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Jordan Overview

Challenges facing Jordan include vulnerability to fluctuations in the oil market because of its energy import dependency and the disruption of gas supplies from Egypt; high unemployment and a dependency on remittances from Gulf economies; increasing pressure on natural resources, especially water; and escalating spillovers from the Syrian conflict.

The greatest challenge for Jordan, and also the largest opportunity, remains the necessity to create conditions for increased private investment and improved competitiveness.This will help deliver the growth needed to create employment and reduce poverty. Staying the course with the fiscal consolidation program may prove challenging but is necessary to maintaining a strong economic performance.

Over the past 10 years, Jordan has had some success pursuing structural reforms in education, health and privatization and liberalization. In addition, the Government of Jordan has been introducing social protection systems and reforming subsidies, creating the conditions for public-private partnerships in infrastructure and making tax reforms, including tax administration and management.

Jordan’s external debt reached 18% of GDP in 2013 and is projected to remain sustainable under the most adverse scenarios. It may not though stabilize much in the medium term. Robust implementation of the fiscal consolidation plan is therefore critical to rebuild buffers. Public sector debt rose in 2013, reaching 86% of GDP at end-December, up from 80% of GDP at the end of 2012. External financing, sound economic policies and additional reforms, however, will be necessary to reduce the country’s vulnerability to external shocks.

Last Updated: Mar 17, 2014

The Country Partnership Strategy (CPS) discussed by the World Bank’s Board of Directors on January 24, 2012 is supporting Jordan in its efforts to build stronger growth resilience and foster job creation. The CPS has a three-pronged strategy: strengthening fiscal management and increasing accountability to support public financial management; strengthening the foundation for sustainable growth with a focus on competitiveness; and enhancing inclusiveness through social protection and local development. A CPS Progress Report will be produced  this fiscal year (2014).

As of March 2014, the World Bank’s active portfolio in Jordan includes 35 projects valued at US$729 million, financed mainly by the International Bank of Reconstruction and Development (IBRD) with 92% of the total portfolio, as well as some World Bank-administered trust funds. The portfolio comprises investments in urban development, education, energy, environment, public sector governance, public administration, social services, finance, and  private sectors. Social services account for the highest share of the investment portfolio at 35%, followed by urban development at 21%.

The World Bank is supporting Jordan’s capacity and performance in  governance, fiscal management, public sector efficiency and private sector-led growth, through two Development Policy Loans of US$250 million each. It also provided support to bolster Jordan’s resilience to the Syrian crisis. The large influx of refugees from Syria has strained the government’s capacity to deliver basic services and led to an increase in social tension, as well as in competition for jobs.

An emergency loan of US$150 million, approved in July 2013, helped affected households maintain access to healthcare services and basic household goods. A complementary Emergency Services and Social Resilience Grant of US$50 million, approved in October 2013, leveraged grants from the United Kingdom, Canada, and Switzerland, with the Arab Fund for Economic Development joining in with an additional US$10 million. This project will help municipalities strengthen their service delivery capacity, support local economic development, and foster social cohesion in host communities.

Micro, Small and Medium Enterprise (MSME) development for inclusive growthThe IBRD project has had a strong impact on developing this sector in Jordan through promoting inclusive financial intermediation.This has increased the role of MSMEs in creating entrepreneurship and employment.  The project has resulted in the creation of over 1,000 private sector jobs and contributed to poverty reduction during a period of deteriorating macroeconomic conditions. About 62% of the project’s beneficiaries were located outside Amman, where unemployment and poverty rates are high. The project also succeeded in mainstreaming gender, with women-owned enterprises representing 57% of the beneficiaries. Youth, who suffer from the highest unemployment rates, represented more than 21%.

Second Education Reform for knowledge economy: IBRD funding has been used for the expansion and piloting of quality kindergartens and highly innovative, alternative childcare all over the country, with the gross enrolment rate increasing from 52.3% in 2009/10 to 58.9% in 2014.An Open Education Management Information System was set up with commitment by the Ministry of Education to continue publishing monitoring and evaluation reports on its website, promoting a culture of transparency in the sector, and the construction and rehabilitation of schools for students. Enrolment rates in primary and secondary education have increased from 96.9% to 98.1%, and 60.4% to 76.9%, respectively. 

Justice Sector Reform: Improving community-driven legal aid for the poor (Japan Social Development Fund) and extending legal aid to displaced Iraqis and Palestinians (State and Peace-building Fund) to provide improved legal services to vulnerable persons, such as the poor, as well as Iraqi, Palestinian, and Syrian refugee communities. Counseling has been provided to more than 3,400 beneficiaries and legal representation to almost 1,500. Public awareness and information events have helped more than 6,800 vulnerable persons, roughly two-thirds of the beneficiaries were women.

 International Finance Corporation (IFC): The IFC’s investment program in Jordan has ramped-up in recent years with the portfolio growing from US$50 million in fiscal year 2005 to US$678 million in January 2014, concentrated in transport, chemicals and power sectors. IFC’s total exposure is close to US$1 billion. This  US$310 million of mobilized investment , the highest ever IFC investment program in Jordan. The majority of this has been supporting infrastructure (power and transportation) and manufacturing (pharmaceuticals and chemicals).

In November 2013, the IFC committed an important debt package of US$221 million to the development of a wind farm in Jordan, the Tafila Wind Project, the country’s first privately-owned renewable energy facility. The Queen Alia International Airport (QAIA) is another landmark project.It has been awarded "Gold" for being one of the top 40 Public Private Partnerships (PPPs) in Emerging Markets. QAIA is not only the Middle East's first full airport concession, but the first to use Sharia-compliant finance. The new airport is expected to create 23,000 jobs and will contribute to Jordan's  tourism and economic growth. The IFC was the lead advisor to the Government of Jordan in structuring and implementing the project, leading to the award of a 25-year concession to the Aéroports de Paris Consortium, with 54.58% of gross revenue going to the government --the highest revenue-sharing percentage in the world for such a project. The IFC has also assisted in the financial sector by increasing access to finance to underserved groups. Jordan is a key part of the IFC’s regional Education for Employment initiative for the Arab World. Its advisory services in Jordan are expanding to projects in PPPs, corporate governance, doing business, regulatory simplification, financial infrastructure, and access to finance. The IFC has advised the first Credit Bureau and helped with legislation for greater access to finance for SMEs, corporate governance, and investment climate reforms.

Multilateral Investment Guarantee Agency (MIGA): MIGA’s outstanding gross exposure from investments into Jordan stood at US$212.9 million as of the end of January 2014. In fiscal year 2013, MIGA issued a US$13 million political risk insurance guarantee to a U.S. investor for the expansion of the A.S. Samra Wastewater Treatment Expansion Project. MIGA’s support sent a strong signal that Jordan remains a viable investment with the agency looking to support more projects in the country.

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Jordan: Commitments by Fiscal Year (in millions of dollars)*

*Amounts include IBRD and IDA commitments

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