban environment within the Greater Amman Region
Indicator: Percentage of municipal solid waste collected and disposed of in an acceptable
environmental manner
Baseline: 0% [2010]
Target: 80% [2014]
Amman landfill equipped with landfill gas
and leachate management system by 2013.
Ongoing activities:
Amman Solid Waste
Management Project
Integrated Ecosystems
Management in the Rift Valley
(GEF)
Ozone Depleting Substance
Phase-out (OTF)
Coordination on improved
Water resources mgt &
capacity building (reg. GEF)
Amman Green Growth
Program (CADF -preparation)
Amman Landfill Gas Recovery
(Guarantee) (Carbon Fund)
New activities:
Badia Ecosystem and
Livelihood Project (GEF)
Nationally appropriate
mitigation actions and climate
finance instruments (TA)
IFC financing of private sector
participation in waste
management and energy
efficiency
Promotion of treated
wastewater reuse in the
Mediterranean (Regional GEF)
Red Sea Preservation (Reg.
GEF)
Increased contribution of Jordan to the climate change mitigation agenda
Indicator : Reduced GHG emissions in the City of Amman
Baseline: 0 t CO2e [2010]
Target: 300,000 t CO2e [2014]
Landfill Gas Recovery component of
Amman Solid Waste project implemented
by 2013
Better conservation and harnessing of values from natural ecosystems
Indicator : Production system managed sustainably in protected areas
Baseline: 15,500 ha [2011]
Target: 23,000 ha [2014]
Increased coverage of ecosystem sensitive
land use planning and management
including the establishment of 4 protected
areas and 7 Special Conservation Areas
(SCAs)
40
Amman Green Growth
Program (Carbon Fund)
Results Area 2.2: Improve the business environment to enhance competitiveness and attract investment
Government Objectives (EDP):
Improve and develop the business environment and promote its competitiveness;
Empower new, small and medium sized enterprises and build their capacities;
Encourage the private sector to enter into partnerships to undertake major development projects
Key Issues Targeted:
Weak institutional framework for the business environment and for
investments
Weakness of Jordan as a production site compared to global and regional
markets
Difficulty in accessing financing for SME and lack of qualified/trained staff
Outcomes the Bank Group expects to influence Milestones Bank Group Program
Instruments/Status
Streamlined regulatory environment and more equitable enforcement of rules
Indicator: Cost of procedures for company formation as a % of GNI per capita:
Baseline: 13.9% [2011]
Target: 7 % [2014] (OECD level)
Indicator: Administrative steps to create a business
Baseline: 7 steps [2012]
Target: 5 steps [2014] (OECD level)
Perform the institutional/legal work to reduce
the number of procedures to create a company
Ongoing activities:
Insolvency Reform TA
(IFC/WB)
IFC Doing Business
reforms Advisory Services
Economic Reform and
Development
TA/Privatization TA
(USAID)
New activities:
DPL II
Development Policy
Review (ESW)
Competitive industries,
SME Growth (TA)
Capacity Building Jordan
Association for Certified
Public Accountants (IDF)
Private Equity Investment
Diagnostic (IFC)
IFC investments in SME
finance and Advisory
Services to strengthen
capacity of SMEs
SME financing facilitated through support to legal and institutional reforms
Indicator: SME lending as a percentage of bank lending
Baseline: 13% as of end June 2010
Target: 16% as of end 2014
A credit bureau has been established and is
operational
Suitable legal environment to regulate PPPs:
Indicator: Effective application of the new PPP Law provisions
Baseline: No small, innovative PPP transactions [2010]
Target: Some small, innovative PPPs transactions in line with best practice [2014]
Cabinet approval of adequate PPP by-laws and
implementing regulations of the PPP law in line
with international best practice
41
IFC Investment climate
Advisory services activities
Results Area 2.3: Improve education quality, develop skills and address labor market constraints
Government Objectives (EDP):
Enhance the knowledge-based economy and harmonize education outputs with labor market
requirements;
Provide a safe and sound educational environment;
Reduce unemployment and increasing job opportunities;
Raise women’s economic involvement in the labor market
Key Issues Targeted:
Matching the outcomes of public basic education with the demands of the
labor market
Low female participation in economic activity
High unemployment rates especially within young graduates
Low enrollment in vocational training
Weak private sector involvement in the training and employment
Outcomes the Bank Group expects to influence Milestones Bank Group Program
Instruments/Status
Learning environment improved
Indicator: Percentage of students in educational facility with two shifts
Baseline: 11.21% [2010-2011]
Target: 10.8% [end of 2013]
Indicator: School readiness in Grade 1: Percentage of learners in Grade 1 being ―school-ready‖ as measured
by the Early Development Indicators
Baseline: Girls 76.4%/Boys 69.8% [2009/10]
Target: Girls 79.5%/Boys 72.6% [end of 2013/14]
Construction of successive batches of 13
school buildings (end 2012)
120 new public kindergartens built and 40
kindergartens renovated and furnished
(2012)
Ongoing activities:
ERfKE II
Employer Driven Skills
Development Project
Higher Education (TA)
Employment for young
women graduates TA /
Pilots to Improve Youth
Employment (GENTF)
Regional Network for
Education Research (IDF)
New activities:
National Employment
Strategy TA
Social Insurance
Law/Employment
Opportunities for Women
(ESW)
Youth and Inclusion
Poverty and Social Impact
Analysis
Improved Response to labor market and employers’ requirement of labor skills
Indicator: Employers’ satisfaction with Vocational Training Center graduates when entering employment
Baseline: [baseline to be established in 2012]
Target: yearly increase of 0.2 in the 1-5 likert scale
New business and training model for the
VTC developed and implemented (by
2012)
Enrollment in post-secondary technical training enhanced
Indicator: Percentage of students enrolled in community college programs
Baseline: 12% [2009]
Target: 14.5% [end of 2013]
Restructuring of community colleges
(separating technical education from
academic education)
Effective operation and financial coverage by the Jordan Student Aid Fund
Indicator: Percentage of students benefitting from financial aid fund out of the general number of students
Provision of loans up to 10,000 new
entrants annually
42
Baseline: 35% [2010]
Target: 50% [end of 2013]
IFC student loan program
with banks
IFC e4e initiative
PILLAR 3: ENHANCE INCLUSION THROUGH SOCIAL PROTECTION AND LOCAL DEVELOPMENT
Results Area 3.1: Enhance Social Protection
Government Objectives (EDP):
Expand the base of social services, provide infrastructure including appropriate housing and focus on
poverty pockets;
Provide an effective social safety net system for the poor and social welfare services in line with best
international practices;
Improve targeting mechanisms for beneficiaries of programs and projects to combat poverty;
Expand umbrella of health insurance
Key Issues Targeted:
Current social safety net system is not adequately targeted to reach most
of the poor
Low quality and level of social welfare services
Absence of a comprehensive health insurance system
Outcomes the Bank Group expects to influence Milestones Bank Group Program
Instruments/Status
Adopt improved targeting mechanism by the National Aid Fund (NAF) that reaches higher number of the poor
Indicators: % of poor population (as defined by those under NAF threshold) reached by NAF assistance (as
measured by consumption methodology)
Baseline: 20% of people under the NAF threshold received benefits [2006]
Target: 80% of people under NAF threshold received NAF assistance [end 2013]
NAF Renewal Plan under implementation and
specifically the Management Information
System (MIS) to establish a Database on Poor
and Vulnerable Population is operational
Ongoing activities:
Social Protection
Enhancement project
Social Insurance
(Programmatic TA)
Measuring Impact of
Nat. policies and
Strategies on Gender
Equality (IDF)
New activities:
Poverty Reduction
Strategy (TA)
Enhancing Legal Aid
Services to Iraqi and
Palestinian Refugees
(SPF)
Community-Driven
Development of Legal
Aid Services (JSDF)
Subsidies targeting
(TA)
Gender
Better access to and quality of social care services
Indicator: Percentage increase of vulnerable groups benefiting from services in the targeted MOSD centers
Baseline: 2000 beneficiaries [2010]
Target: 2800 beneficiaries 40% increase [2014]
Integrated social care services will be
operating in MOSD social care centers by
2012
Expanded access to Social Security Coverage
Indicator: Population of workers covered by SSC
Baseline: 810,000 [2010]
Target: 1 million [2014]
Increase in the number of branches to improve
services in underserved areas
43
assessment/Gender
Action Plan (ESW)
Social Security Law-
Employment
Opportunities for
Women (ESW)
Results Area 3.2: Pursue Local Development and Address Poverty Pockets
Government Objectives (EDP):
Promote local development to achieve a high level of developmental balance between governorates,
protect the middle class, reduce poverty and reduce unemployment;
Promote tourism and preserve cultural heritage
Key Issues Targeted:
Discrepancy between the regions in socio-economic development
Debt of municipalities and their limited role in development
Poverty is not being addressed in a multi-dimensional and comprehensive
manner
Outcomes the Bank Group expects to influence Milestones Bank Group Program
Instruments/Status
Enhanced operational performance and project implementation practices in municipalities other than Amman
Indicator: percentage of approved sub-projects successfully implemented against plans/set criterion
Baseline: 80% [2009]
Target:100% [2014]
Indicator: Percentage of Municipalities outside GAM that improved as per performance indicators of MoMA
Performance Based Block Grant System
Baseline: 10% [2009]
Target:52% [2014]
Implementation of new procedures and
guidelines related to operation performance in
16 municipalities by the end of 2012
Performance Based Block Grant system is
institutionalized within MoMA in 2012
Ongoing activities:
Cultural Heritage,
Tourism and Urban
Development Project
(CHTUDP)
Regional and Local
Development Project
(RLDP)
New activities:
Secondary Cities
Development Strategy
(CITIES)
Tourism Development
Program for the Irbid
Historic City Center and
Tafileh (TA)
Badia Ecosystems and
Livelihoods Project
(GEF)
Poverty Reduction
Program (TA)
Improved local development in four historically and culturally important cities – Jerash, Karak, Madaba, Salt,
and Ajloun region - through increased tourism activities
Indicator: Increased visitation and stay in targeted cities
Baseline: 1.46 days [2009]
Target: 2.7 days [2014]
Increased rehabilitation activities in historic
urban cores that complements the existing
cultural heritage and thereby promotes
economic and social development.
Implementation of an action plan (including institutional set up and mechanisms) to address poverty
pockets.
Indicator: Reduction in the number of poverty pockets.
Baseline: 32 [2011]
Target: Reduction by 5 percent [2014]
Draft National Poverty Reduction Strategy
produced by 2012
44
ANNEX 2: JORDAN COUNTRY ASSISTANCE STRATEGY COMPLETION REPORT
(CASCR) FY06-FY10
Country: Jordan
Date of CAS: April 6, 2006
Date of Progress Report: March 11, 2009
Period Covered by the CAS Completion Report: July 2005- June 2010
I. INTRODUCTION
1. On May 4, 2006 the Board of Executive Directors discussed the Country Assistance
Strategy (CAS) for Jordan, for the Fiscal Years 06-10 (Report No. 35665-JO). This Country
Assistance Strategy Completion Report (CASCR) takes stock of the effectiveness of the FY06-FY10
Bank assistance to Jordan and draws lessons for the preparation of the forthcoming Country Partnership
Strategy (CPS). The methodology used in conducting this assessment was comprised of three main
elements: (i) close consultations and interviews with project team leaders, team members and clients; (ii)
review of Implementation Completion Reports (ICRs), Implementation Status Reports (ISRs) and Aide
Memoires; and (iii) examination of the alignment of the CAS and the following adjustments in the
progress report with the country development objectives as well as progress made toward these long-term
objectives. It examines the political and economic context over the CAS implementation period, assesses
implementation progress and impact of analytical support, draws lessons learned, and recommends ways
to effectively assist Jordan to address its development challenges in the next country strategy.
II. JORDAN’s DEVELOPMENT OBJECTIVES: NATIONAL AGENDA
A. Recent Political, Social and Economic Developments
2. Jordan is a lower middle income country (LMIC) with strong ownership of its development
strategy. Over the last years, the Government has established a solid track record as one of the
champions of fiscal and structural reforms in many areas in the Middle East and North Africa region
(MENA).
3. In July and November 2007, municipal and parliamentary elections were held in Jordan
respectively, and a new Prime Minister and Government were appointed. In the ensuing two years,
Prime Minister Dahabi reiterated Jordan’s long-term development goal of transforming the country from
a lower-middle income country into a modern knowledge-based economy with higher value-added and
increased productivity and employment, and underscored the GoJ’s commitment to implementing
economic policies to reduce the budget deficit and maintain a stable macroeconomic framework.
4. Although Jordan enjoys overall political stability, it remains embedded in a highly volatile
regional environment. Its national security remains closely linked to regional stability. During the CAS
implementation period, sporadic domestic tensions caused by geopolitical events (such as increased
tension in Iraq until late 2007 and the Gaza offensive in 2008) often affected Jordan’s national security.
5. The global economic slowdown created challenges for Jordan during the CAS period.
Jordan was exposed to major external economic shocks such as the fuel and food crisis as well as the
global economic recession. The combined impact of higher global oil prices, lower private capital
45
inflows and lower overall regional growth reduced Jordan’s economic growth from 7.6% in 2008 to only
2.3% in 2009. In addition, the fiscal deficit rose to 8.5% of GDP (2009).
6. On November 23 2009, King Abdullah II dissolved Parliament two years ahead of schedule.
On December 9, 2009, a new Government was announced and Samir Al-Rifai, previously Chief of the
Royal Court, was appointed as new Prime Minister through a letter of designation by King Abdullah. The
Parliamentary elections were held on November 9, 2010.
B. Development Objectives
7. Becoming a modern knowledge-based economy with higher value added and increased
productivity and employment is at the core of Jordan’s long-term development vision. This vision
implies a bold modernization of the country’s economic, institutional and political infrastructure, based
on improving its business environment, increasing the efficiency of the public sector and enhancing its
human capital, and ameliorating poverty. The Government acknowledges that this requires a modern and
efficient administration, and a more open and participatory policy.
8. Jordan’s National Agenda (JNA) was prepared in 2005 by a Steering Committee comprised
of representatives from the government, civil society, private sector, Parliament, and media. The
National Agenda is an ambitious 10-year development agenda that aims to transform Jordan from a
lower-middle income country into a modern knowledge-based economy with higher value added,
increased productivity and employment, and improved quality of life for Jordanians. The National
Agenda distinguished three consecutive phases: (i) first phase (2007-12) focuses primarily on improving
the business environment, creating employment opportunities, and building the skills needed for the
knowledge economy; (ii) second phase (2013-17) focuses on strengthening the industrial base and
preparing the ground for the development of high value-added sectors in the knowledge economy; and
(iii) final phase (2018-onward) would complete Jordan’s transformation into a world class competitor in
the global knowledge economy.
9. The GoJ has prepared a new Executive Development Plan (EDP) to underpin the National
Agenda. The EDP, presented on February 17, 2010 by the new Cabinet at the request of His Majesty
King Abdullah II, includes seven strategic pillars, namely: (i) reforming the public sector and increasing
accountability through tools for measuring and benchmarking government performance; (ii) encouraging
civil and political participation; (iii) improving the investment and business climate; (iv) improving
workforce skills to meet the needs of the labor market; (v) supporting economic growth through the
development of strategic infrastructure projects; (vi) expanding the middle class base and protecting low
income groups; and (vii) improving the quality and delivery of public services.
III. CAS RELEVANCE
10. The Bank Group Assistance program is aligned with the JNA, focusing on the GoJ’s
overarching objectives of productive jobs creation. In agreement with the GoJ, the CAS focused on
the following four priority areas: (1) strengthening the investment environment and building human
resources for a value-added, skill-intensive and knowledge-based economy; (2) supporting local
development through increased access to services and economic opportunities; (3) reforming social
protection and expanding inclusion; and (4) restructuring public expenditures and supporting public sector
reform.
11. The assessment of the CAS program at mid-term and more recently showed high relevance
of the program with regard to Jordan’s development priorities. The CAS program was found to be
46
broadly relevant, evidenced by a near complete execution of the entire program, with the exception of the
public sector reform program. This program was considered to be too ambitious for the prevailing reality
of the political economy. As such, the CAS results matrix was revised, and the indicators associated with
public sector reform were removed, narrowing the focus of the fourth pillar on public expenditure
management. In addition, in the context of the global economic crisis, the principle of increased flexibility
to adapt to changing country needs was emphasized.
12. During the CAS period, Jordan was subject to several external shocks including high oil
and food prices and the global economic downturn. Oil prices more than doubled during the first half
of the CAS period, and this hit Jordan particularly heavily as it imports more than 95% of its energy
needs. This increase had an adverse impact on the wellbeing of poor and vulnerable households and
broader economic and social implications as households cut back on consumption. The GoJ’s policy of
gradual elimination of subsidies over the previous three years was coupled with a compensation package
that directed a portion of the budgetary savings to finance better targeted expenditures that benefit low-
and middle-income households. The combination of sharp increases in both oil and food prices in 2008,
however, led to a massive increase in the coverage of the compensation package in 2008. The GoJ
acknowledged that the budgetary compensation measures were an imprecise method of compensating for
price increases and could eliminate the recent hard-achieved fiscal gains.
13. The global financial crisis led the Government to request an emergency ―Recovery under
Global Uncertainty‖ Development Policy Loan (DPL) in the amount of $300 million from the Bank
to address the widening fiscal gap. The Government was keen to avoid crowding out the private sector
in the domestic market by diversifying its financing instruments, which in recent years had relied mostly
on the domestic market. The DPL’s objective was ―to support the implementation of the Government’s
medium-term development program in the context of the current global financial crisis and economic
slow-down.‖ I t was developed as a comprehensive operation underpinned by a long standing technical
dialogue with the GoJ on key development challenges in the following four areas: (i) reducing fiscal
vulnerability; (ii) strengthening the financial sector; (iii) improving the business climate; and (iv)
facilitating access of vulnerable groups to a more effective and fiscally sustainable social protection
system. 14. The breadth and quality of existent analytical work contributed to the relevance of the
Emergency Development Policy Loan. A series of new programmatic ESW programs supported the
Government in assessing the impact of the global financial crisis on Jordan. These included the ongoing
programmatic assistance to public financial management; the work on the Medium Term Expenditure
Framework (with emphasis on budget planning reforms); the assessment of the global financial crisis
impact (which examine means of transmission of the financial crisis to the Jordanian private sector and
real economy); the study on price shocks and subsidy reforms which confirmed the need for fiscal
consolidation to reduce fiscal imbalances and strengthen the effectiveness and efficiency of public
spending. A Bank/IMF team also prepared a financial sector assessment program update.
15. The global financial turmoil resulted in mounting pressures on Jordan’s financial system
and social protection measures. The GoJ moved quickly to form a high-level inter-ministerial
committee to track relevant economic information and identify emerging macroeconomic imbalances in a
timely fashion. A slowdown in the Jordanian economy has undoubtedly had an impact on low income
households in the country. The social safety net reforms were, therefore, highly relevant and urgent so
that their targeting is made sharper and leakages are restricted. The Bank supported these reforms
through a programmatic ESW program on social insurance and pensions which identified key areas of
reforms and provided assistance to the Government. On the basis of this broad analysis, a social
protection component was determined and included in the DPL.
47
16. In sum, the Bank was already working on the necessary reforms such as social insurance
and safety nets, business environment, financial sector and fiscal adjustments and was able to
provide advice in a timely and programmatic manner. However, the crisis also had somewhat of a
diverting impact on the implementation of the CAS such as: (i) slower implementation of reforms and
legislation regarding social insurance, (ii) fiscal distress for the government which resulted in financing
caps for projects and a cancellation of the Higher Education Reform for the Knowledge Economy
(HERfKE) project. Despite the cancellation of the loan, the GoJ is committed to implement the
objectives of HERfKE.
IV. PROGRESS ON CAS PILLARS AND BANK GROUP PERFORMANCE
17. The CAS Results Framework provides a structure for assessing the contribution of the
Bank Group (see Annex 1). Implementation experience yielded a number of lessons which will be
reflected in the forthcoming CPS. The four clusters were underpinned by 14 outcomes and 26 milestone
indicators which in some cases were found overly ambitious. They have has been corrected at mid-term
to allow for proper measurement of the CAS results during the second half of the CAS period.
18. The four clusters remain consistent with the government’s priorities and relevant in guiding
the Bank’s program choices. Annex 1 presents a results matrix which includes outcomes and
milestones for each of the four CAS clusters. Several of the indicators were revised at the time of the
CASPR to take into account changes in country circumstances as well as in the Bank’s program over the
CAS period. In particular, the outcomes associated with the public sector reform were removed. Although
the title of the fourth pillar was narrowed to ―Restructuring Public Expenditures,‖ the results presented
under this pillar cover the Bank’s engagement in public financial management more broadly. The CASCR
builds on the revised results matrix of the CASPR and has been further revised to reflect changed
outcome indicators associated with sections 1 and 4 of cluster 2 on supporting local development. These
areas were revised to reflect: (i) recent project revisions of the Cultural Heritage, Tourism and Urban
Development Project and (ii) restructuring of the Regional and Local Development Project as of March
2010. Additional outcomes related to the Emergency DPL which were not in the original CAS envelope
are also presented under the respective pillars.
19. Jordan made significant progress in many areas during the CAS period. In particular in
education and public expenditure management, the original targets are likely to be fully achieved during
the CAS period. In social safety nets, investment climate, and local development, the tools to achieve the
CAS outcomes are in place, and, if efforts are sustained, the objectives are likely to be fully achieved
early in the next CPS period. As such, the targets in this area have been modified to better align with the
timetable of reforms. In social insurance and energy, the Bank’s involvement has been deeper than
anticipated as the GoJ requested that the Bank provide continued technical assistance to the
implementation of reforms, particularly in light of the energy and food price shocks and the global
financial and economic crisis. The implementation of reforms in the areas: (i) fiscal adjustment, (ii)
financial sector policies, (iii) business environment and (iv) social insurance and social safety net were in
particular supported and accelerated through the Recovery under Global Uncertainty Development
Emergency Policy Loan.
20. In public sector reform, progress has been slower than anticipated when the CAS was first
formulated. The Bank’s planned assistance in this area did not materialize during the CAS period and the
relevant outcome indicators have been modified accordingly during the mid-term review. However, given
the recent new emphasis on public sector reform in Jordan, the Bank is re-engaging in these areas under
the new CPS.
48
Table 1 Summary of CASCR findings on the FY06-10 CAS results matrix Strategic Objective 1
Strengthening the Investment Environment
and Building HR for a Value-Added, Skill-
Intensive and Knowledge-Based Economy
Strategic Objective 2
Supporting Local Development through
Increased Access to Services and
Economic Opportunities
Strategic Objective 3
Reforming Social
Protection and
Expanding Inclusion
Strategic Objective 4
Restructuring Public
Expenditures
1.1 Improvement in Jordan’s investment climate/business environment
2.1 Effective local government supporting economic development
in place
3.1 Robust and well targeted social
protection system in
place with following outcomes:
Safety Nets:
Social Insurance:
4.1 Transparency in the budget
system is
improved and clearly describes
government
priorities and expected
outcomes of
public spending.
1.2 Education and skills development
aligned with knowledge economy and
employment needs: a. Further improvements in Jordan’s
performance in 2007 TIMSS
b. Improvements in scores in National Knowledge Economy Assessment
c. Higher education policy reform
framework adopted
d. Student aid program for poor students
to universities expanded and
functioning
e. A quality assurance and accreditation
system for universities
f. Functioning E-TVET Council
4.2 Budget
outcomes are
consistent with government
policy and
National Agenda.
4.3 Medium-term
expenditure
framework (MTEF)
introduced.
Achieved Partially achieved Not achieved
A. Areas of Bank Group Involvement through Implementation of the CAS
21. Cluster 1—Strengthening the investment environment and building human resources for a
value-added, skill-intensive and knowledge-based economy has shown good progress in many areas.
The Bank has worked successfully with the GoJ in this area. The objectives have been largely achieved,
although progress in the area of business environment - while significant - has been slower than planned
in the CAS.
With the support of the Bank Group, the GoJ has embarked on an investment climate reform
process. In 2008, the GoJ put together a Committee to coordinate and facilitate faster improvement in the
business environment headed by the Ministry of Planning and International Cooperation. The Committee
devised a strategy to improve the business environment in Jordan on the basis of the framework provided
by the Doing Business (DB) report, and key areas of concern underlined by the 2007 Investment Climate
Survey. Despite these continuing reforms, Jordan’s Doing Business 2011 ranking dropped to 111 from
107 in 2010. The GoJ has adopted a more strategic approach to capital formation, combining efforts to
improve the investment climate and attract/encourage private business investment. It is worth noting that
49
a new Temporary Income Tax Law became effective as of January 1, 2010. With the adoption of this
coherent strategy the government has achieved the CAS milestone. However, in order to be successfully
executed it would need to ensure a consistent implementation, which, if achieved, can yield significant
improvements in the two coming years in areas covered by the key Doing Business Indicators (starting a
business, licensing, property registration, investor protection, etc.).
22. During the CAS period, the GoJ launched its Public Private Partnership program and
promoted Public Private Partnerships (PPPs) for selected infrastructure investments. In 2008, the PPP
regulation was implemented. During the CAS period, two PPPs were completed: the Assamra Water
Treatment Plant/BOT (2007) and the expansion of the Queen Alia International Airport (QAIA) BOT
2009..PPPs are expected to play a strong key role in Jordan by creating employment opportunities, and
providing essential and quality services to the general public and to businesses, thereby fostering local
economic growth and reducing poverty. The privatization trust fund from USAID managed by the Bank
was critical in supporting Jordan's major privatization transactions while continuing to provide technical
advice and oversight to the Executive Privatization Commission (EPC). Parallel to the aforementioned
PPP program initiative, in the electric-power sector the government successfully privatized the
Central Electricity Generating Company in 2007 and two formerly state-owned electricity
distribution companies in 2008. In addition, Jordan successfully launched the independent power
producer program, resulting in the development of two new privately-owned power plants to date
(the Amman East power project was awarded in 2006 and the Al Qatrana power project in 2008). The WB provided a partial risk guarantee to support private financing of the Amman East Power
project. The focus of Bank assistance has shifted away from the privatization of State Owned
Enterprises (which is now almost fully completed) to the development of a regulatory and institutional
framework for PPPs and a pipeline of medium-size PPPs for needed infrastructure and services. Jordan is
now transitioning into promotion and identification of public-private partnerships. In addition to larger
PPPs (e.g. power sector), the GoJ/EPC is now pursuing medium-sized PPPs in transport, housing and
education. The WB supported the process with a policy note on guarantees for debt financing for PPPs. A
new PPP law has also been developed to reflect lessons learned.
23. In order to strengthen Government’s capacity to further utilize PPPs and as part of a wider
public sector restructuring plan, the Government intends to merge EPC, and integrate its resources
within the Projects Administration (PA) at the Prime Ministry in the course of 2011. The PA’s principal
mandate is providing institutional support to the execution of vital mega projects, strategic projects and
PPPs and will be focused on ensuring delivery of vital projects for the government in partnership with
line ministries and agencies. The PA will also be responsible for promoting and identifying public-private
partnerships, as well as taking ownership for the PPP Law that will be presented to Parliament in 2011.
Serving as Government’s PPP expertise hub, the PA will elevate the importance of PPPs as a vehicle to
implement Government projects and services. This will also expedite the decision making processes
regarding approving PPP projects by Council of Ministers.
24. In private sector development, the GoJ reduced the minimum capital required to establish a
limited liability company from the equivalent of 795% of GDP per capita in 2007 to 19.9% in 2009 —to
encourage businesses to enter the formal sector. Jordan made it easier to start a business and pay taxes,
extended the construction permit one-stop shop for medium-size projects, lowered property transfer taxes,
implemented major court reforms, and speed up trade. The DPL supported in particular the Business
Environment reforms by measures that reduced the entry and operating costs and improved the tax
administration: (i) A new Company Law was approved where the minimum capital requirements for
limited liability’s companies was abolished by eliminating the requirement for depositing 50 percent of
the capital of limited liability’s companies in commercial banks. As an outcome minimum capital
requirement for limited liability’s companies is 0 percent of GNI in 2010 versus 24.2 percent in 2008.
(despite slowdown in economic activity, the number of companies registered in the first seven months of
50
2010 increased by 1.03 percent compared to the same period in 2009). Moreover, the DPL also facilitated
improvements of the registration and contract enforcement process: the registration through the
Companies Control Directorate of the Ministry and Trade was facilitated through four additional one-
stop-shops outside Amman offering a full range of services19
; the Ministry of Justice has instituted fully
operational specialized commercial sections at eight courts outside Greater Amman to improve the
resolution of business disputes. (ii) The Cabinet has approved a draft Bankruptcy and Insolvency Law
thereby defining the priority order of secured creditors in bankruptcy cases. (iii) The DPL supported also
improvements of tax system: An on-line filing system for tax returns and electronic payment systems has
been initiated and is being used by at least 10 percent of corporate tax payers in November 2010 vs. 1.5
percent in 2009.
25. There are indications that the GoJ continues to streamline its business registration
processes; a new commercial code is being considered; a Unified Tax Code is in draft; and there are
significant reform efforts underway in the area of trading across borders. Jordan continues to be interested
in unifying customs regulations to be consistent with the region. With assistance from the Bank Group,
Jordan is focusing on addressing some of the remaining constraints, including streamlining civil
proceedings; reforming taxation and tax administration and developing the capacity of insolvency
administrators. IFC is supporting the GoJ in implementing a comprehensive licensing and inspection
reform program to simplify the inspection processes in selected ministries and to reduce the time and cost
burden that inspections place on businesses.
26. Beyond the original outcomes of the CAS, the DPL contributed to strengthen the financial
sector and to broaden the access to finance: (i) The Central Bank (CBJ) adopted a plan for more
consolidated supervision providing a comprehensive view of potential risks to the banking sector. The
Central Bank of Jordan has completed a first run of stress testing on the aggregate banking sector balance
sheet and has issued guidelines on stress testing to individual banks; a first run stress testing by each
individual bank has been completed; (ii) The cabinet approved the Credit Bureau Law that improves SME
access to finance by facilitating bank lending through making credit information of borrowers available
and alleviating restrictions on use of collaterals.
27. The IFC program contributed significantly to the investment and private sector
development pillar. The IFC played a key role in supporting the rehabilitation and expansion of the
Queen Alia International Airport PPP project. IFC was the lead advisor to the GoJ in structuring and
implementing the project leading to the award of a 25-year concession to the Aéroports de Paris
Consortium with a bid of 54.58% of gross revenue to the GoJ, the highest revenue-sharing percentage
achieved in the world for similar projects. This transaction represented the largest private sector
investment in Jordan to-date of approximately $1 billion, and is expected to generate $3.7 billion
(approximately $148 million annually) in concession fees to the GoJ and to realize fiscal savings of
approximately $1.7 billion. In FY08 IFC invested $127 million in the project (both equity and debt),
along with $100 million co-financing from the Islamic Development Bank (IsDB).
28. IFC also supported the privatization of Royal Jordanian Airlines by conducting the pre-
feasibility study that led to the initial public offering (IPO) in November 2007, in which the GoJ
sold 71% of the airline to the private sector. In addition, IFC is currently the lead advisor to the GoJ
for the implementation of Amman Ring Road PPP concession to help mobilize private sector investment
for the 118-kilometer expressway—the first toll road project in Jordan. In addition to the infrastructure
19 By 2010 start-ups of businesses was eased by offering a single reception service for company registration at the company
registrar. In 2008, One-stop-shops limited the time to start business to fall from 18 to 14 days and business start-up procedures
from 11 to 10.
51
sector, IFC has been actively supporting private sector involvement in transport and warehousing with a
total of $168 million committed during the CAS period. Over the last 4 years, IFC’s portfolio in Jordan
increased significantly from $50 Million to around $400 Million today, an indication of an improved
environment for private sector participation in the economy.
29. Through an integrated investment and advisory program, IFC has helped develop the
financial sector by increasing access to finance to underserved groups. During the CAS period, IFC
has: (i) promoted the leasing sector by strengthening the legislative regime and clarifying the tax
treatment of leasing; (ii) supported the preparation of the corporate governance code for banks in Jordan;
(iii) supported the microfinance sector, especially targeting women; (iv) stimulated the housing finance
market through an investment in a new mortgage finance company, support for the Jordan Mortgage
Refinance Company, and advisory services to support new legislation for the sector; and (v) assisted the
GoJ in drafting the new legislation that will regulate the sharing of credit information. Through its Global
Trade Finance Program, IFC also supported the capacity of three commercial banks to deliver trade
financing through partial or full guarantees covering payment risks on banks in the emerging markets for
trade related transactions. Moreover, a $50 million IFC equity investment (IFC’s largest equity
investment in the banking sector in Jordan) in Capital Bank supports the bank in its small and medium
enterprise and housing finance strategy, promoting better corporate governance standards, and helps with
future regional expansion.
30. During the period of this CAS, major progress has been achieved in reforming the institutional and market structure of the energy sector. The GoJ’s energy strategy (updated in 2007)
calls for further private sector participation in the energy sector, enhancing energy security through
diversification of energy imports and strengthened regional trade of gas and electricity, development of
renewable energy, promotion of energy efficiency, and development of domestic energy resources,
including oil shale.
In the electricity sector, the strategy calls for the development of additional gas-based
independent power producer (IPP) contracts. The Bank Group has provided a Partial Risk
Guarantee (PRG) and a MIGA Guarantee ($45 million for the PRG and $69.8 million for the
MIGA guarantee) for the construction of the Amman East power plant and demonstrated
success of these instruments in attracting private sector investment in infrastructure that could
further catalyze their use.
The adoption of the oil subsidy reform, a milestone of the CAS, has been achieved.
Subsidies for oil products were gradually removed and completed in February 2008, except
for LPG (Liquefied Petroleum Gas) resulting in a significant increase in the prices of oil
products. Associated costs in real income for low and middle income groups have been
compensated by a variety of measures including tax reductions and exemptions, various cash
transfers and a substantial increase in public sector pay.
A new energy strategy has been developed, emphasizing the need to develop renewable
energy and an institutional framework for the promotion of renewable energy and energy
efficiency. A new Renewable Energy and Energy Efficiency Law was officially ratified in
February 2010. The Bank is providing support to the sub-sector in the form of two GEFs—
one project supporting wind power generation and one for energy efficiency to initiate the
implementation of the new framework. Under the Energy TA, three analytical documents
were prepared to support Government in its policy decisions: (1) Jordan Power Sector:
Medium Term Issues and Options; (2) Energy Efficiency Framework for Jordan; and (3)
Concentrated Solar Power for Jordan: Economic Impacts on the Power System..Follow up
AAA activities are now underway, including (i) a TA on smart electricity grid application for
Jordan, and (ii) a capacity building TA on carbon capture and storage for Jordan.
The Bank also launched a study to assess the potential for regional energy integration in the
Mashreq, funded by ESMAP and the Arab World Initiative. A Clean Technology Fund (CTF)
52
soft loan was also approved in December 2009 to establish a clean technology investment
plan and enhance the capacity for Concentrated Solar Power (CSP) including strengthening
the regional interconnection of electricity grids in five countries, including Jordan.
IFC is supporting the implementation of the energy sector PPP program through Advisory
Services and direct financing and mobilization of resources to projects in generation,
distribution, and renewables. In FY09, IFC invested $40 million in Kingdom Electricity
Company (KEC), the preferred bidder for the acquisition of the GoJ stake in Electricity
Distribution Company (EDC). Jordan is the only country in the MENA region to fully
privatize the electricity distribution sector. By mobilizing intra-regional investments from the
Gulf, the IFC project hopes to demonstrate the feasibility of electricity distribution
privatization and attractiveness to foreign investment in the region. The project also provided
much needed one-off revenues to the government and has relieved the fiscal burden of
continued investments in power distribution by the public sector.
31. The Go’s commitment to transform the education system into one that can produce
graduates with skills necessary to meet the needs of a knowledge economy is still strong. At the pre-
tertiary level, the Go’s implementation of a 10-year reform program–Education Reform for the
Knowledge Economy (ERfKE) for which the Bank is the lead donor–has already yielded positive results
and targets have been fully achieved:
Education Reform for the Knowledge Economy (ERfKE): Within the ERfKE program, the
Bank financed the development and implementation of a student outcomes-based curriculum
for all subjects and grades, an assessment framework for student achievement that measures
authentic, performance-based achievement; the development and piloting of supplemental e-
learning materials in core subject areas; the connection of more than 2,000 schools to high-
speed learning network; the upgrade of 466 schools, and the construction of 40 new schools
to provide access to safe and adequate school facilities to basic and secondary students. Net
enrolment rates in the 8th grade increased considerably during the ERfKE I project period.
The 2007 Trends in International Mathematics and Science Study results show strong
improvements in Jordan’s ranking in science and math in both regional and international
science rankings. 2008 National Assessment for the Knowledge Economy results showed
improvements in all grades tested as compared to 2006 scores.20
With the support of the
second phase of ERfKE, the ERfKE II project, the GoJ has adopted a whole school approach
that engages teachers, principals, administrators, parents and communities in the formulation
and implementation of school development initiatives focused on the achievement of quality
learning outcomes. In FY11, IFC made a $13 million equity participation in EdFund (a UAE
based Fund) to support their acquisition of Al-Alamiyah Schools in Amman. The project will
help increase the quality of private schooling in Jordan.
In higher education, with technical support from the Bank and a PHRD Grant, the GoJ
prepared a comprehensive higher education policy framework to serve as the foundation for
the reform to be supported by the proposed Bank-financed Higher Education Reform for the
Knowledge Economy project (HERfKE) (FY09). In July 2009, the government decided not
to borrow, and to finance the project from its own resources. As a result of the financial crisis
on the government’s approach to debt management, the national debt committee decided to
significantly curtail borrowing as well as general investment from the budget. Under the
guidance of the framework prepared for the Higher Education reform project, the GoJ
nevertheless moved forward on drafting key legislation to kick-start the reform program.
20 2008 NAFKE results show improvements in scores compared to 2006 baseline in all grades tested (5th, 9th, 11th) and in
following subjects per grade tested: (i) 5th: reading; (ii) 9th: math, science and reading; and (iii) 11th: math and reading.
53
Three laws were subsequently passed by the extra-ordinary Parliament session in July 2009,
these laws are: (i) the Higher Education Law; (ii) the Public Universities Law; and (iii) the
Higher Education Accreditation Law. While the enacting of the laws mentioned sends a
strong signal to all stakeholders as to the seriousness of GoJ to reform the sector, much work
still needs to be done to address the state of affairs at the community colleges and to address
the rising inequity in the system. Despite the decision by the GoJ not to borrow from the
Bank for the higher education, the Bank’s support in preparing the project and providing
technical assistance resulted in the development of a comprehensive Higher Education Policy
Framework which was endorsed by the Council of Ministers (CoM) in March 2009. CoM has
endorsed, in October 2010, with direct technical assistance from the World Bank, a new
model for student aid (the Jordan Student Aid Bank – JSAB) based on four pillars: Access,
Equity, Student Responsibility, and Fiscal Sustainability. An Inter-Ministerial Policy
Committee has been established and tasked with developing the institutional arrangements for
the JSAB by end January 2011, for the JSAB to be operational for the 2011/2012 school year.
The Bank will continue to provide Higher Education reform advice in the form of a multi-
year Technical Assistance in response to the Government of Jordan’s request for assistance to
support implementation of current and proposed reforms for a better managed Community
College system and the development of robust student aid programs.
IFC’s use of financial intermediaries helped to increase access to quality education. In
FY08, IFC committed its first investment in the education sector in Jordan. This project
consists of a student loan program for university students, whereby the IFC will share risk of
up to $5 million on a portfolio of student loans that will originate and managed by the Cairo
Amman Bank, a private commercial bank.
With the approval of the Employer Driven Skills Development Project, the training
sector gained momentum to undertake significant reforms, such as engaging employers in
the training process, bridging the gaps in matching vacancies with job seekers and ensuring
that workers and unemployed get access to education and training. The Cabinet has endorsed
a new law setting up the T-VET council. The council secretariat was established but requires
further support and capacity building. While a number of PPPs have already been signed with
the hospitality service sector, telecommunications, pharmaceutical and automotive industries,
progress in the E-TVET area has been slower and more complex than expected primarily due
to the involvement of multiple stakeholders (Ministry of Labor, Ministries of Education &
Higher Education, as well as the private sector).
Cluster 2—Supporting local development through increased access to services and economic
opportunities. This cluster has shown progress in spite of a slow start-up. The results matrix was
updated in the CAS Progress Report to reflect the slow start-up of the Regional and Local Development
Project (RLDP) and to revise overly ambitious milestones and expectations. Therefore, new, more
realistic indicators were added to report on the additional work undertaken with GAM. Since shifting to
result-based budgeting in 2007, the Ministry of Municipal Affairs (MOMA) is taking a pro-active role in
fostering local development and supporting municipalities in their efforts to increase access to services at
the local level, with the support from the RLDP, (co-financed by the Agence Française de
Développement- AFD), and the Cultural Heritage, Tourism, and Urban Development Project (CHTUD),
both approved in FY07.
32. In 2008, MOMA issued the 2008-15 Municipal Development Strategy, a strategic framework
to guide the implementation of the municipal sector reform agenda whose implementation the RLDP is
supporting. The GoJ is making progress towards an intergovernmental legal and regulatory framework
that rationalizes and clarifies authorities and functional assignments among different tiers of government.
54
Beyond the strategic framework for local development, the government started the preparation for a
regional and local development White Paper which will pave the ground for the intergovernmental
framework. Leadership of the project was shifted from MoPIC to MOMA. MOMA started to implement
the Municipal ―Performance –Based Block Grant (PBBG)‖ system which was developed under the RLDP
project, closely working with the municipalities to identify local priorities through a participatory system
and to deliver a large number of municipal infrastructure.
33. Under the RLDP, the GoJ made progress in providing better access to finance for sub-
national government and contributing to the development of sound municipal financial
management systems and investment planning tools. It took steps to review the fiscal equalization
transfer system for municipalities and is in the process of revising the current fiscal transfer formula. This
fiscal equalization grant, together with the performance based block grant (PBBG) supported by RLDP,
will assist in achieving a cumulative increase in additional resource transfers to municipalities. The first
cycle of the PBBG has been completed. This supported a series of infrastructure projects in 72
municipalities. Key outcomes of the cycle also include: improved municipal planning, management of
investments, investment prioritization, strengthened procurement capacity and increased fiscal
responsibility as several municipalities exceeded their required share of project financing. In the
meantime, the second cycle has begun. This cycle will be competitive and eligible municipalities will
compete to access financing.
34. Building on a sector assessment by the Millennium Challenge Corporation, the RLDP has
been launching the design of an integrated municipal finance management information system. MOMA also made progress towards the full disclosure of resource transfer tools, by publishing, together
with MOF, a joint annual report on intergovernmental fiscal allocation in October 2009.
35. The Greater Amman Municipality (GAM) presents an excellent example of decentralization
working effectively in Jordan. Under the RLDP project, GAM is sharing its experience with other
municipalities (e.g., Irbid and Salt) and is developing the capacity of the newly created Amman Institute
to formally train and mentor at a national and regional level.
36. Through the CAS instrument, GAM was provided with access to financing to support
priority investments. GAM entered into an agreement with the Bank to purchase part of the Certified
Emission Reduction amounting to 0.9 to 0.95 million tons of CO2 and obtained an accompanying
investment loan to systematically address municipal solid waste management issues and to initiate steps
towards integrated and efficient municipal solid waste management while mitigating negative
environmental effects at both the local and global level. Both the carbon finance and the investment
operations were approved for sub-national borrowing (lending to an institution with the guarantee of the
government) for an amount of $25 million in FY09. Owing to the success of these operations, GAM
requested continuing collaboration with the Bank as a partner in the development and implementation of a
City-Wide Clean Development Mechanism program. This program (the Amman Green Growth Program)
will target GAM priority investments in several municipal infrastructure and services and will make
Amman the first city worldwide to develop such an approach. GAM is now being considered to join the
Bank-managed Carbon Partnership Facility as a Seller.
37. A number of activities at the sub-national level are underway with GAM: PPIAF financing
was secured to carry out an analysis of PPP models for certain priority investments. The Bank has
initiated TA to review the adequacy of GAM’s revenue and financing sources. This will also help to
define requirements for a multi-year capital investment plan, and will help GAM access further grant
funding from the Sub-national Technical Assistance Program (PPIAF-SNTA). The TA will also assist the
GAM in building a business model for the City-Wide CDM program. Finally, dialogue is on-going on the
possibility of using the joint Bank-IFC Sub-national Finance Window for GAM’s investment program.
55
Moreover, the Bank is currently providing technical and financial assistance to GAM, under the
ongoing Amman Development Corridor project (ADCP), to prepare the feasibility and design
studies for a public urban transport project which would include Mass Rapid Transit (MRT) and
could involve a PPP scheme.
38. Jordan’s cultural heritage has benefited from project support. GoJ undertook works to
restore cultural heritage assets and to improve overall quality of life in historic city cores. The urban
renewal works were already launched in Madaba, Salt and Jerash. The work in Madaba is almost
completed. The generation of local economic opportunities through cultural heritage assets initially faced
some delays. With support of the CHTUP the operation manual for local economic development was
produced.
39. A country environmental analysis was prepared during the CAS. The Jordan country
environmental analysis provided the framework for identifying and responding to Jordan’s environmental
priorities.
40. In 2008, the Bank began support to the communities hosting Iraqi guests21
with a Post-
Conflict Fund (PCF) grant in the amount of $1.7 million to the Save the Children alliance primarily
in the education sector (kindergartens). The project will be closing in June 2011. It is designed under
the umbrella of the ―Ta’leem‖ (learning) Regional Education Initiative which increases access to quality
education for youth between the ages of 4-24. In Jordan, program activities are implemented in direct
partnership with the Ministry of Education, adding to the World Bank support for the Education Reform
process (ERfKE) and meeting critical needs in the emerging early childhood sector. Achievements to date
include: (i) 1250 Iraqi children benefited from a scholarship scheme; (ii) 450 children benefited from
education support classes; (iii) 60 teachers received capacity building on learning difficulties, inclusion,
and protection; and (iv) 75 adolescents and youth received training on life skills.
Cluster 3 — Reforming social protection and expanding inclusion. Significant progress has been
achieved in this cluster, especially on the social security reforms. Reforms in the social safety nets area,
however, have been slower than expected. Both Safety nets and social inclusion (SI) were substantially
supported through the DPL which included also SP components. The GoJ has developed specific
strategies, policies, and action plans with support from the Bank in key areas, namely reforming the
pension system, introducing unemployment insurance savings accounts, reforming health insurance, and
modernizing the National Aid Fund (NAF) and expanding its safety nets.
Expanded social insurance: The most important outcome of this cluster is the enactment of the new
Social Insurance Law in March 2010. The law includes reforms related to the current pension system to
make it financially sustainable, introduces maternity benefits, unemployment insurance, health insurance,
and extends coverage to establishments of 5 or less employees.22
41. In the pension reform area, the Bank assisted the Social Security Corporation (SSC) to
design parametric reforms of the current system aimed at: (i) improving the sustainability of the SSC;
(ii) introducing other benefits such as unemployment insurance, maternity benefits and health insurance;
(iii) improving the administration of the SSC, and (iv) developing a regulatory framework for private
pensions in Jordan. With Bank support, a new law that will serve as the basis for the new pension system
21 There is currently a population of 500,000 Iraqi guests in Jordan, adding to the demand for services and economic
opportunities. 22 The new law extended the SCC umbrella to include housewives, linked pensions with the inflation rate and set salary ceiling
subject to SSC deduction oat JD 5,000. Groups of previously excluded workers in Jordan are now covered by social security. Employers and self-employed are incorporated at a compulsory basis, while stay-at-home women are covered on a voluntary
basis.
56
was approved in January 2008 by the Board of Directors of the SSC and the Cabinet. In end March 2010,
the new law was enacted and implementation commenced. The outcomes of the SI components went
beyond expectations. The new SI legislation includes various innovative and important reforms unlike
many other countries in the region. In addition, the process followed by SCC was exemplary in seeking
technical advice from various aspects, demonstrating high ownership of reforms, building its own
technical capacity and launching a wide and massive information campaign on the reform. Major progress
has been achieved in the social insurance sector with the support of the Bank’s multi-year programmatic
ESW combined with the DPL thereby supporting the Jordanians in designing, preparing and pushing
forward the reforms.
42. The Bank is supporting the GoJ's aim to achieve universal health insurance and to increase
coverage in a sustainable and equitable way in the coming years. The Bank prepared an assessment of
the financial implications of possible reform scenarios which was discussed with stakeholders. The
process to reach a consensus took longer than anticipated and slowed the project preparation. This
outcome is partially achieved at least for SCC members who will now have health insurance coverage.
Currently, approximately 50 percent of the population is covered by formal health insurance.
43. An important achievement of the SI component under the DPL is the extension of the
unemployment insurance program. The DPL supported a cabinet approval of a draft unemployment
insurance program as part of the social security law which provides unemployment insurance benefits to
all members of the SSC. As a result, all SCC members were covered by November 2010 versus 0 percent
beginning 2009. On unemployment insurance, the Bank analyzed different alternatives, including the
viability of an unemployment savings account option. Financial parameters and technical features of the
unemployment insurance system were designed with Bank assistance and incorporated in the new draft
pension law. In addition, implementation details were developed. The results matrix was slightly
modified to reflect the additional work done at the request of the GoJ in unemployment insurance.
44. In social safety nets, the GoJ with assistance from the Social Protection Enhancement
Project (approved in FY08) is seeking to improve the targeting mechanism of the NAF and to
increase its coverage. Although the project has advanced implementation in all aspects, it is too soon to
assess the overall progress towards achieving this objective. At this stage the milestones are partially
achieved. Under the project, the GoJ has taken steps to establish the database on poor and vulnerable
populations as a key element in achieving better targeting, but progress has been slower than anticipated.
With support of a DPL prior action, the coverage of the target poor population by NAF assistance
increased from 20 percent in 2006 to 40 percent by November 2010 of those under NAF threshold.23
The
NAF has initiated testing of a new targeting mechanism that is envisaged under the NAF Renewal Action
Plan, including: (i) improved questionnaire finalized; (ii) database software developed; and (iii) data from
at least 2,000 households out of planned 6,000 collected. In the meanwhile, NAF has recently completed
the pilot for 6468 households to be screened using the Proxy Means Testing formula to ascertain their
eligibility to receive NAF cash benefits. 24
However, a slowdown in the Jordanian economy that has
resulted from the global economic downturn will undoubtedly have an impact on low income households.
The ongoing social safety nets reform, supported by the project, is highly relevant and urgent so that their
targeting is made sharper and leakages are restricted to increase coverage of poor people. The results
matrix was modified because the original targets can only be achieved upon completion of the project,
which will take place mid-way through the implementation of the next CPS.
23 NAF, Ministry of Social Development 24 Switching from the previous targeting mechanism (categorical) to a new mechanism (proxy-means testing) proved to be more
difficult than expected since resistance to change was high. The PMT pilot results were presented to the Human Development
Committee in the Prime Ministry and awaiting decision from the Committee (ISR Jordan Social Protection Enhancement
Project).
57
45. The 2006 Household Income and Expenditure Survey estimated that poverty stood at 13%
in 2006, with varying levels of poverty between governorates. Contrary to public perception, poverty
in Jordan dropped between 2002 and 2006, but deep pockets of poverty persist. Poverty in Jordan is
shallow with a large share of the population consuming at levels close to the national poverty line. The
decline in poverty is explained by an increase in real expenditure especially among the poorest resulting
from robust GDP growth and increasing remittances since 2000. In contrast, income levels remained
stagnant over the same period. The Government has been providing cash transfers and various subsidies
as part of its safety net, which reached its peak in 2008 at the time of international price shocks. Focusing
on mechanisms that are systematically included in the budget, such as revising the National Aid Fund
targeting, is more effective in protecting the poor and vulnerable. To this end, the Bank will continue to
provide programmatic assistance in poverty monitoring and mapping, including developing a computable
general equilibrium model; small area estimation; and improving the quality, timeliness and periodicity of
wage and earnings data.
Cluster 4—Restructuring Public Expenditures
46. Bank interventions and the defined outcomes of cluster 4 are addressing primarily public
financial management and the efficiency of public expenditures. The Bank supports GoJ with a
substantial programmatic assistance in PFM since 2006. The ongoing work was complemented by the
crisis-response DPL which was not foreseen in the CASPR of March 2009. As already mentioned in the
CASPR and elaborated below, the support of the public sector program did not materialize. It was
therefore considered to revise the theme of cluster 4 with a focus on PFM and the efficiency of public
expenditures.
47. The ongoing programmatic assistance in public financial management initiated in 2006
under scored the need for further fiscal consolidation and more efficient public spending in Jordan. Since 2007 the Bank has assisted the GoJ with the introduction and implementation of the Medium Term
Expenditure Framework (MTEF), with emphasis on strengthening the policy orientation of the budget
planning reforms. The assessment of the global financial crisis impact, which examined mechanisms of
transmission of the financial crisis to the Jordanian private sector and real economy, and the ongoing
study on price shocks and subsidy reforms identified areas of fiscal vulnerability and selectively
quantified the gains/losses of compensation policies, confirming the need for fiscal consolidation to
reduce fiscal imbalances and strengthen the effectiveness and efficiency of public spending.25
48. The main achievements of PFM reforms to support the authorities’ fiscal consolidation
measures until 2010 include:26
Introduction of a Medium Term Expenditure Framework (MTEF) in 2008, integrating the
planning and budgeting processes, for which the Bank, together with other donors such as USAID
and GTZ, provided programmatic technical assistance. It has continued to make good progress with
the introduction of the MTEF and budget preparation reforms which to date have covered three
budget preparation cycles. The budget planning horizon was now extended to three years with the
inclusion of program level Forward Estimates (FEs) for two outer years. In introducing the MTEF,
GBD decided to roll out FEs and performance indicators to all ministries/GUs, rather than starting
with a number of pilot ministries. The approach has emphasized the central role of the MTEF in
Jordan’s budget management reforms. FEs were introduced for ministries with the 2008 Budgets and
for ministries and governmental units (GUs) with the 2009 Budget.
25 Country Background note for DPL evaluation 26 IMF/WB , Jordan Public Financial Management Reforms, January 2011 (Draft)
58
Improved Budget preparation and prioritization through MTEF: In both sector ministries and
GBD, the MTEF is already considered to have brought about significant improvements to budget
preparation and negotiation. In most ministries, the MTEF resource ceilings have facilitated more
realistic and better prioritized budget planning. In some ministries, such as Education and Health
Care, MTEF already contributed to improvements in budget planning procedures that aim to ensure
more explicit linkage between ministry strategic plans and budgets. The inclusion of budget
performance indicators is similarly seen as a positive development that has emphasized the link
between ministry strategic plans and their budgets. In GBD the reforms are regarded as having
allowed progress towards a more strategic approach to budget negotiation in which policy
considerations play a more significant role.
Adoption of a revised budget calendar providing more time for expenditure review and strategy
analysis; The revised budget calendar now provides a clearer agenda for the roll out of the MTEF and
budget planning reforms. The new calendar was introduced for the 2011 budget for the expenditure
review and strategy analysis phase and involved Cabinet at four stages during budget preparation. The
Jordan’s new development plan, the Executive Development Plan (EDP), is the country’s first plan
whose priorities are directly linked to the budget.27
Deepening results-oriented budgeting (RoB) by further improving the definition of ministry and
program level objectives and introducing performance indicators and targets into the budget
documentation: These comprise outcome or high level output indicators for measuring progress
against the strategic objectives of the ministry/GU, and output and activity indicators for monitoring
program level performance which were aligned the government’s capital spending program and the
Executive Development Program (EDP);
Introducing a new macroeconomic forecasting model scheduled to be fully operational by mid-
11: This model strengthened the capacities for medium-term macroeconomic and fiscal analysis and
forecasting in the MoF and tax authorities which has resulted in a more robust macro-fiscal
framework within which budget planning takes place.
Improved transparency of budget system: With collective assistance from Bank and USAID
budgets were presented in a program format and included performance indicators and targets at level
of Budget Institution and program since 2008. Moreover, narrative presentation of budgets at program
level were developed and piloted with preparation of 2010 Budget and will be further rolled out with
the 2011 Budget. In addition, a ―Budget in Brief‖ and a ―Citizen’s Budget‖ for the 2011 budget was
prepared.
A number of broader PFM reforms have recently been put in action. These reforms include new
GFS compliant budget classification and chart of accounts for state and independent institutions
(introduced in 2009), installation of a Government Financial Management Information System
(GFMIS, being piloted in selected ministries) which will be expanded to include budget preparation
and paving the way for an integrated approach in improving PFM, and completion of a Treasury
Single Account whose coverage is being extended to budget and trust accounts in commercial banks
and transferring most government revenues in commercial banks to the TSA on a daily basis. When it
becomes fully operational, the GFMIS will significantly improve data reliability and will enable more
timely and accurate centralized accounts reconciliation. While the overall reform agenda has been
ambitious, the approach has been pragmatic to better manage the complexity of these reforms.
27 There were however difficulties in holding to the new budget calendar in the preparation of the 2011 budget related mainly to
the need to ensure consistency with the 2011-13 EDP. Certain reforms such as the establishment of a commitment control system
(CCS) were delayed.
59
However, it must be recognized that it will take time to build depth in the process and bring about
more fundamental changes in budget planning processes in ministries/Gus Reforms such as the
GFMIS, the new chart of accounts (CoA), and the earlier submission date of the Budget to Parliament
are critical to the successful roll out of the MTEF and budget planning reforms.
49. The crisis-DPL supplemented the ongoing program on the fiscal reforms. It targeted
Government’s challenges of (i) reducing the fiscal vulnerability by broadening tax base, and (ii)
enhancing effectiveness of government expenditures and had immediate budget effects to mitigate
negative fiscal effects. It contributed to reduce fiscal imbalances and to enhance the country’s
macroeconomic stability which were demonstrated through the following results: (i) tax exemptions
distorting relative prices were reduced, and a new framework for scrutinizing introduction of future
preferential rates was initiated; (ii) fiscal consolidation plan, including completion of subsidy reform, was
reinstituted (budget deficit excluding grants declined to $470 million in first half of 2010 compared to
$884 million in first half of 2008). (iii).The Ministry of Finance adopted an enhanced budget calendar to
strengthen the initial strategic phase of budget preparation, during which budget performance, strategies
and priorities are reviewed and medium-term spending requirements evaluated. The calendar included
Cabinet level consultations in the first quarter of each fiscal year on the key parameters and issues
underlying the development of the MTEF based on a Budget Policies and Priorities Paper. These policy
actions had immediate budget effects which helped the government in 2010 to weather the negative fiscal
effects of the global crisis and supplemented the ongoing program. With a new series of programmatic
DPLs under the new CPS, the WB will make use of its leverage to continue supporting the fiscal
consolidation and growth efforts as well as other parts of its policy agenda.
50. The quality of the WBs analytical work was a decisive determinant of the quality of the
lending (DPO) and of the related policy dialogue on the crisis response. Due to the extensive
analytical work that had been conducted prior to the DPL, the Bank team was able to prepare a DPL in
less than six months. The preparation of the DPO built on a solid portfolio of ESWs, including an earlier
public expenditure review, an Investment Climate Assessment, and insolvency and a Creditor Rights
Report on the Observance of Standards and Codes (ROSC). A series of targeted programmatic ESWs on
the impact of the global financial crisis helped to advance the policy dialogue with Government and
supported preparation of the DPL: (i) a Fiscal and Poverty Impact Study, (ii) Financial Sector assessment
program update and (iii) Impact on the Real Economy &Private Sector Assessment.
51. Progress on public sector reform has been uneven, but new interest in addressing sector
challenges with World Bank support has emerged. The Public Sector Reform Capacity Building
Project, which was supporting the development of capacity to carry out the reforms, was cancelled at the
request of the GoJ in March 2008. The broader political environment in Jordan and internal differences
within successive cabinets regarding the scope and content of the reforms to be supported by the Bank
compromised the project's effectiveness. Of the original agenda articulated in the White Paper, progress
has been made in monitoring key service delivery indicators in selected ministries. Other areas, ranging
from reforms in pay and grading to improving meritocracy and human resources management to
strengthening policy coordination and streamlining government, have witnessed limited progress.
Progress has been registered within several ministries/public institutions using different tools such as the
King Abdullah II Center for Excellence, which plays an innovative role in promoting excellence in
service delivery by public sector institutions; and twinning projects with EU institutions which is proving
effective in harmonizing Jordan’s institutional framework with the EU’s. Because of the lack of Bank
involvement in this area, the Results Matrix has been revised and no longer includes the corresponding
outcome indicators and milestones. In its new Executive Development Plan of February 2010, the GoJ
committed to reform the public sector and expressed interest in pursuing public sector reform with World
Bank support in the upcoming CPS.
60
52. In terms of governance, the GoJ has requested technical assistance in the pharmaceutical sector
to define policy reforms and activities that will have a positive impact on availability and prices of
pharmaceuticals in the public sector and promote equitable access to high quality medicines. The
components of the TA program are: (i) the adoption of procurement guidelines and ensuring that these are
effectively disseminated; (ii) assessment of key policy issues regarding pricing and regulation; and (iii)
conducting meaningful discussions with all stakeholders and related parties.
53. Although outside the core program, procurement reform has recently emerged as an area of
engagement upon request of the GoJ. The World Bank team has been assessing the strength and
weakness of the current public procurement system (2009-10). In line with the requirements of the GoJ,
the establishment of two bodies are foreseen: (i) the Directory of Purchasing and Government Contracts –
an operational central procurement , based on a merger of the General Supplies Department (GSD), the
General Tenders Department (GTD), and the Joint Procurement Department (JPD) and (ii) the Higher
Procurement Committee (Council) – assigned the tasks of dealing with complaints from bidders and
conflict resolution, widely perceived as referring to settlement of contract implementation disputes. The
most urgent priority in this area is to support the planned merging of the existing three procurement
institutions and the establishment of the two new procurement bodies. One specific area of focus in this is
to revise and complete the Legal Framework which consists of the preparation and submission of a
consolidated Public Procurement Legislation (By-Law(s)) and the elaboration of consolidated regulations
to support implementation of these By-Law(s), as well as standard bidding documents (including general
conditions of contract) and supplementary instructions for various sectors of procurement. This area of
engagement is expected to be highlighted in the forthcoming CPS currently under preparation.
54. Cross-cutting dimensions. The CAS proposed to address two thematic/cross-cutting issues within
four priority sectors.
Environment
The Bank is also supporting Jordan in improving urban environment within the Greater Amman
Municipality with focus on solid waste management. The ongoing Bank funded Solid Waste and
Carbon Finance operation approved in September 2008 is supporting Amman City in addressing
municipal solid waste issues, while initiating steps towards effects at both the local and global
levels. It aims particularly at upgrading the current disposal practices while mitigating Green
Gashouse and generating of green electricity at the existing landfill in Amman. The Government
sees this operation as a model for other municipalities in Jordan to enhance their MSWM systems
and the Ministry of Municipal Affairs expresses strong interest in applying such model
throughout the country.
Some water-related issues were addressed in the Country Environment Analysis led by the Bank,
assessing Jordan’s environmental agenda and the linkages between development and
environmental impact with emphasis on water quality and transport. The CAS had envisaged
different possible instruments to support the water sector. The GoJ is working to invest in non-
renewable sources with IFC support and engaged with USAID on the preparation of a water
sector review to analyze the economic and fiscal costs and trade-offs of alternative policy options.
IFC explored opportunities in the water sector under a design, build, operate and transfer contract
that involved the extraction of water from the Disi Aquifer and the conveyance of water to the
Greater Amman area..The project did, however, not come to fruition due to external factors. Due
to the increasing pressure on natural resources, the Bank will possibly assist GoJ to in supporting
efficiency of water management utilities under the new CPS under preparation.
61
Under the Ozone Depleting Substances (ODS) Phase-out II project, Jordan exceeded its target by
reducing its ODS importation of chlorofluorocarbon by 96% in 2006 compared to the baseline.
Under the Conservation of Medicinal and Herbal Plants GEF Project, both in-situ and ex-situ
activities in the project areas currently contribute to protect endangered species, including seed
bank collection, and farmer communities are integrated in activities seeking to improve
vegetation and combat land degradation. In addition to the two GEF Grants, and a third GEF
Grant was approved to secure the ecological integrity of the Jordan Rift Valley by applying the
principles of integrated ecosystem management. The ongoing Bank funded Solid Waste and
Carbon Finance operation approved in September 2008 is supporting Amman City in addressing
municipal solid waste issues, while initiating steps towards integrated and efficient Municipal
Solid Waste Management (MSWM) that minimizes negative environmental effects at both the
local and global levels. It aims particularly at upgrading the current disposal practices while
mitigating Green Gas house and generating of green electricity at the existing landfill in Amman.
The Government sees this operation as a model for other municipalities in Jordan to enhance their
MSWM systems and the Ministry of Municipal Affairs expressed strong interest in applying such
model throughout the country.
Gender
The Bank Group has developed a program seeking to create an environment more conducive to
higher participation of women in the labor force. An IDF grant to measure the impact of national
policies and strategies on gender equality is under implementation. With funding from the Arab
World Initiative (AWI), the Bank Group recently launched a technical assistance program to
assist in creating an enabling environment for job creation for graduate young women in
partnership with the private sector. Through its microfinance program, IFC has reached over
35,000 women borrowers in Jordan (96% of all borrowers in the program). IFC is also tracking
the number of jobs created for women through its investment projects.
55. Several activities were launched under the Arab World Initiative in FY09 to support
Jordan’s further integration into the regional and global economy, to foster faster and more
inclusive growth and to address special challenges to Jordan’s development.
Technical assistance for the establishment of a center of excellence for professional development
of teachers.
Assessment of energy integration in the Mashreq countries.
Assessment of cross-border facilitation and infrastructure in Mashreq countries.
IFC investments in trade finance facilities and mobilization of South-South and intra-regional
investments.
V. WORLD BANK GROUP PERFORMANCE
56. Total IBRD lending for the CAS period amounted to $505.5 million, which exceeded the
planned lending of $440 million (in the base case). Operations envisaged in the CAS were approved for a
total commitment amount of $205.5 million in investment lending (six investment loans and one
supplemental loan), and one development policy loan for $300 million. In addition to providing resources
for these investments, Jordan has sought Bank support to develop overall policy frameworks and to serve
as a catalyst for additional financing.
57. While all the operations originally envisaged in the CAS were approved over the CAS
period, the Higher Education Reform for the Knowledge Economy loan ($25 million) was subsequently
cancelled with a view to limiting new debt. However, policy reforms associated with this project are now
62
being pursued with the support of TA from the Bank. In general, project preparation has been slower than
anticipated (by about one year on average), largely because of delays in the preparation of the policy
frameworks the projects are supporting. In some instances, delays have reduced the impact the projects
could have during the CAS period.
58. The active Bank portfolio in Jordan consists of 7 investment operations for a total net
commitment of $243.5 million. The disbursement ratio for investment projects remained strong at 22.7%
on average during the CAS period. Historically, the quality of the portfolio during the CAS period was
satisfactory with only one problem project.28
. However, beginning in June 2010, the portfolio started
showing signs of weakness which are reflected in three problem projects: the Cultural Heritage, Tourism
and Urban Development (CHTUD) Project, the Employer Driven Skills Development Project, and the
Social Protection Enhancement Project. These projects have been effective for over two years now, and
several implementation issues have emerged mainly concerning low capacity of implementing agencies
and lack of familiarity with Bank procurement, financial management and disbursement procedures. In all
these cases, the Bank is working with the counterparts to develop action plans to improve performance,
including restructuring as needed.
59. Three projects closed during the CAS period. IEG rated the outcome of two of the projects
unsatisfactory/moderately unsatisfactory, citing that the relevance of the design of the Higher Education
project was modest, and did not provide effective means for obtaining the expected benefits. IEG found
that the Horticultural Exports Promotion LIL generated little operationally relevant knowledge on the
potential for involving small farmers in out-grower schemes. IEG rated the outcome of the Amman Water
and Sanitation project moderately satisfactory because the objective: ―improve efficiency, management,
operation and delivery of water and wastewater services for the Amman Service area and lay groundwork
for sustainable involvement of private sector involvement in the countries overall management of water
and wastewater services‖ was only modestly achieved.
60. During the CAS period, a total of 13 recipient-executed grants amounting to $19.3 million
and one grant of $1.0 million executed by the Bank were approved.29
.Six of these grants have closed
(total of $2.7 million), one was financed by the Trust Fund for Statistical Capacity Building (TFSCB) and
five were financed by the Japan Policy and Human Resources Development Fund (PHRD). Currently,
there are eight active grants (valued at about $17.6 million) in the portfolio of which seven are
implemented by Jordanian authorities and one by the Bank.30
Three grants (total of $13 million) are
financed by the Global Environment Facility (GEF)). Overall, Jordan's trust fund portfolio performance
is good albeit with some initial delays, generally due to a lack of pro-activity from the relevant staff on
both Bank and Government sides. The team will continue close monitoring to avoid further delays.
61. The existing trust fund portfolio includes three grants (valued at $20 million) which are financed
by the Ozone Trust Fund (OTF), the United States Agency for International Development (USAID) and
the Canadian International Development Agency (CIDA). These grants were approved prior to this CAS
period but the closing dates were extended and therefore are still active and being monitored.
62. During the CAS period, two guarantees were approved valued at $60 million: (i) $45 million
from IBRD for the Amman East Power Guarantee Project; and (ii) $15 million from the Carbon Fund for
the Amman Landfill Gas Recovery Project.
28. From FY06-FY09, the Public Sector Reform Capacity Building Project was in problem status.This project was later cancelled
in March 2008. 29 A GENTF grant of US$1.0 million which is implemented by the World Bank was approved in April 2010 to fund a technical
assistance project to increase young female graduates’ employability and place them in private sector jobs. 30 PCF Funds for Displaced Iraqi’s of about US$ 2.2 million were agreed with the Government of Jordan as recipient of which
the amount of US$ 1.2 million of recent additional financing was allocated to a third party implementing agency NGO Save the
Children.
63
63. Analytical and advisory services remain a key instrument for achieving the CAS objectives. The GoJ seeks high quality and detailed analytic work to further their drive towards reforming the
economy and to adapt international experience to Jordan’s specific circumstances. The GoJ has sought
programmatic assistance from the Bank to accompany reforms (many underpinned by diagnostic work)
during the implementation phase. The Bank will continue to provide programmatic analytic support in
key areas, including public expenditure management, social insurance, poverty monitoring, and energy
sector reform. While there has been a high level of receptivity of the analytical program, dissemination
has generally been limited, and, the GoJ has not benefited fully from feedback from key stakeholders
which could have increased the impact of the analysis on the policy reform agenda. To respond to
pressing requests from the GoJ, particularly in response to external shocks and the global economic
downturn, the Bank Group quickly deployed a joint IBRD/IFC team of experts to prepare technical notes
on specific issues such as the impact on growth of reductions in FDI, exports and remittances, as well as
firm-level surveys. The Bank Group strove to apply the same rigor to these quick response studies
designed to answer specific policy questions as is applied to classic ESW products, albeit with shorter
delivery timelines.
64. Financial Products. The GoJ took advantage of the interest rate conversion offer in connection
with all eight of the currency pool loans in its IBRD loan portfolio. Most of the loans have been converted
into fixed rate which resulted in a savings of about 2% in interest payments. The Bank will continue to
focus on building awareness of the breadth of the menu of banking products available to Jordan. In
addition to the choices available for new lending, the Bank will continue its dialogue on the use of
existing IBRD financial products in contributing to the management of Jordan's financial risks.
65. Public Debt Management. At the request of the Minister of Finance, a joint Bank/IMF mission
advised the GoJ on developing a medium-term debt management strategy with a view to helping the
authorities strengthen the governance structures for debt management and improve operational risk
management. The Bank and the Fund also advised the authorities on how to strengthen the integration of
debt and fiscal management issues, in particular with a view to improving the effectiveness of cash
management. In each of these areas, the team reviewed existing systems and capacities, and provided
recommendations for strengthening these functions in the future. The Bank/IMF team will continue to
assist in debt management strategy formulation and reorganization of the public debt management
functions.
66. IFC has scaled up its investment activities in Jordan considerably during the last few years.
The portfolio has grown from $50 million at end FY05 to $ 400 million today. FY08 was a record
year for IFC (commitments of $243 million in 8 projects), and in FY09, IFC committed $83 million in
five projects in trade finance, cement transportation, and power distribution. At end February 2010, IFC
had a committed investment portfolio of around $300 million in 14 companies. IFC’s current investment
portfolio in Jordan encompasses a number of financial instruments, including loans, equity and quasi-
equity, and risk management and guarantees. Portfolio performance has been generally good. Effective
collaboration with World Bank has always taken place and has been repeatedly recognized by IEG. IFC
has a mid-sized country office in Amman, co-located with the Bank’s Iraq transitional office.
64
VI. LESSONS LEARNED
67. The Bank Group will continue to pursue a selective and flexible approach in supporting
Jordan’s development agenda. The ongoing global economic turmoil and uncertain outlook pose
exceptional challenges to Jordan’s short- to medium-term economic prospects. In order to quickly
respond to the challenges that may arise as a result of the global shocks and the highly volatile
environment, the Bank will approach the Jordan program with an even higher degree of flexibility to
deploy rapidly, using the various instruments available. The Bank has been successful at meeting
government requests in energy, education, social protection, public expenditure management and poverty
reduction, through a mix of instruments relevant to a sophisticated LMIC. The principles of flexibility and
selectivity will guide the Bank Group’s engagement in Jordan with a view to being able to respond to
requests from the GoJ based on the following criteria for involvement: (a) select sectors or areas with the
highest contribution to the GoJ’s strategic objectives and in which the Bank has a comparative advantage
and can serve as a catalyst for reform, and (b) address emergency issues, particularly the impact of the
global economic and financial downturn on Jordan’s economy.
68. In formulating the new CPS for Jordan the Bank will pay particular attention to the need
for continued strong analytical work and technical assistance, especially in the area of economic
diversification and sources of growth. High quality analytical and advisory work made important
contributions to the GoJ’s development agenda and remain also in future highly relevant to respond to
GoJ’s requests. The Bank demonstrated a high degree of preparedness and flexibility and was able to
respond effectively and swiftly to the GoJ request for a $300m DPL. The Bank will need to remain agile
and be able to respond to the changing needs of the country, especially as it emerges from the effects of
the global economic crisis.
69. Broad-based consultations are necessary to assure support from different stakeholders. The
Bank will commit to having intense consultation during the new CPS period as well as through its sector
interventions, when preparing for a new project, as well as agreeing on the stages of project preparation
and timeline approvals by both sides, in addition to the implementation.
70. Close collaboration between the IFC and IBRD is key to respond to Jordan’s demand.
Strong local presence of IFC and active engagement of the entire WBG on the ground shows
positive results. IFC has had a positive experience during its increased engagement in Jordan over the
CAS period..In the context of this improved partnership between IFC and the private sector as well as the
GoJ, the Government has expressed strong interest in having greater involvement of IFC in its reform and
private sector development program in the upcoming CAS period.
71. In moving forward to the next Country Partnership Strategy for Jordan, there is a need for
greater realism in designing the results matrix. The 2006 CAS results matrix, updated in March 2009,
was too specific and at times overly ambitious. While the matrix continued to be broadly relevant
throughout the time period of the CAS, certain milestones should have been simplified and easier to
assess. The lesson learned here is to ensure a more reasonable and practical results framework that
accounts for the flexibility and dynamism of the Bank approach.
VII. THE WAY FORWARD
72. Despite the progress made, Jordan still confronts several challenges, including those that
will arise from the recent global economic slowdown. Challenges include vulnerability to fluctuations
in the international oil market, due to the country’s high energy import dependency; high unemployment
and dependency on remittances from Gulf economies; and increasing pressure on natural resources,
especially water. The greatest challenge (and also the largest opportunity) remains the necessity to create
65
adequate conditions for increased private investment and improved competitiveness. This will help to
deliver the high and sustainable growth needed to create employment and to reduce poverty. Staying the
course with the implementation of the fiscal consolidation program may prove more challenging in the
future but is key for preserving good economic performance.
73. Achieving sustained growth and reducing unemployment and poverty are the main
development challenges in Jordan. Commensurate with strong growth in investments and GDP, labor
force growth in Jordan has been strong. However, unemployment among nationals declined slowly (from
14.5% during 2000-05 to 12.7% in 2008). The unemployment rate might further increase in 2010 if
economic activity slows down and fewer job opportunities are available for Jordanians in the Gulf
countries. Unemployment needs to be addressed through changes in policies that affect incentives for
employers to hire Jordanian workers and incentives for Jordanians to accept available jobs rather than
wait for public sector openings or overseas jobs. While employment among those who actively seek work
need to be supported through increased focus on skills, addressing voluntary unemployment requires
aligning policies with the Jordan’s aspiration for becoming a knowledge economy.
74. Sustained progress in implementation of structural reforms and a supportive regional and
external environment are critical for sustaining good economic performance. The economy continues
to perform well despite negative external shocks. Nevertheless, there are risks associated with Jordan’s
heavy reliance on capital inflows and with pressures on the fiscal balance. The Government’s increasing
emphasis on cushioning the population from the impact of the price shocks and economic downturn since
2008 led to a divergence from the fiscal consolidation program and erosion of fiscal gains achieved over
the previous years. However, in the period ahead, pressures from price shocks are expected to ease
resulting in budgetary savings from subsidies in the GoJ’s 2009 budget, but the indirect economic impact
of the global financial turmoil may continue to put pressure on the fiscal balance.
66
CASCR Annex 1: Results Matrix
CAS Outcomes Milestones Latest Data Lessons Learned
Cluster 1: Strengthening the Investment Environment and Building Human Resources for Value-Added, Skill Intensive and Knowledge-Based
Economy
Improvement in Jordan’s investment
climate/business environment, as
measured by:
WEF
Doing Business Data
Investment Rating
ICA Baseline Indicators
Adoption of a coherent investment
strategy by the GoJ.
Achieved: The GoJ has defined and adopted a coherent
investment strategy. Successful execution of this strategy
hinges on consistent implementation which, if achieved, can yield significant improvement in the coming two
years. Over the last 4 years, IFC’s portfolio in Jordan
increased significantly from $50 Million to around $400 Million today, an indication of an improved environment
for private sector participation in the economy.
Importance of identifying a leader who is
consistent, committed and can create consensus.
Adoption of a simplified private sector led institutional framework for
investment.
Achieved: Through the leadership of MoPIC, Jordan has adopted a private sector led institutional framework for
investment. Jordan made it easier to start a business and
pay taxes, extended the construction permit one-stop shop to medium-size projects, lowered property transfer
taxes, implemented major court reforms, and sped up
trade. Despite these reforms, Jordan’s Doing Business 2011 ranking dropped to 111 from 107st in 2010.
Consistent implementation of the framework in the coming years is crucial to the success of this
strategy.
Crisis-DPL complemented through the prior actions ongoing Business Environment and
Financial Sector Reforms..
Adoption of key recommendations of
PPP study.
Achieved: In addition to larger PPPs (e.g., power sector),
GOJ/EPC is now pursuing medium-sized PPPs in transport, housing, education..WB is overseeing USAID
TF to develop regulatory & institutional framework for
PPPs.. During the CAS period two PPPs were completed. WB will provide a AAA policy note on guarantees for
LT debt financing for PPPs, provided a partial risk
guarantee to support private financing of the Amman East Power project and will propose a new PRG
guarantee operation. .
IFC made a landmark investment along with IsDB in the Queen Alia International Airport - a 25 yr concession
awarded by GoJ.
Adoption of subsidy reform (energy). Achieved: Subsidies for oil products were gradually
removed (completed in February 2008), resulting in a significant increase in the prices of oil products.
Associated cost in real income for low and middle
income groups has been compensated by a variety of
measures including tax reductions and exemptions,
various subsidies/transfers and a substantial increase in public sector pay.
Jordan is a primary importer of energy and
therefore, moving forward, prospects for energy security should be taken into account. Consider
working with Jordan in enhancing renewable
energy capacity, conducting domestic
exploration and enhancing regional integration.
Continue to support the GoJ in implementing the energy strategy.
67
CAS Outcomes Milestones Latest Data Lessons Learned
Education and skills development
aligned with knowledge economy and
employment needs.
Further improvements in Jordan’s
performance in 2007 TIMSS
Curricula, textbooks, and other learning
resources for all grades and subjects revised, with appropriate teacher training
taking place.
Achieved: Curricula, textbooks, etc. revised and in place.
Teacher training intensified and enhanced. 2007 TIMSS Scores: 482 science and 427 math. Results
showed positive and marginally significant improvement
in performance. In Science, Jordan improved its regional and international ranking.
Between 1997 and 2007, Jordan witnessed the largest
increase in science test scores of 8th grade students in the international assessment - TIMSS - in which more than
50 countries participate globally. This is clearly hard
evidence that the education reforms in general education over the last decade have made a difference, particularly
taking into account that net enrolment rate in the 8th
grade has also increased during that period. In FY11, IFC made a $13 million equity participation in
EdFund (a UAE based Fund) to support their acquisition
of Al-Alamiyah Schools in Amman..The project will help increase the quality of private schooling in Jordan.
Improving TIMSS scores reflects continuing
good performance of Jordan education system, but is not necessarily attributable to
interventions in CAS period.
Improvements in scores in National
Knowledge Economy Assessment relative
to baseline (to be established in 2006).
Achieved: 2008 NAFKE results show improvements in
scores compared to 2006 baseline in all grades tested
(5th, 9th, 11th) and in following subjects per grade tested: (i) 5th: reading; (ii) 9th: math, science and reading; and
(iii) 11th: math and reading.
Higher education policy reform framework adopted and under implementation.
Partially achieved: A detailed policy framework and operational plan (embodied in the Statement of Sector
Policy) were developed collaboratively with stakeholders
and different ministries and the policy framework was endorsed by the Council of Ministers in March 2009.
Subsequently in August 2009, Parliament passed three
laws for the sector: The Higher Education Law; the Public Universities Law; and the Higher Education
Accreditation Law. These laws are the basis for
governance and management reforms of the sector.
Despite the fact that the HERfKE project was cancelled immediately after it was approved by
the Bank Board (due to fiscal constraints caused
by financial crisis), the Bank’s support in preparing and technical assistance in the CAS
period resulted in the development of a policy
framework, the basis of which were the legislative changes approved in August 2009.
Key lesson is that the Bank’s TA can be of
benefit and can sometimes achieve even more than project loans.
Student aid program for poor students to
universities expanded and functioning
adequately.
Partially achieved: This outcome was only partially met
though there are plans in the Ministry of Higher
Education and Scientific Research to develop an
expanded program to include loans, as well as merit-
based grants, with close links to the banking sector in Jordan. Only a limited student aid program is currently
operational in MHESR which existed prior to CAS
period, but has been expanding unsustainably. GOJ has
This outcome was one of the subcomponents of
the HERfKE project which was cancelled by
GoJ. The Bank will be extending TA to GoJ to
support the development of a robust student aid
program, and thus the lesson learned is similar to the point above.
68
CAS Outcomes Milestones Latest Data Lessons Learned
endorsed, in October 2010, with direct technical
assistance from the World Bank, a new model for student aid (the Jordan Student Aid Bank – JSAB). An Inter-
Ministerial Policy Committee has been established and
tasked with developing the institutional arrangements for the JSAB by end January 2011, for the JSAB to be
operational for the 2011/2012 school year.
IFC has introduced a student loan program through the Cairo Amman Bank in an effort to increase access to
higher education by low and middle-income groups.
An independent quality assurance and accreditation system for universities in
place and functional.
Achieved: Law #20 enacted in April 2008 establishing the Higher Education Accreditation Commission
(HEAC). The law was amended in August 2009 to give
HEAC full autonomy, and the HEAC now reports to the Prime Minister.
Functioning E-TVET Council and system
operational linking employment and skills
policies with provision through Vocational Training Corporation and Public Private
Partnerships for training delivery and
redefined training and content delivery model.
Existing National Training and
Employment Program under MOL
redesigned.
Partially achieved: Cabinet endorsed new law setting up
the E-TVET Council.
However, Council has not been functioning as foreseen and although its secretariat has been established, it needs
further support. A number of PPP have been signed with
hospitality, pharmaceutical, automotive and telecom industries.
Progress in the E-TVET area has shown to be
more complex and slow than expected at outset.
Key reason is the involvement of multiple stakeholders – not just Ministry of Labor, but
equally the Ministries of Education and Higher
Education, as well as private sector.
Cluster 2:.Supporting Local Development through Increased Access to Services and Economic Opportunities
Effective local government supporting
economic development in place
Progress towards adoption of a clear
intergovernmental legal and regulatory framework that rationalizes and clarifies
authorities and functional assignments
among different tiers of government.
Partially achieved: The Ministry of Municipal Affairs
issued in April 2008 a strategic framework for Local Development (2008-15) and is in the process of
recruiting the expert consultant to support the preparation
of the Regional and Local Development White Paper. Considerable effort has been dedicated by the Ministry of
Municipal Affairs (MOMA) to effectively implement the
Municipal "Performance-Based Block Grant" (PBBG) system developed under the project, closely working
with Municipalities to identify local priorities through a
participatory system and deliver a large number of municipal infrastructures.
Ambitious milestones and expectations that have
been slow to materialize due to the changing political environment in Jordan
a. Increase in capital expenditures by sub-
national government. b. Practice of random municipality
bailouts decreased.
c. Increase in number of credit- worthy municipalities.
d. CVDB operating sustainably and at
arm’s length from Central Government (no evidence of Central Government
interference in CVDB operations and
Progress towards reviewing the Fiscal
Equalization Transfer System for Municipalities.
Partially achieved: A fiscal Economist has been recruited
to support MOMA and MOF to revise the current fiscal transfer formula.
Contribute to develop sound municipal
Financial Management systems and
investment planning to avoid unsustainable municipal indebtedness.
Partially achieved: Building on the sector assessment
carried out by the Millennium Challenge Corporation
(MCC), the project is launching the design of an integrated Municipal Finance MIS. The firm for the
consultancy has been selected and will begin work in
early April 2010. In addition, through the PBBG program, more rigorous systems for municipal
69
CAS Outcomes Milestones Latest Data Lessons Learned
no need for Central Government
recapitalization). e. Jordan’s capacity enhanced to address
environmental challenges with potential
to impact economic growth.
investment planning and delivery have been introduced
in the 72 target municipalities.
MoMA to make progress towards full
disclosure of resource transfer pool.
Partially achieved: MoMA and MoF published the joint
annual report on intergovernmental fiscal allocation
(Jordan resource transfer pool and allocation to municipalities’ bulletin) in October, 2009.
Provide Amman Municipality with
access to financing to support priority
investments.
Achieved: A $ 25 million loan to the Greater Amman
Municipality (GAM) was approved in Sept. 2008 to
support priority investments in solid waste and to mobilize additional financial resources from carbon
markets.
Following a CF Assist-funded review and GAM’s request, the Bank will support GAM in the development
and implementation a City Wide Clean Development
Mechanism program (the Amman Green Growth Program) targeting priority investments in several
municipal infrastructure and services.
There is ongoing dialogue and TA with Amman Municipality. Secured PPIAF financing to carry out a
study on PPP models for priority investments. Bank has
initiated TA to review the adequacy of GAM’s revenue and financing sources, and based on this initial
assessment will prepare a request for PPIAF-SNTA
funds that would help develop a multi-year capital investment plan.
Updated urban planning regulations and
standards.
Partially achieved: Under preparation (due in calendar
year 2011).
6 percent cumulative increase in
additional resource transfers (Grant from
RLDP) to municipalities other than Amman.
Partially achieved: Fiscal equalization grant is in place.
Cycle 1 of the PBBG is complete and Cycle 2 has begun.
Leverage cultural heritage assets to
create the conditions to generate local
economic opportunities.
Partially achieved: Local Economic Development Fund
is ready for operation. However, the launch of the fund
will be constrained by the fiscal situation in Jordan as no financing has been allocated to the fund from FY 10
budget.
Undertake works to restore cultural heritage assets and improve overall
quality of life in historic cores of at least
two project municipalities
Partially achieved: Urban renewal works already launched in Madaba, Salt and Jerash; work in Madaba is
completed.
Contribute to the national debate on affordable housing.
Not achieved: Could not provide technical advice in the update of the Housing Strategy due to internal issues
with the Housing and Urban Development Corporation.
70
CAS Outcomes Milestones Latest Data Lessons Learned
Country environmental analysis for
Jordan prepared.
Achieved: Jordan Country Environmental Analysis
provides framework for identifying and responding to Jordan’s environmental priorities.
Cluster 3: Reforming Social Protection and Expanding Inclusion
Robust and well targeted social
protection system in place with following
outcomes:
Both Safety Nets and Social Inclusion (SI) reforms became part of the Crisis DPL. Without
the work that had been undertaken over the past
years in these two areas, and the priority that the Bank and the GoJ put on these areas, it would
have been difficult to approve a DPL without a
safety net component.
Safety Nets:
a. Significant progress towards
establishing the national database on poor and vulnerable made.
b. Improvement in targeting mechanism
identified and implemented.
National social protection strategy
developed by MOSD and presented to
the Higher National Council for Social Development.
Partially achieved: The elements of the strategy have
been spelled out in several strategic documents,
including the Bank safety net strategy for Jordan and GoJ documents. The GoJ has agreed to Bank safety net
strategy though no formal approval by Cabinet or Higher
Council has yet taken place
Decisions and deliberations took longer than was
anticipated due to political consensus issues and
a lack of champions.
An improved targeting mechanism in
place and database on poor and
vulnerable population established.
Partially achieved: The IBRD project (SPEP) was
approved and implementation begun. The project
supports strengthening the targeting mechanism and establishing the database on poor and vulnerable
population. Progress is slow however in adopting an
improved targeting mechanism. Field testing completed
only by end 2009.
Switching from the previous targeting
mechanism (categorical) to a new mechanism
(proxy-means testing) proved to be more difficult than expected. Resistance to change is
high. In addition, the financial crisis made it
difficult for the GoJ to take measures that would
touch programs known to be focused on the poor
regardless of how good of a job they were doing.
Standards and guidelines for NGOs developed in MOSD.
Achieved: A new NGO law was passed by Parliament in summer of 2009.
Social Insurance:
d. Pension system reformed to be more sustainable and equitable in future.
e. Social health insurance reform
underway with objective of increased coverage in sustainable and equitable
way.
f. Financial parameters and technical features of the unemployment
insurance system designed and
incorporated in new draft pension law. Implementation details
developed.
Reform proposal of an integrated and
sustainable Social Insurance program is prepared by SSC and approved by the
government.
Proposal to extend Social Health
Insurance in a sustainable manner is
prepared by the government after discussion with key stakeholders of
health sector.
Achieved: d.) Reform proposal enacted into law end
March 2010 as a new Social Insurance Law, and implementation commenced. The new law includes
reforms to make the pension system financially
sustainable, introduces maternity benefits, health insurance, unemployment insurance, and extend
coverage to establishments with 5 or less employees.
Partially achieved: e.) Outcome achieved partially at
least for the members of the SSC who will now have
health insurance coverage
Achieved: f.) This outcome has been achieved.
In many respects the outcomes of the SI
components went beyond expectations. Not only did a new Social Insurance Law get approved,
but in addition, the new SI legislation includes
various innovative and important reforms unlike many other countries in the region. In addition,
the process followed by the SSC was exemplary
in seeking technical advice from various aspects, having very high ownership of the reforms,
building its own technical capacity, and
launching a wide and massive information campaign on the reform.
Another important lesson is the value that Bank
continued involvement with a reform process could have. In this case, it was the programmatic
ESW approach, supported by high level
71
CAS Outcomes Milestones Latest Data Lessons Learned
technical experts, over a multiple of years, which
was able to assist the Jordanians in designing, preparing, and pushing forward the reforms.
Cluster 4: Restructuring Public Expenditures
Transparency in the budget system is
improved and clearly describes
government priorities and expected
outcomes of public spending.
Development of a program-based budget
document which substantiates the objectives and requirements of the
National Agenda.
Achieved: 2008 and subsequent budgets presented in
program format and including performance indicators and targets at level of Budget Institution and program.
Narrative presentation of budgets at program level devel-
oped and piloted with preparation of 2010 Budget. To be further rolled out with 2011 Budget.
Budget approval brought forward with 2009 and 2010
Budgets submitted to Parliament in October of previous year and approved by year end.
New calendar being introduced for 2011 Budget will introduce for expenditure review and strategy analysis
phase, and involve Cabinet at 4 stages during budget
preparation.
The revised budget calendar now provides a
clearer agenda for the roll out of the MTEF and budget planning reforms.
The Crisis-DPL supported the ongoing program
in the PFM/Fiscal sector by: (i) reducing the fiscal vulnerability and (ii) enhancing
effectiveness of Government expenditures which
had immediate budget effects to mitigate negative fiscal effects.
The quality of the WBs analytical work
determined the quality of the DPL and of the related policy dialogue on the crisis response.
Budget outcomes are consistent with
government policy and National Agenda.
Planning and forecasting capacities are
developed and strengthened.
Budget classification is improved to ensure results oriented budgeting.
Partially achieved: New GFS compliant budget classification and chart of accounts introduced for State
Institutions and Independent Institutions with 2009
Budget
State Institutions have prepared Strategic Plans linked to
National Agenda. Budget includes State Institution strategic objectives and outcome indicators from
National Agenda and program indicators and targets from Strategic Plans.
Jordan still at an early stage in the implementation of results based budgeting.
Experience from elsewhere emphasizes
importance or gradual and progressive introduction of such reforms.
Macroeconomic fiscal forecasting
capacity to assist in the establishment of
fiscal policy improved.
Partially achieved: With the support of the USAID, the
research department of the Ministry of Finance has
developed a new macro-econometric model that helped enhance fiscal forecasting. The plan is however to build a
consistency model to improve the consistency of
forecasting.
Medium-term expenditure framework
(MTEF) prioritized.
Development of a three-year rolling
expenditure framework that includes
both current and capital expenditures.
Achieved: MTFF prepared and approved by Cabinet
prior to issuing of Budget Circular and resource ceilings.
New policy-led budgeting procedures were piloted in selected ministries for 2009 Budget. State Institutions
now required review and update strategic plans annually.
New budget calendar provides for these processes are to be integrated (including recurrent spending generated by
capital spending).
Development of an integrated planning and
budgeting process made difficult by split in
responsibilities between MoF and MoPIC.
Expenditure efficiency is substantially
improved.
Medium-Term expenditure framework
as outlined in National Agenda.
Partially achieved: Resource ceiling introduced with
preparation of 2008 Budget and have contributed to a more strategic and streamlined budget negotiation
Ceilings determination should be further refined
to give greater focus to achieving the more effective and efficient use of existing recurrent
72
CAS Outcomes Milestones Latest Data Lessons Learned
between State and Independent Institutions and GBD.
Budget preparation remains overly focused on
investment project with insufficient attention given to
recurrent spending.
spending resources.
73
CASCR Annex 2: CAS Work Program FY06-10
Loans / Grants Planned
CAS
Est. Loans / Grants Actual Actual
Analytical and Advisory Activities
Planned Actual
Investments US$m US$m
Cultural Heritage, Tourism, & Urban Dev’t. 35 Cultural Heritage, Tourism, & Urban Dev’t.
(FY07) 56.0 Pension PESW
Social Insurance PESW TA (FY08)
PESW Pension TA (FY06-07)
Municipal & Regional Development Project 20 Regional & Local Dev’t. Project (FY07) 20.0 Public Expenditure Management & Financial
Accountability
Institutional Financial Capacity Assessment t(FY07)
PER Support TA (FY07)
Public Expenditure Review TA (FY07) Public Expenditure Management TA (FY09-10)
Social Assistance & Social Policy Project 10 Social Protection Enhancement Proj.(FY08) 4.0 Social Protection & Safety Net Strategy for Modernization of Social Safety Nets (IPSP
Strategy) (FY07)
Employer-Driven Skills Development Project 10 Employer-Driven Skills Dev’t. Proj. (FY08) 7.5 Labor Market Study Investment and Labor Market (FY07)
Higher Education Development Project II 25
Higher Education Dev’t. Project II (FY09)
25.0 Investment Climate Assessment
Investment Climate Survey (FY07)
Investment Climate Seminar (FY08) ICR ROSC (Insolvency & Creditors Rights: Report on
the Observance of Standards and Codes) (FY10)
Education Reform for Knowledge Eco. II 60 Education Reform for Knowledge Eco. II
(FY09) 60.0
Poverty Profile & Assessment
Poverty Inst’l Framework TA
Poverty Update (FY08)
Poverty Institutional Framework TA (FY06-07) Wage and Earnings Statistics TA (FY08)
Additional Investments in Clusters 1, 3, & 4 80 Amman Dev’t. Corridor (Supptl FY09); $38m approved FY04
33.0 Public-Private Partnership Study
Private Participation in Infrastructure TA (FY06)
Solid Waste Project Management Amman Solid Waste Management (FY09) 25.0 Country Environment Analysis Country Environment Analysis (FY09)
Development Policy Loan (1 to 2) 200 Recovery Under Global Uncertainty DPL 300.0
Water Mgt Reform & Rural Dev’t.
Water Sector Review
[selected water issues were included under the Country
Environment Analysis, FY09]
Grants Energy Energy Strategy Update TA (FY08)
CEM
Review of the Incentive
Regime for Investment
Impact of the Global Financial Crisis:
− Price Shocks & Subsidy Reform: Fiscal & Poverty Impact Study (FY10)
− Financial Sector Assessment Program Update (FY09)
− Impact on the Real Economy & Private Sector Assessment
GEF – Promotion of a Wind Power Market
GEF - Rift Valley
GEF – Promo. of a Wind Powr Mkt (FY09)
GEF – Energy Eff. Inv. Sup. Frmwk(FY09)
GEF – Integ. Ecosystem Mgt. in the Rift Valley (FY08)
6.0
1.0
6.1
74
Privatization Trust Fund
PCF – Sub-Reg’l. Response to Displaced Iraqis (FY08), including Additional
Financing for Implementing Agency
IDF – Measuring Impact of Nat’l. Policies & Strategies on Gender Eqlty (FY09)
IDF – Reg’l Network for Educ. Research
(FY10) CITIES – Secondary Cities Dev’t. Strat.
(FY11)
2.2
0.29
0.48
0.47
PPIAF on Pvt. Public Partnerships in Infrastructure
Country Systems
CGAP Support
Public-Private Partnership in the Provision of Services for GAM under Preparation
Pilot for Use of Country System
Pharmaceutical Governance TA (FY10)
Loans / Grants Planned
CAS
Est. Loans / Grants Actual Actual
Analytical and Advisory Activities
Planned Actual
PPIAF on Private Public Partnerships in
Infrastructure
PHRD – Pvt. Participation in Infras. (FY07) 0.75 Cooperative Sector Restructuring
Cooperative Sector Restructuring TA (FY07)
PHRD – Cultural Heritage, Tourism & Urban Dev’t. (FY06)
PHRD – Employer Driven Skills Dev’t. (FY07)
PHRD – Social Prot. Enhancement (FY07)
PHRD – Higher Educ. Dev’t. II (FY07)
0.70
0.35
0.49
0.38
Dropped
PSD Diagnostics
Skills & Vocational Training TA (FY06) High Policy Gender Forum (FY07)
Amman Development Strategy TA (FY08)
Macro Modeling TA (FY08) Medicines Transparency Alliance (MeTA) TA (FY09
Employment for Young Women Graduates TA (FY10)
Clean Development Mechanism (CDM) TA (FY10)
TFSCB – Dev’t. of Statistical Master Plan
(FY07)
GENTF – Employment for Young College Graduates in Jordan (FY10)
0.07
1.0
Guarantee(s) (IBRD) 100 Amman East Power Guarantee (FY07) 45.0
Carbon Fund (Guarantee) – Clean Dev’t.
Mechanism (CDM)/Solid Waste Project Management
Carbon Fund (Guarantee) - Amman
Landfill Gas Recovery (FY09) 15.0
Dropped
Output-Based Aid
Cancelled
Higher Education Dev’t. Project II (FY10) -25.0
Total Investments & DPL 440.0 505.5
Total Grants 0 20.3
Total Guarantee s(IBRD & Carbon Fund) 100.0 60.0
Grand Total 540.0 585.8
75
CASCR Annex 3: IFC CAS Work Program FY06-10
76
77
ANNEX 3: DEVELOPMENT PARTNERS
Jordan has good relations with its development partners. The Government of Jordan has a
clear understanding of the comparative advantages of donors based on various areas of technical
expertise and terms of their financial support.
The role played by external financing31 in Jordan has tended to be quite significant, ranging
between 35-45 percent of total Government revenues which is considerably higher than the MIC
country average of 17 percent. In 2010, foreign grants constituted 9.4 percent of total domestic
revenues in Jordan which is equivalent to 2.1 percent of GDP. Brief descriptions of development
partners’ programs in Jordan are provided below:
Abu Dhabi: The Abu Dhabi Fund for Development started to finance priority economic and
social projects through soft loans as early as 1974. Ongoing intervention supports the health
sector and residential construction such as the expansion of Al Basheer Hospital in Amman, the
Queen Rania Al-Abdullah for Children Hospital, and the development of Al Karma
Neighborhood in Aqaba for a total of $49.3 million.
Arab Fund for Economic and Social Development: The Fund supports nine projects in
Amman, Irbid, Zarqa, Aqaba, and Tafilah. The sectors covered are mainly water, health,
infrastructure, agriculture, social services and electricy. Ongoing Projects funded by soft loans
include: Al Wihda Dam; Amman Development Corridor (Phase I & II); Development of Wadi
Araba Region; Prince Hamza Hospital; and the Samra Electric Power Generating Plant (Phase III
& IV). Grant-supported projects address life sciences R&D, Mobile Mammography Unit, and a
Women’s Health Center in the South. The Fund’s ongoing portfolio is about $373.3 million.
Canada (Canadian International Development Agency-CIDA): Canada launched its
development relationship with Jordan in 1986. CIDA has focused its assistance on Jordan’s
human resources development and has been a key partner in supporting Jordan’s education
reform program (ERfKE I & II), the vocational training sector, and the empowerment of the
Ministry of Labor to develop and manage a demand-driven labor sector. Currently ongoing
financial and technical cooperation is directed towards developing the Human Resources
Development Information System II and providing support to Jordan’s ERfKE which is also
financed by the WB. The newly committed support to the ERfKE II is Canadian $20 million.
CIDA will maintain its thematic priorities with a focus on human resources development in the
areas of basic education, employment and vocational training, gender and local development.
The volume of support is expected to reach C$7 million annually.
China: Between 1999 and 2009, China has provided Jordan with 17 grants totaling $57.1 million
to finance key development projects in various areas such as rehabilitating water supply
networks, financing the construction of housing projects, training of Jordanian officials in China,
and supplying equipment to ministries. Ongoing projects include the Al-Baqa’a Hospital, the
Installation of Central Monitoring System in Amman, the Jordanian Servicemen Apartment
Project, the Low Income Family Housing Project, and the Water Supply Network Upgrading and
Expansion Project.
31
External financing is defined here as ―grants and other revenue‖ which includes grants from other foreign
governments, international organizations, and other government units; interest; dividends; rent; requited,
nonrepayable receipts for public purposes (such as fines, administrative fees, and entrepreneurial income
from government ownership of property); and voluntary, unrequited, nonrepayable receipts other than
grants.
78
The European Investment Bank (EIB) has been supporting Jordan since 1978. Becoming a key
player in the financial partnership between Europe and the Mediterranean, its activities increased
significantly after the establishment of the Facility for Euro-Mediterranean Investment and
Partnership (FEMIP) in 2002. Its investments are focused on support for the private sector and
on the creation of an investment-friendly environment. It has provided financing to the following
sectors: water and environment; industry; transport; telecommunications; energy; SME finance;
human capital projects; and private equity as well as technical assistance with feasibility studies
for major infrastructure projects. Future engagement will be directed towards the following
sectors: energy, water, transport, PPPs and private sector-led initiatives. Outstanding and
committed exposure stands at €40 million.
The European Union (EU) is an important development partner in Jordan in the context of the
EU Neighborhood Policy. The four strategic objectives of the EU Country Strategy Paper (CSP)
for Jordan for the period 2007-13 and the National Indicative Program are: (i) democracy, human
rights, media and justice; (ii) trade, enterprise and investment development; and (iii) sustainability
of the growth process, including human resource development; (iv) public financial reform, (v)
the development of new or alternative energy sources; (vi) local development. For the period
2011-13, the EU proposed to allocate €223 million under the ENPI bilateral envelope.
France (Agence Française de Développement-AFD): AFD started to operate in Jordan in 2004
and pursues two strategic objectives: i) sustainable environment and management of water
resources; and ii) improvement of living conditions and social cohesion. AFD has provided loans
and a grant facility to finance projects in the energy, environment, sanitation, and water and
irrigation sectors under the first objective. AFD and the French GEF contributed to the multi-
donor trust fund administered by the World Bank on the Red Sea-Dead Sea water conveyance
study program. The Regional and Local Development Project, co-financed with the World Bank,
is supported together with microfinance and the private sector under AFD’s second pillar.
Committed exposure stands at €400 million. In July 2011, Jordan and AFD signed a 3 year MOU
under which a ceiling €600 million was made available to finance projects in the water, transport,
energy, and local development sectors, in addition to extending development policy loans, and
supporting the SME Program.
Germany (Gesellschaft für Internationale Zusammenarbeit-GIZ/Kreditanstalt für Wiederaufbau-
KfW): Germany’s support for Jordan targets several areas including debt swap and the
rescheduling of Jordan's debt to Germany. Financial cooperation includes the provision of
schools, support for the German-Jordanian University, and diverse investments in the water
sector. Technical support is mainly concentrated on the execution of projects in the following
areas: water (focus area), energy efficiency, environmental issues, management of public
expenditures, and fiscal decentralization. Based on the German-Jordanian Government Talks in
the form of financial cooperation (€99 million is earmarked for Jordan for 2011-2012 to be
extended in the form of financial cooperation (€93 million) to finance projects implemented by
KfW, and technical cooperation ((€6 million) to be implemented by GIZ.
International Fund for Agriculture Development (IFAD) has committed $71.4 million in loans
to Jordan since 1981 to support agricultural development and reduce rural poverty. The main
focus of its support to Jordan is in the agriculture sector, with an emphasis on agricultural
development, financial services and capacity building through soft loans and grants. Ongoing
projects aim to improve food and water security and designed to empower small farmers, herders
and rural women (Agricultural Resource Management Project - Phase II in Karak and Tafila &
Yarmouk Agricultural Resources Development Project).
79
International Monetary Fund (IMF): The IMF has been assisting Jordan in assessing the
macroeconomic impact of recent developments and how best to preserve economic and financial
stability and promote inclusive growth. The Fund has provided technical assistance to the CBJ,
including through its Middle East Technical Assistance Center (METAC). This has covered the
budgeting and costing framework, external sector statistics (foreign direct investment survey,
balance of payments and international investment information, collection and compilation of
remittances data) and monetary and banking statistics. METAC has also been providing technical
assistance to the Ministry of Finance in cash management and treasury single account. Areas of
joint work between the IMF and the World Bank also cover technical assistance to the Ministry of
Finance in developing a medium-term debt management strategy, and the assessment of progress
with public financial management reforms. Most recently, staffs of the two institutions have been
coordinating closely on policy advice on consumer subsidy reform.
Islamic Development Bank (IDB): Jordan and the Islamic Development Bank have enjoyed
close ties since 1976. The IDB project portfolio in Jordan consists of eight projects funded by
grants and soft loans. Ongoing projects funded by soft loans include microfinance, electricity
transmission, the central library at the Jordan University of Science and Technology, and
infrastructure support in the health sector (Zarqa Hospital). Grant-supported projects address
capacity building on the local level, microfinance, and the National Information Technology
Center. The projects amount to a total of $133.6 million.
Italy: Italy supports a portfolio of 5 ongoing projects throughout Jordan and in several sectors
such as: trade and industry development, water/wastewater, and employment and vocational
training, tourism, education, and SMEs. Projects amount to about $76 million in the form of
grants and soft loans.
Japan: Japan’s financial and technical assistance has helped Jordan in pursuing its reform
programs and in implementing priority projects in key sectors. Japan has an extensive technical
cooperation program in Jordan which is implemented by the Japan International Cooperation
Agency in a broad number of areas including tourism development, clean energy, SME
development, environmental protection, water resources management, and support to Palestinian
refugees. JICA cooperates with the Jordanian Government to promote regional stability through
a joint training program for neighboring countries in various sectors. JICA is also preparing its
first Development Policy Loan to Jordan in collaboration with the WB.
Kingdom of Saudi Arabia and Saudi Fund for Development: The Kingdom of Saudi Arabia
provides significant support to Jordan. One important instrument of assistance is the Saudi Fund
for Development. Jordan was one of the first countries to have received assistance from the
Fund. During the period 1975-2010, the Fund financed 18 priority economic and social
development projects through soft loans with a total amount of $315,617 million. These projects
focused on following sectors: water, infrastructure, health, energy and industry. Ongoing
projects funded are: the expansion of the Al Samra Electric Power Station (Phase III) for $51
million and two health projects; the expansion of Al Basheer Hospital in Amman (phases II &
III); and the Al-Zarqa Hospital in Zarqa for a total of $78.6 million. In addition, the Kingdom of
Saudi Arabia has also provided a $1.4 billion grant to Jordan in 2011.
Kuwait: The Kuwait Fund for Arabic Economic Development provides soft loans and grants to
support the preparation of feasibility studies in the following sectors: Industry, Water,
Infrastructure, Health, and Education. The Fund has financed several ongoing priority
development projects through soft loans such as a power plant expansion in the electricity sector
(a supplementary loan agreement was signed in March 2011 for the Alsamra Power Generation
Company for $11.9 million) and a health care infrastructure project (Prince Hashem Bin Abdallah
II Hospital in Aqaba). The Kuwait Fund has provided a total of 25 loans to Jordan in the total
80
amount of about $520 million to assist in financing projects in various sectors. The Fund’s
ongoing portfolio is about $147.6 million.
OPEC Fund for International Development: The OPEC Fund supports projects in several
areas such as agriculture and agro-industry, energy, education, health, and industry. The total
amount of supported projects has reached about $70 million. One health-related supported
project is at the Queen Rania Al Abdallah Hospital (Children Hospital) in Amman and an
agriculture-related project is the Agricultural Resources Management - Phase II, in Al Karak,
Maan, and Tafilah. OPEC also supported a research grant to help visually impaired girls at the
Saudi Center for Rehabilitation and Training of Blind Girls ($130,000) and a grant to support a
conference on Food Security and Climate Change.
South Korea: A total amount of $16.16 million was extended to Jordan as grants during the
period 2004-2008 to finance a series of projects. South Korea has also provided Jordan with soft
loans for a total amount of $119.4 million to finance projects in the water sector. Areas of
supported projects cover water and wastewater, health, vocational training, supplying equipment
to ministries and public institutions, nuclear energy, and private sector innovation strategy (in
cooperation with the WBI).
Spain (Agencia Espaňola de Cooperación Internacional para el Desarrollo-AECID): Spain
supports ten projects in Jordan targeting several areas including education, tourism, microfinance,
water, local development, environment, health, and ICT. Spain’s grants amount to about $5
million.
Sweden: Sweden supports three water projects in the Zarqa and Aqaba areas. Recently, it-
supported regional climate study was started to map the impact of climate change on water
resources as well as regional economic integration initiatives related to investments, trade, and
standardization.
USA: USAID has been a partner in Jordan for almost 60 years. Investments in Jordan total
nearly $7.4 billion, with significant increases in the past decade as Jordan’s strategic centrality in
the region has grown. Due to the recent developments in the region, USAID is updating its
Country Strategy for Jordan for the years 2012 – 2017 and is focusing its aid on six main sectors:
water, energy, economic growth, health, education, and democracy and governance. Youth and
poverty alleviation are major cross-cutting themes integrated across USAID’s portfolio. USAID
also provides a large Cash Transfer Program to help with Jordan’s balance of payments. The
annual economic assistance budget for Jordan in Fiscal Year 2010 totaled $463 million including
an additional $100 million in FY 2010 that was provided to address pressing economic issues.
81
82
ANNEX 4: CONSULTATION REPORT
During the course of its engagement in Jordan, the World Bank has maintained a good dialogue
with the Government and with different development partners including the private sector, academia, civil
society organizations, parliament and local representatives. In the preparation of the Country Partnership
Strategy (CPS), consultations were carried out on different levels, organized both around the CPS itself as
well as around other elements of the Bank’s work in Jordan (analytical reports, projects, conferences, etc).
The goal of these consultations was to understand better the priorities, challenges, and obstacles to
development and to ascertain where the World Bank has brought value added and where its engagement
could be strengthened. These consultations were also an opportunity to disseminate key analytical reports
and lessons learned from the World Bank’s program in Jordan.
Consultations with Government
The development of the CPS has been a consultative and iterative process with the Government
involving a series of discussions at different levels. Consultations were carried out mainly with the
Ministry of Planning and International Cooperation (MoPIC) which coordinates the Bank’s program in
Jordan, although discussions were held also with other ministries where the Bank finances activities. The
CPS discussions were launched in February 2010 with a large meeting between most of the World Bank’s
Jordan Country Team and the principal interlocutors and representatives of different Government
ministries and agencies. Thereafter, the Bank’s team followed up through a series of meetings with
MoPIC and other ministries to understand more clearly how they viewed the World Bank’s engagement,
what were the lessons learnt from the previous Country Assistance Strategy (CAS), and where they were
seeking the Bank’s partnership in the future.
From these consultations it was apparent that the Government has a clear vision of where and
how it wants the Bank to engage. The Minister of Planning and International Cooperation, during his
participation in the 2010 Bank’s Annual Meetings, elaborated on the Government’s Executive
Development Program, and these meetings helped the country team better align the CPS pillars and
themes with the Government’s priorities.
The Government actively contributed to the CPS beyond consultations by reviewing various
drafts of the document and providing useful insights, comments, and inputs. These exchanges were
carried out with candor and reflected a solid partnership between the Bank and the Government.
Internal CPS consultation
The Bank also held several internal meetings dedicated to the development of the CPS and also
invited outside experts to discuss Jordan’s development challenges and the Bank’s most valuable
contribution to the country’s development.
Preparation for the CPS consultations
The Bank’s CPS team prepared consultations during March and October 2010 and March 2011
with a set of development partners and stakeholders. The objective was to organize events that would be
representative of a range of stakeholders but would also allow for productive discussion and debate.
The Bank team targeted specific partners and stakeholders through a careful review of the main
civil society organizations and private sector representatives. Invitations to the consultations in Amman
were extended to local representatives, NGOs, and women’s groups. Representation included sectors and
groups directly affected by the CPS pillars under discussion.
83
Invitations were sent out with a note on the CPS process which provided information on the
nature and goal of the consultations, the nature of the CPS itself, results and challenges from the last
Country Assistance Strategy (2006-10), key lessons, and ongoing Bank Group projects in Jordan. At the
meetings, information packages were made available according to the target audience. Information
shared with participants included: (i) an informational web package posted on the Jordan website with
links to related CPS and country data; (ii) a framework note explaining what a CPS is, along with the
purpose of the consultations in English and Arabic; (iii) information packages with a set of brochures (10
Things to Know about the World Bank and the WB Public Information Center resources) and (iv) a Press
release.
Two objectives guided the approach of the consultations:
To discuss the priorities and the role of the World Bank in Jordan: The consultations were
structured so as to introduce the World Bank Group’s approach to development and to gather
opinions on the development priorities in the country; the themes proposed by the CPS (pillars
and cross-sectoral themes); the role of the World Bank in Jordan; perceptions relating to the
efficiency of its activities and its impacts; and ways to better support the country.
To provide depth to the consultations on the sector specific themes. Thematic consultations
were conducted on the subjects and/or the sectors that emerged from discussions during the pre-
CPS consultations phase, for example: private and banking sector, gender issues, the knowledge
economy, and public-private partnership.
Thematic consultations
In planning and conducting the thematic consultations, the Bank team benefited from the existence
of an umbrella organization and think tank that operates as an independent advisory body to the Jordanian
Government on economic and social issues and policies. The Economic and Social Council (ESC) has
the mandate to advise the executive body on the outlines of economic and social policy and is the first
official and institutionalized forum for the promotion of social dialogue and policy discussions in Jordan.
The ESC brings together the Government, the private sector, labor, and civil society organizations with
the goal of reaching consensus on economic and social policies in Jordan. It works to promote
coordination among stakeholders and to strengthen accountability in Government. The ESC is made up
of experts from a wide range of backgrounds and is able to draw on their experience. The ESC has four
policy committees: Economic, Social, Labor, and Educational. The Bank team had several meetings
with the ESC, and discussions took place with wide representation of ESC members. In addition, the
Bank team met with a number of NGOs working on a range of development issues, including: (i)
education, (ii) health, (iii) infrastructure and public service delivery, and (iv) local development.
On education and employability
This sector emerged as a main concern of various stakeholders, especially with regard to the
quality of public education, particularly in rural areas, and the mismatch between the labor market needs
and the work force. This mismatch is seen to be exacerbating unemployment, especially among the
youth. Participants noted that education in rural areas suffers from weak infrastructure and poor quality
of delivery. Participants also raised the issue of rural ―hub schools,‖ suggesting that low enrollment
schools in small villages should be closed in favor of one main school which could cater to the region.
This model should take into consideration the availability of public transport needed for students and
teachers as costs of commuting are high.
As for private education, the standard is seen to be higher, but guidance for students is still
lacking regarding the needs of the labor market—a process that participating NGOs deemed necessary to
84
start at an early age. The mismatch creates a surplus of graduates in certain professions which contributes
to brain drain. Conversely, there is a severe shortage of Jordanians in certain professions which is offset
by foreign workers. The participants believe that this issue should be addressed through vocational
education and skills training on a national level, not only in rural areas, and requires a change in the
Jordanian mentality of seeking prestigious professional jobs and high wages. The NGOs acknowledged
that mentality change is a long process and should focus on small communities. Participants raised the
issue of public daycare centers (pre-schooling) needed to support working mothers.
Private sector representatives expressed dissatisfaction with the level of competence of university
graduates. Jordan’s once renowned human capital was said to be dwindling. Gulf countries which used
to attract many Jordanian graduates would in ten years look elsewhere for employees due to the poor
quality of university education. The problem was traced back to 1986 when private for-profit universities
started spreading; these focused more on profit than on educational quality. Due to the incompetence of
graduates, private sector employers are resorting to foreign labor. Strengthening vocational education and
training could help reduce unemployment rates in the long run.
Women make up a small share of the workforce in Jordan due to a number of reasons, including:
social taboos, inadequate maternity leave and employment benefits, and discrimination in salary and
employment opportunities by the employers. To address these shortcomings, the participants suggested
that gender issues should be included in early education curriculums. Although this is a long-term
process, the Government and the Bank were urged to engage with all strands of the community, especially
schools, teachers, and parents.
Need to focus on the quality of education, education systems and education management
Need to address the quality of education both at the university and school level, and encourage
vocational training
Need to address underlying constraints of women’s employability, starting with early education
On rural and local development
Participants stressed that the high level of urbanization of the Jordanian population (around 80
percent) has deepened the disparity between rural and urban development, contributing to increased
poverty and unemployment, especially among women and youth. In some cases, women in rural areas
are discouraged from pursuing employment as it is considered to be ―shameful‖. The National Aid Fund
currently provides cash transfers to the unemployed (JD 40 per month). These cash transfers, coupled
with generally low salaries in the labor market, make it unattractive for the unemployed to pursue jobs.
Participating NGOs agreed that micro-finance as well as Government support to job-creating businesses
instead of cash transfers may provide better incentives for social development, not only in rural areas, but
also in urban centers. Participants also noted that severe water shortages and inferior electricity
infrastructure discourage agricultural and industrial projects. Moreover, the absence of public transport is
encouraging rural-urban migration.
The health sector in rural areas is seen to be inefficient and fragmented. Health ―clinics‖ are poorly
staffed and equipped. Similar to the ―hub schools‖ suggestion, participants requested consolidation of
these clinics into ―hubs‖ that serve wider areas and could be better monitored and maintained. Again,
public transport was cited as an important component for the success of this model.
Need to address regional disparities by supporting local economic development and micro-
finance to support local job creation
85
On fiscal management
Participants noted that Jordan’s slow recovery from the financial and economic meltdown was due to
its dependence on foreign aid. The Government sought pre-2008 to reduce its dependence on regional
inflows and rely more on the international community. The participants believed that Jordan’s fiscal
management is inefficient and that donor aid should be allocated to capital investments rather than used to
pay salaries of the public sector employees. The Government was said to be bent on shrinking the deficit,
without examining the impact on the economy.
Need for expenditure rationalization, then expenditure cuts
On private and banking sector
A key problem for private sector growth was said to be the absence of dialogue between the
public sector and the private sector. One of the issues raised by the private sector was commercial banks’
limiting the line of credit extended to the private sector. This was seen to be restraining the potential
growth of the private sector. From the commercial bank side, figures showed that the amount of credit
extended to the private sector is recovering and comparable to the previous years; however, drilling down
and analyzing the figures showed that most of the extended credit went to a limited number of firms.
Microfinance is considered as a strong enabler for women’s employability. World Bank statistics
showed that 98 percent of Jordanian women have paid back their loans on time. Participants believe that
the banking system in Jordan is too conservative and risk averse towards micro-credit, especially for
women. Moreover, there is a general lack of confidence in the sustainability of small industries; products
could be of high value, but the packaging is costly, and the marketing and branding skills are poor,
therefore banks are reluctant to offer credit.
Need for better dialogue between the private and public sector, better access to finance, in
particular to MSMEs
On governance
Corporate governance was seen as a mirror of the public administration and was a serious concern
for both the NGOs and the private sector. Hiring decisions should be based on experience and skills
rather than nepotism.
Need to strengthen transparency and accountability in the public administration
On development coordination
Participants noted that in general, donor contributions to Jordan’s social development have been
fragmented, uncoordinated and short-term, especially those related to education, social awareness and
youth.
86
CAS Tables
Annex A2: Jordan At-a-Glance
Jordan at a glance 10/26/11
M. East Lower
Key Development Indicators & North middle
Jordan Africa income
(2010)
Population, mid-year (millions) 6.1 331 3,811
Surface area (thousand sq. km) .. 8,778 31,898
Population growth (%) 2.2 1.8 1.2
Urban population (% of total population) 80 58 41
GNI (Atlas method, US$ billions) 25.6 1,190 8,846
GNI per capita (Atlas method, US$) 4,190 3,597 2,321
GNI per capita (PPP, international $) 5,730 7,911 4,784
GDP growth (%) 2.3 3.4 7.1
GDP per capita growth (%) 0.1 1.6 5.9
(most recent estimate, 2004–2010)
Poverty headcount ratio at $1.25 a day (PPP, %) <2 4 ..
Poverty headcount ratio at $2.00 a day (PPP, %) 3 17 ..
Life expectancy at birth (years) .. 71 68
Infant mortality (per 1,000 live births) .. 27 43
Child malnutrition (% of children under 5) .. 7 24
Adult literacy, male (% of ages 15 and older) 95 82 87
Adult literacy, female (% of ages 15 and older) 89 66 74
Gross primary enrollment, male (% of age group) 94 106 109
Gross primary enrollment, female (% of age group) 59 104 105
Access to an improved water source (% of population) .. 87 86
Access to improved sanitation facilities (% of population) .. 84 50
Net Aid Flows 1980 1990 2000 2010 a
(US$ millions)
Net ODA and official aid 1,275 886 552 761
Top 3 donors (in 2008):
United States 50 58 188 395
European Union Institutions 11 7 81 85
France 4 7 17 59
Aid (% of GNI) 32.3 22.5 6.4 3.1
Aid per capita (US$) 585 279 114 127
Long-Term Economic Trends
Consumer prices (annual % change) 11.0 16.1 0.6 5.0
GDP implicit deflator (annual % change) -0.4 12.7 -0.4 8.4
Exchange rate (annual average, local per US$) 0.3 0.7 0.7 0.7
Terms of trade index (2000 = 100) 88 93 100 86
1980–90 1990–2000 2000–10
Population, mid-year (millions) 2.2 3.2 4.9 6.1 3.7 4.3 2.3
GDP (US$ millions) 3,910 4,160 8,470 26,492 2.5 5.0 6.8
Agriculture 7.9 7.7 2.3 3.4 6.8 -3.0 8.9
Industry 24.1 26.2 25.5 30.7 1.9 5.2 7.8
Manufacturing 8.9 13.6 15.7 19.2 0.5 5.6 8.9
Services 68.0 66.0 72.1 65.9 2.3 5.0 5.7
Household final consumption expenditure 78.5 74.9 80.6 77.2 1.9 4.9 6.5
General gov't final consumption expenditure 29.2 24.0 23.7 20.6 1.9 4.7 5.3
Gross capital formation 37.2 30.8 22.4 24.0 -1.9 0.3 9.8
Exports of goods and services 40.4 59.8 41.8 46.1 4.8 2.6 5.4
Imports of goods and services 85.3 89.6 68.5 67.9 1.2 1.5 5.9
Gross savings 31.1 21.0 22.7 19.1
Note: Figures in italics are for years other than those specified. 2010 data are preliminary. Group data are for 2009. .. indicates data are not available.
a. Aid data are for 2009.
Development Economics, Development Data Group (DECDG).
(average annual growth %)
(% of GDP)
8 6 4 2 0 2 4 6 8
0-4
15-19
30-34
45-49
60-64
75-79
percent of total population
0
10
20
30
40
50
60
70
80
1990 1995 2000 2009
Jordan Middle East & North Africa
-15
-10
-5
0
5
10
15
20
25
95 05
GDP GDP per capita
87
Jordan
Balance of Payments and Trade 2000 2010
(US$ millions)
Total merchandise exports (fob) 1,901 7,046
Total merchandise imports (cif) 4,602 15,207
Net trade in goods and services -2,259 -5,774
Current account balance 28 -1,315 as a % of GDP 0.3 -5.0
Workers' remittances and
compensation of employees (receipts) 1,845 3,597
Reserves, including gold 3,434 13,426
Central Government Finance
(% of GDP)
Current revenue (including grants) 32.2 24.6
Tax revenue 16.0 15.9
Current expenditure 29.5 25.3
Technology and Infrastructure 2000 2009Overall surplus/deficit -2.0 -5.6
Paved roads (% of total) 100.0 100.0
Highest marginal tax rate (%) Fixed line and mobile phone
Individual .. .. subscribers (per 100 people) 21 109
Corporate 25 25 High technology exports (% of manufactured exports) 8.0 1.4
External Debt and Resource Flows
Environment
(US$ millions)
Total debt outstanding and disbursed 7,355 7,719 Agricultural land (% of land area) 12 11
Total debt service 740 677 Forest area (% of land area) 1.0 ..
Debt relief (HIPC, MDRI) – – Terrestrial protected areas (% of land area) .. ..
Total debt (% of GDP) 86.8 29.1 Freshwater resources per capita (cu. meters) 135 120
Total debt service (% of exports) 12.6 4.1 Freshwater withdrawal (billion cubic meters) .. 0.9
Foreign direct investment (net inflows) 807 1,677 CO2 emissions per capita (mt) 3.2 3.8
Portfolio equity (net inflows) -179 773
GDP per unit of energy use
(2005 PPP $ per kg of oil equivalent) 3.5 4.2
Energy use per capita (kg of oil equivalent) 1,027 1,215
World Bank Group portfolio 2000 2009
(US$ millions)
IBRD
Total debt outstanding and disbursed 798 1,046
Disbursements 38 317
Principal repayments 53 107
Interest payments 53 39
IDA
Total debt outstanding and disbursed 57 34
Disbursements 0 0
Private Sector Development 2000 2010 Total debt service 3 3
Time required to start a business (days) – 13 IFC (fiscal year)
Cost to start a business (% of GNI per capita) – 44.6 Total disbursed and outstanding portfolio 77 246
Time required to register property (days) – 21 of which IFC own account 77 206
Disbursements for IFC own account 4 64
Ranked as a major constraint to business 2000 2010 Portfolio sales, prepayments and
(% of managers surveyed who agreed) repayments for IFC own account 26 7
n.a. .. ..
n.a. .. .. MIGA
Gross exposure 40 4
Stock market capitalization (% of GDP) 58.4 116.5 New guarantees 39 0
Bank capital to asset ratio (%) 7.0 11.0
Note: Figures in italics are for years other than those specified. 2010 data are preliminary. 10/26/11
.. indicates data are not available. – indicates observation is not applicable.
Development Economics, Development Data Group (DECDG).
0 25 50 75 100
Control of corruption
Rule of law
Regulatory quality
Political stability
Voice and accountability
Country's percentile rank (0-100)higher values imply better ratings
2009
2000
IBRD, 1,288
IDA, 32IMF, 8
Other multi-lateral, 1,301
Bilateral, 2,851
Private, 1,081
Short-term, 1,158
88
Millennium Development Goals Jordan
With selected targets to achieve between 1990 and 2015(estimate closest to date shown, +/- 2 years)
Goal 1: halve the rates for extreme poverty and malnutrition 1990 1995 2000 2009
Poverty headcount ratio at $1.25 a day (PPP, % of population) 2.8 <2 .. <2
Poverty headcount ratio at national poverty line (% of population) 15.0 11.7 .. ..
Share of income or consumption to the poorest qunitile (%) .. 7.6 .. ..
Prevalence of malnutrition (% of children under 5) 6.4 6.4 .. ..
Goal 2: ensure that children are able to complete primary schooling
Primary school enrollment (net, %) 66 67 91 ..
Primary completion rate (% of relevant age group) 98 98 96 100
Secondary school enrollment (gross, %) 80 86 87 88
Youth literacy rate (% of people ages 15-24) .. .. .. ..
Goal 3: eliminate gender disparity in education and empower women
Ratio of girls to boys in primary and secondary education (%) 93 102 101 ..
Women employed in the nonagricultural sector (% of nonagricultural employment) 23 22 21 ..
Proportion of seats held by women in national parliament (%) .. 1 .. ..
Goal 4: reduce under-5 mortality by two-thirds
Under-5 mortality rate (per 1,000) 43 37 34 ..
Infant mortality rate (per 1,000 live births) 35 31 28 ..
Measles immunization (proportion of one-year olds immunized, %) 87 92 94 ..
Goal 5: reduce maternal mortality by three-fourths
Maternal mortality ratio (modeled estimate, per 100,000 live births) .. .. 41 ..
Births attended by skilled health staff (% of total) 87 97 100 ..
Contraceptive prevalence (% of women ages 15-49) 35 50 56 ..
Goal 6: halt and begin to reverse the spread of HIV/AIDS and other major diseases
Prevalence of HIV (% of population ages 15-49) .. .. .. ..
Incidence of tuberculosis (per 100,000 people) .. .. 10 ..
Tuberculosis case detection rate (%, all forms) 84 84 86 100
Goal 7: halve the proportion of people without sustainable access to basic needs
Access to an improved water source (% of population) 97 .. 96 ..
Access to improved sanitation facilities (% of population) 98 .. 99 ..
Forest area (% of land area) 1.0 .. 1.0 ..
Terrestrial protected areas (% of land area) .. .. .. ..
CO2 emissions (metric tons per capita) 3.3 3.2 3.2 3.8
GDP per unit of energy use (constant 2005 PPP $ per kg of oil equivalent) 3.2 3.4 3.5 4.2
Goal 8: develop a global partnership for development
Telephone mainlines (per 100 people) 7.8 7.6 12.9 8.4
Mobile phone subscribers (per 100 people) 0.0 0.3 8.1 101.1
Internet users (per 100 people) 0.0 0.0 2.7 29.3
Personal computers (per 100 people) .. 0.8 3.1 7.6
Note: Figures in italics are for years other than those specified. .. indicates data are not available. 10/26/11
Development Economics, Development Data Group (DECDG).
Jordan
0
25
50
75
100
125
2000 2005 2009
Primary net enrollment ratio
Ratio of girls to boys in primary & secondary education
0
20
40
60
80
100
120
2000 2005 2009
Fixed + mobile subscribers Internet users
0
25
50
75
100
1990 1995 2000 2009
Jordan Middle East & North Africa
89
CAS Tables
Annex B2: Selected Indicators of Bank Portfolio Performance and Management
As of November 30, 2011
Indicator 2009 2010 2011 2012
Portfolio Assessment
Number of Projects Under Implementation a 12 10 10 11
Average Implementation Period (years) b 2.9 3.9 4.9 5.2
Percent of Problem Projects by Number a, c 0.0 20.0 40.0 60.0
Percent of Problem Projects by Amount a, c 0.0 23.8 28.3 47.1
Percent of Projects at Risk by Number a, d 8.3 20.0 50.0 60.0
Percent of Projects at Risk by Amount a, d 1.7 23.8 35.9 47.1
Disbursement Ratio (%) e 37.3 12.5 17.3 4.3
Portfolio Management
CPPR during the year (yes/no) No No No Yes
Supervision Resources (total US$) 537 761 921 915
Average Supervision (US$/project) 45 76 92 83
Memorandum Item Since FY 80 Last Five FYs
Proj Eval by OED by Number 65 5
Proj Eval by OED by Amt (US$ millions) 2,104.8 97.2
% of OED Projects Rated U or HU by Number 17.7 66.7
% of OED Projects Rated U or HU by Amt 11.0 3.9
a. As shown in the Annual Report on Portfolio Performance (except for current FY).
b. Average age of projects in the Bank's country portfolio.
c. Percent of projects rated U or HU on development objectives (DO) and/or implementation progress (IP).
d. As defined under the Portfolio Improvement Program.
e. Ratio of disbursements during the year to the undisbursed balance of the Bank's portfolio at the
beginning of the year: Investment projects only.
* All indicators are for projects active in the Portfolio, with the exception of Disbursement Ratio,
which includes all active projects as well as projects which exited during the fiscal year.
90
CAS Tables
Annex B5: Social Indicators
As of November 30, 2011
Latest single year Same region/income group
M. East Lower-
& North middle-
1980-85 1990-95 2004-10 Africa income
POPULATION
Total population, mid-year (millions) 2.6 4.3 6.1 330.9 3,810.8
Grow th rate (% annual average for period) 3.9 5.9 2.2 1.8 1.2
Urban population (% of population) 66.4 78.3 80.2 57.6 40.9
Total fertility rate (births per woman) 6.1 4.3 .. 2.7 2.5
POVERTY
(% of population)
National headcount index .. 15.0 .. .. ..
Urban headcount index .. .. .. .. ..
Rural headcount index .. .. .. .. ..
INCOME
GNI per capita (US$) 1,930 1,530 4,190 3,597 2,321
Consumer price index (2005=100) 45 87 153 124 130
INCOME/CONSUMPTION DISTRIBUTION
Gini index .. .. .. .. ..
Low est quintile (% of income or consumption) .. .. .. .. ..
Highest quintile (% of income or consumption) .. .. .. .. ..
SOCIAL INDICATORS
Public expenditure
Health (% of GDP) .. .. .. 2.7 2.1
Education (% of GNI) .. .. .. 4.6 4.1
Net primary school enrollment rate
(% of age group)
Total 73 67 .. 89 87
Male 73 67 .. 91 88
Female 73 68 .. 88 86
Access to an improved water source
(% of population)
Total .. 97 .. 87 87
Urban .. 99 .. 95 95
Rural .. 92 .. 80 81
Immunization rate
(% of children ages 12-23 months)
Measles 73 92 .. 87 79
DPT 85 95 .. 88 79
Child malnutrition (% under 5 years) .. 6 .. 7 24
Life expectancy at birth
(years)
Total 66 70 .. 71 68
Male 64 69 .. 69 66
Female 67 72 .. 73 70
Mortality
Infant (per 1,000 live births) 52 31 .. 27 43
Under 5 (per 1,000) 67 37 .. 33 58
Adult (15-59)
Male (per 1,000 population) .. 205 .. 155 201
Female (per 1,000 population) .. 152 .. 104 136
Maternal (per 100,000 live births) .. .. .. 88 230
Births attended by skilled health staff (%) .. 87 .. 80 67
CAS Annex B5. This table w as produced from the CMU LDB system. 11/04/11
Note: 0 or 0.0 means zero or less than half the unit show n. Net enrollment rate: break in series betw een 1997 and 1998 due to
change from ISCED76 to ISCED97. Immunization: refers to children ages 12-23 months w ho received vaccinations before one
year of age or at any time before the survey.
91
CAS Tables
Annex B6: Key Economic Indicators
As of November 30, 2011
Estimate
Indicator 2005 2006 2007 2008 2009 2010 2011 2012 2013
National accounts (as % of GDP)
Gross domestic producta
100 100 100 100 100 100 100 100 100
Agriculture 3 3 3 3 3 3 3 4 4
Industry 29 29 32 34 32 31 29 29 29
Services 68 68 66 63 65 66 67 67 67
Total Consumption 107 106 107 101 97 98 113 111 108
Gross domestic fixed investment 31 25 27 28 25 23 10 11 12
Government investment 6 6 6 5 7 4 5 4 4
Private investment 25 19 21 23 18 19 5 6 7
Exports (GNFS)b
53 54 54 57 46 46 48 50 52
Imports (GNFS) 94 88 92 88 69 68 71 72 72
Gross domestic savings -7 -6 -7 -1 3 2 -13 -11 -8
Gross national savingsc
16 17 13 21 22 19 1 2 4
Memorandum items
Gross domestic product 12603 15074 17130 22018 23880 26492 28512 31012 33798
(US$ million at current prices)
GNI per capita (US$, Atlas method) 2460 2690 3010 3500 3870 4220 4380 4770 5200
Real annual growth rates (%, calculated from 85 prices)
Gross domestic product at market prices 8.1 8.1 8.2 7.2 5.5 2.3 2.5 3.0 3.5
Gross Domestic Income 9.1 8.1 8.9 19.5 5.3 -5.7 2.2 5.5 5.5
Real annual per capita growth rates (%, calculated from 85 prices)
Gross domestic product at market prices 5.7 5.6 5.9 4.9 3.2 0.1 0.3 0.8 3.5
Total consumption 8.7 5.5 6.0 9.1 1.9 -6.5 -1.7 -1.6 0.4
Private consumption 11.9 3.1 7.3 6.0 0.5 -4.4 5.6 -1.4 0.8
Balance of Payments (US$ millions)
Exports (GNFS)b
6642 8121 9290 12441 10955 12220 13670 15551 17603
Merchandise FOB 4306 5210 5738 7954 6391 7046 8101 9073 9984
Imports (GNFS)b
11873 13246 15718 19268 16495 17995 20365 22215 24275
Merchandise FOB 9328 10272 12197 15133 12673 13713 15492 17039 18590
Resource balance -5230 -5125 -6428 -6827 -5540 -5774 -6695 -6664 -6672
Net current transfers 2619 2943 2866 4089 3807 3951 4051 3552 3649
Current account balance -2274 -1728 -2878 -2041 -1128 -1315 -2616 -2597 -2439
Net private foreign direct investment 1823 3686 2577 2819 2360 1677 2102 2580 3234
Long-term loans (net) 6 -92 -147 -2580 218 -224 648 200 243
Official -52 -63 -206 -2113 408 371 460 -8 -56
Private 58 -29 60 -467 -190 -594 188 208 299
Other capital (net, incl. errors & ommissions) 997 -180 1389 1062 -94 1192 200 434 615
Change in reservesd
-553 -1686 -942 740 -1356 -1330 -334 -617 -1653
Memorandum items
Resource balance (% of GDP) -41.5 -34.0 -37.5 -31.0 -23.2 -21.8 -23.5 -21.5 -19.7
Real annual growth rates ( YR85 prices)
Merchandise exports (FOB) -3.3 9.1 -5.6 -10.3 -13.3 28.9 6.7 9.7 9.6
Primary -4.2 -6.3 4.5 18.8 -17.1 41.2 18.3 12.5 10.6
Manufactures 0.9 12.7 -6.9 -5.4 -10.6 40.3 2.0 0.7 3.4
Merchandise imports (CIF) 16.0 0.5 4.6 2.9 -4.2 -14.7 4.8 12.5 11.4
Actual Projected
92
CAS Tables
Key Economic Indicators (continued)
Actual Estimate Projected
Indicator 2005 2006 2007 2008 2009 2010 2011 2012 2013
Public finance (as % of GDP at market prices)e
Current revenues 33.9 32.1 32.3 32.4 26.5 24.6 27.4 24.9 24.9
Current expenditures 31.9 29.2 30.9 28.7 27.1 25.3 28.8 26.3 25.7
Current account surplus (+) or deficit (-) 2.0 2.9 1.5 3.7 -0.7 -0.7 -1.4 -1.4 -0.8
Capital expenditure 7.1 7.4 6.9 6.1 8.5 5.1 5.4 4.2 4.1
Foreign financing -3.3 1.2 0.6 -10.3 1.4 4.0 2.1 -0.1 -0.2
Monetary indicators
M2/GDP 138.5 132.2 128.6 117.4 118.3 118.9 119.0 119.0 119.0
Growth of M2 (%) 17.0 14.1 10.6 17.3 9.3 11.5 7.8 8.8 9.0
Private sector credit growth / 75.8 118.0 64.6 42.1 41.0 74.9 57.5 42.5 36.1
total credit growth (%)
Price indices( YR85 =100)
Merchandise export price index 138.6 153.6 179.3 277.0 256.7 219.6 236.7 241.7 242.6
Merchandise import price index 177.1 193.8 220.1 265.2 233.4 289.7 312.2 305.3 298.9
Merchandise terms of trade index 78.2 79.3 81.5 104.5 110.0 75.8 75.8 79.2 81.1
Real exchange rate (US$/LCU)f
116.0 114.4 109.8 117.3 127.6 127.0 126.8 116.2 110.8
Real interest rates
Consumer price index (% change) 3.5 7.5 5.4 14.9 -0.6 5.0 22.7 2.0 1.9
GDP deflator (% change) 2.0 10.7 5.1 19.9 2.8 8.4 5.0 5.6 5.3
a. GDP at factor cost
b. "GNFS" denotes "goods and nonfactor services."
c. Includes net unrequited transfers excluding official capital grants.
d. Includes use of IMF resources.
e. Consolidated central government.
f. "LCU" denotes "local currency units." An increase in US$/LCU denotes appreciation.
93
CAS Tables
Annex B7: Key Exposure Indicators
As of November 30, 2011
Actual Estimated
Indicator 2005 2006 2007 2008 2009 2010 2011 2012 2013
Total debt outstanding and 7696 8055 8368 6577 7080 7719 8370 9009 9330
disbursed (TDO) (US$m)a
Net disbursements (US$m)a
16 -164 -299 -2240 503 1104 156 697 182
Total debt service (TDS) 616 690 770 2702 632 677 839 801 746
(US$m)a
Debt and debt service indicators
(%)
TDO/XGSb
80.0 69.0 61.1 38.8 46.4 46.9 48.2 45.4 42.2
TDO/GDP 61.1 53.4 48.8 29.9 29.6 29.1 29.4 29.0 27.6
TDS/XGS 6.4 5.9 5.6 15.9 4.1 4.1 4.8 4.0 3.4
Concessional/TDO 49.2 49.4 49.5 54.6 54.0 48.3 46.0 47.3 46.8
IBRD exposure indicators (%)
IBRD DS/public DS 18.0 19.0 17.7 4.6 23.2 20.7 15.8 17.8 19.6
Preferred creditor DS/public 56.6 55.1 49.2 12.5 54.3 54.1 54.5 51.0 50.1
DS (%)c
IBRD DS/XGS 1.1 1.1 0.9 0.7 1.0 0.9 0.8 0.7 0.7
IBRD TDO (US$m)d
925 897 868 835 1046 1048 971 1325 1227
Of which present value of
guarantees (US$m)
Share of IBRD portfolio (%) 1 1 1 1 1 1 1 1 1
IDA TDO (US$m)d
45 42 39 37 34 32 29 27 24
IFC (US$m)
Loans
Equity and quasi-equity /c
MIGA
MIGA guarantees (US$m)
a. Includes public and publicly guaranteed debt, private nonguaranteed, use of IMF credits and net short-
term capital.
b. "XGS" denotes exports of goods and services, including workers' remittances.
c. Preferred creditors are defined as IBRD, IDA, the regional multilateral development banks, the IMF, and the
Bank for International Settlements.
d. Includes present value of guarantees.
e. Includes equity and quasi-equity types of both loan and equity instruments.
Projected
94
CAS Tables
Annex B8: Operations Portfolio (IBRD, IDA and Grants)
As of November 30, 2011
Closed Projects 76
IBRD/IDA *
Total Disbursed (Active) 112.95
of w hich has been repaid 6.21
Total Disbursed (Closed) 650.82
of w hich has been repaid 800.81
Total Disbursed (Active + Closed) 763.77
of w hich has been repaid 807.02
Total Undisbursed (Active) 129.55
Total Undisbursed (Closed) 0.00
Total Undisbursed (Active + Closed) 129.55
Active Projects
Project ID Project NameDevelopment
Objectives
Implementation
ProgressFiscal Year IBRD IDA GRANT Cancel. Undisb. Orig. Frm Rev'd
P081505 JO - Amman Development Corridor S S 2004 71.0 7.8 -25.2 -0.1
P104960 JO - Amman Solid Waste Management MU MU 2009 25.0 20.9 14.4
P081823 JO - Cultural Heritage, Tourism & Urban MS MS 2007 56.0 20.9 16.1 3.2
P100534 JO - Employer Driven Skills Dev. MS MU 2008 7.5 6.8 5.2
P105036 JO - ERfKE II MS MU 2009 60.0 58.7 4.0
P070958 JO - Regional & Local Development MU MU 2007 20.0 11.1 11.1 2.5
P100546 JO - Social Protection Enhancement MU MU 2008 4.0 3.4 1.7
Sub-total (IBRD) 243.5 129.6 27.3 5.6
P075534 Integrated Ecosystems/Rift Valley MU MU 2007 6.15 3.2 2.4
P093201 Promotion of a Wind Power Market MU MU 2008 6.0 5.0 3.5
P108064 Energy Efficiency Investment Support Framework - - 2009 1.0 1.0
P049706 ODS Phaseout II S S 1997 6.0 0.7 -0.3
P122070 Ombudsman Capacity Building Support - - 2012 0.3 0.3
P109392
Measuring the Impact of National Policies &
Strategies on Gender Equality (Gender Monitoring) - - 2009 0.3 0.1
P114758 Regional Network for Education Research - - 2010 0.5 0.2
P121762 Secondary Cities Development Strategy - - 2011 0.5 0.3
P053834 Economic Reform & Dev't. TA / Privatization TA S S 2005 9.5 0.1
P113115 Employment for Young Women Graduates - - 2010 1.1 0.3
P126689
Enhancing Legal Aid Services to Iraqi & Palestinian
Regugees - - 2012 1.8 1.8
P128689 Community-Driven Development of Legal Aid Services - - 2012 2.6 2.6
Sub-total (Trust Funds) 35.6 15.6 5.6 0.0
Overall Result 243.5 35.6 145.2 33.0 5.6
Supervision Rating Original Amount in US$ Millions Disbursements a/
Difference Between
Last PSR Expected and Actual
95
CAS Tables
Annex B8: Statement of IFC’s Committed and Outstanding Portfolio
As of November 30, 2011
International Finance Corporation
Commitment Institution LN ET QL + QE GT RM ALL ALL LN ET QL + QE GT RM ALL ALL
Fiscal Year Short Name Cmtd - IFC Cmtd - IFC Cmtd - IFC Cmtd - IFC Cmtd - IFC Cmtd - IFC Cmtd - Part Out - IFC Out - IFC Out - IFC Out - IFC Out - IFC Out - IFC Out - Part
0 0.97 9.50 0 0 10.47 0 0 0.97 9.50 0 0 10.47 0.00
70.00 0 50.00 0 61.49 181.49 160.00 51.83 0 35.40 0 60.10 147.33 118.53
0 0 0 0.12 0 0.12 0 0 0 0 0.12 0 0.12 0.00
1.50 0 0 0 0 1.50 0 1.50 0 0 0 0 1.50 0.00
14.76 0 7.00 0 0 21.76 0 14.76 0 7.00 0 0 21.76 0.00
0 0 0 5.10 0 5.10 0 0 0 0 0.57 0 0.57 0.00
0 18.08 20.00 0.82 0 38.90 0 0 18.08 20.00 0.82 0 38.89 0.00
36.60 0 0 0 0 36.60 0 36.60 0 0 0 0 36.60 0.00
0 0.85 0 0 0 0.85 0 0 0.85 0 0 0 0.85 0.00
125.00 0 0 0 0 125.00 90.13 29.81 0 0 0 0 29.81 21.49
50.00 0 0 0 0 50.00 60.00 25.84 0 0 0 0 25.84 31.00
0 0.25 0 0 0 0.25 0 0 0.00 0 0 0 0.00 0.00
0 0.00 0 0 0 0.00 0 0 0.00 0 0 0 0.00 0.00
2.25 0 0 0 0 2.25 0 2.25 0 0 0 0 2.25 0.00
0 0 0 0.20 0 0.20 0 0 0 0 0.20 0 0.20 0.00
38.66 2.60 0 0 0 41.27 0 38.66 2.60 0 0 0 41.27 0.00
338.77 22.76 86.50 6.24 61.49 515.76 310.13 201.24 22.50 71.90 1.71 60.10 357.46 171.02
Report Run Date: 12/08/2011
Statement of IFC's Committed and Outstanding Portfolio
Amounts in US Dollar Millions
Accounting Date as of : 11/30/2011 Page 1
Region(s):Middle East and North Africa
Country(s) : Jordan
2012 ACWA Pow erJordan
2008 AIG Company
2008/ 2009/ 2010/ 2011/ 2012 Bank of Jordan
2001 Boscan Jordan
2006/ 2009 CTI
2000/ 2011 Cairo Amman Bank
2007/ 2008/ 2009/ 2010/ 2011/ 2012 Capital Bank Jor
EDCO
Hikma UK
2011 JIFCO
2010 Jordan Phosph...
1999 MAICO
2002 MEREN
2010 Tamw eelcom
2009/ 2010/ 2011/ 2012 Union Bank JOR
1997/ 2008/ 2010 Zara
Total Portfolio
Jabal RamJabal Ram(1,734 m) (1,734 m)
AA rr dd aa ss SS aa ww aa aa nn
A Q A B AA Q A B A
TAFILAHTAFILAH
K A R A KK A R A K
A M M A NA M M A N
IRBIDIRBID
ZARKAZARKA
MADABAMADABA
BALQABALQA
M A F R A KM A F R A K
M A ' A NM A ' A NAsh ShawbakAsh Shawbak
Al Al RashadiyahRashadiyah--
As SafiAs Safi-- --
Al Mazra’ahAl Mazra’ah
Al QatranahAl Qatranah--
Mahattat al HalifMahattat al Halif
Ar RuwayshidAr Ruwayshid
Azraq ashAzraq ashShishanShishan-- --
Ba’irBa’ir--
Al JafrAl Jafr
ArdaArda
Um QaisUm Qais
Al MudawwarahAl Mudawwarah
Ra’s an NaqbRa’s an Naqb
PetraPetra
Ad DisiAd Disi
IrbidIrbid
AjlunAjlun
JarashJarashAl MafrakAl Mafrak
AzAzZarkaZarka
Al KarakAl Karak
At TafilahAt Tafilah
Ma'anMa'an
AqabaAqaba
MadabaMadaba
As SaltAs Salt
AMMANAMMAN
DeadDeadSeaSea
A Q A B A
TAFILAH
K A R A K
A M M A N
IRBIDAJLUN
JARASH
ZARKA
MADABA
BALQA
M A F R A K
M A ' A NAsh Shawbak
Al Rashadiyah-
As Safi- -
Al Mazra’ah
Al Qatranah-
Mahattat al Halif
Ar Ruwayshid
Azraq ashShishan- -
Ba’ir-
Al Jafr
Arda
Um Qais
Al Mudawwarah
Ra’s an Naqb
Petra
Ad Disi
Irbid
Ajlun
JarashAl Mafrak
AzZarka
Al Karak
At Tafilah
Ma'an
Aqaba
Madaba
As Salt
AMMAN
Jord
an
Riv
er
Med
i terr
anea
nSe
a
LakeTiberias
Gul
f of A
qaba
DeadSea
To Zefat
To Al Jawf
To Al B'ir
To Al B'ir
To Nuweiba
To Damascus
To Baghdad
To Jerusalem
To Beersheba
A r d a s S a w a a n
Jabal Ram(1,734 m)
34°N
33°N
32°N
31°N
30°N
29°N
34°N
33°N
32°N
31°N
30°N
35°E 36°E 37°E 38°E 39°E
35°E 36°E 37°E
38°E 39°E
JORDAN
0 0
0 25 50 Miles
50 Kilometers
IBRD 33424
JANUARY 2005
JORDANSELECTED CITIES AND TOWNS
GOVERNORATE CAPITALS
NATIONAL CAPITAL
RIVERS
MAIN ROADS
RAILROADS
GOVERNORATE BOUNDARIES
INTERNATIONAL BOUNDARIES
This map was produced by the Map Design Unit of The World Bank. The boundaries, colors, denominations and any other information shown on this map do not imply, on the part of The World Bank Group, any judgment on the legal status of any territory, o r any endo r s emen t o r a c c e p t a n c e o f s u c h boundaries.