Overview

Over the past 10 years, Jordan has had success pursuing structural reforms in education, health, as well as privatization and liberalization. The Government of Jordan has introduced social protection systems and reformed subsidies, creating the conditions for public-private partnerships in infrastructure and making tax reforms, including tax administration and management. In 2015, it has also focused on identifying concrete, although still insufficient, steps towards enhancing the investment climate and ease of doing business.

Adverse regional developments, in particular with the Syria and Iraq crises, remain the largest recent shock affecting Jordan, as reflected in the large refugee influx, disrupted trade routes and lower tourism inflows. The large number of Syrian refugees entering the country has had a strong impact on the country’s social fabric, economy and security.    

Despite larger financing of utility companies in 2014, the central government fiscal deficit improved thanks to continued fiscal consolidation efforts and a steadily expanding economy. While fiscal policy remains tight through 2015, the Central Bank of Jordan (CBJ) maintains its expansionary monetary policy.

Real GDP growth is forecast at 2.4% in 2015, reflecting an unexpected deceleration in the first quarter of the year but yet stronger private consumption and a narrower trade deficit, in part driven by lower oil prices. Real GDP growth is forecast at 3% in 2016, reflecting additional investment projects in the medium term.

Nonetheless, Jordan faces daunting challenges due to the regional instability, high unemployment, a dependency on grants and remittances from Gulf economies as well as continued pressure on natural resources.

It will remain indispensable for Jordan to continue diversifying its energy supply in the medium term in order to reduce the large twin deficits and macroeconomic vulnerabilities. Sound economic policies and growth-enhancing reforms will also be necessary to reduce the country’s vulnerability to external shocks.

Creating conditions for increased private investment and improved competitiveness will help deliver the growth needed to generate employment and reduce poverty.

Last Updated: Apr 01, 2016

The Country Partnership Strategy (CPS)  is supporting Jordan in its efforts to build stronger growth and foster job creation and was released in January 2012. While the overall thrust of the CPS remains relevant, the Bank’s strategy was recently adjusted in  2014 to reflect the evolving country context and to link with the World Bank Group’s twin goals of ending poverty and promoting shared prosperity. A new Country Partnership Strategy for 2016-2021 is under preparation and will be discussed by the World Bank Board in July 2016. It is based on a Systematic Country Diagnostic  for Jordan which was circulated to the Board in February 2016.

As of March 2016, the World Bank’s active portfolio in Jordan includes 18 projects valued at US$515.3 million in loans and grants. The portfolio comprises investments in municipal services, education, energy, environment, public sector governance, public administration, social services, access to finance, and the private sector.

Over the past few years, the World Bank has supported Jordan’s capacity and performance in governance, fiscal management, public sector efficiency and private sector-led growth, through two Development Policy Loans, US$250 million each. It also provided support to the fiscal sustainability and efficiency of the energy and water sectors through a new Programmatic Policy Loan (first US$250 million operation presented to the World Bank Board in July 2015; follow-up on operation currently under discussion).  

The Bank has 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$65.9 million, approved in October 2013, leveraged grants from the United Kingdom, Canada, Sweden and Switzerland. This project is helping municipalities strengthen their service delivery capacity, supporting local economic development, and fostering social cohesion in host communities.

Last Updated: Apr 01, 2016

The Micro, Small and Medium Enterprise (MSME) Development for Inclusive Growth project has resulted in the creation of over 2,000 private sector jobs for the most disadvantaged segments of society. 62% of the project’s beneficiaries came from outside Amman, where unemployment and poverty rates are high. Women-owned enterprises represented 85% of the beneficiaries. Youth, who suffer from the highest unemployment rates, represented more than 45%.
 
The Second Education Reform for Knowledge Economy project has contributed to the expansion of quality kindergartens and highly innovative, alternative childcare all over the country. A system was created to allow the Ministry of Education to publish monitoring and evaluation reports online. New schools and extensions were built. Enrolment rates in primary and secondary schooling increased from 96.9% to 98.1%, and 60.4% to 76.9%, respectively.

The Emergency Services and Social Resilience Project (ESSRP) grant helped 16 municipalities respond to the increased demand for services due to the large influx of Syrian refugees. In the first two years of implementation, the project funded goods, works and basic services amounting to US$40 million. This included solid waste collection, rehabilitation of basic infrastructure, improvements to the roads network, lighting in the streets, and addressing rising community tensions. A scoping mission visited Jordan in early February to explore options for a potential scale up of the project. In the context of Jordan’s holistic approach to the Syrian crisis and the recently-adopted Jordan Compact, this scale up could contribute to financing labor-intensive works for generating employment opportunities for Syrians.

The Access to Justice Project  (Japan Social Development Fund & State and Peace-building Fund) provided improved legal services to vulnerable communities, including poor Jordanians, and Iraqi, Palestinian, and Syrian refugees. The project is implemented by the Justice Center for Legal Aid (JCLA), a Jordanian civil society organization.  Consultations were provided to 4,500 beneficiaries and 1,600 public awareness sessions were held, reaching more than 40,000 beneficiaries.  

The International Finance Corporation (IFC) has maintained a strong program in Jordan with long-term finance investments totaling at around US$1.2 billion, of which US$546 million has been mobilized from other investors from January 2011 to date. Landmark investments in the renewable energy sector include: (i) Tafila Wind - US$221 million debt package to finance the country’s first privately owned renewable energy facility; (ii) “Seven Solar Sister” - US$208 million financing package to support the largest private sector-led solar PV initiative in the MENA region. Other recent investments include a repeat investment of around US$94 million in Queen Alia Airport, US$11 million in Luminus, the leading private vocational and technical training provider in the country, and US$2 million to FINCA Jordan, a leading microfinance organization. These investments have helped IFC double its committed portfolio since 2010, which now stands at US$730 million across 24 clients, largely concentrated in the transport, chemicals, and renewable power sectors. IFC has also provided strong advisory support focusing in the areas of corporate governance, regulatory simplification, energy efficiency, access to finance (credit Bureau & secured lending), PPP, and skills development to match the needs of the private sector.

The Multilateral Investment Guarantee Agency’s (MIGA) outstanding gross exposure from investments into Jordan stood at US$228 million as of March 2016. MIGA supports: a U.S. investor for the expansion of the AS Samra Wastewater Treatment Plant; the expansion and operation of an existing bromine and bromine derivatives manufacturing plant; and two solar power plants through guarantees for Adenium Solar. MIGA’s support to foreign private investors sends a strong signal that Jordan remains a viable investment destination.

Last Updated: Apr 01, 2016


LENDING

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

*Amounts include IBRD and IDA commitments