Overview

Over the past 10 years, Jordan has pursued 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. More work needs however to be accomplished so the focus on identifying steps towards enhancing the investment climate and ease of doing business can lead to concrete outcomes.

Adverse regional developments, in particular the Syria and Iraq crises, remain the largest recent shock affecting Jordan. This is reflected in an unprecedented refugee influx, in disrupted trade routes, and in lower investments and tourism inflows. The large number of Syrian refugees entering the country is having a strong impact on the country’s economy and social fabric. Other major challenges facing Jordan include high unemployment, a dependency on grants and remittances from Gulf economies as well as continued pressure on natural resources.

Jordan’s economy remains sluggish as growth slowed down in 2016 for the second year in a row — to an estimated 2 percent from 2.4 percent in 2015 — as geopolitical repercussions take a toll and as reflected in worsening labor market indicators. Economic growth is expected to marginally improve to an estimated 2.6 percent average over 2017-2019 anticipating improvements in tourism, exports, and the impact of investment climate reforms. Inflationary pressures appear after two years of deflation. Fiscal consolidation and monetary policy tightening are expected to continue.

On August 24, 2016, the IMF Board of Directors approved a three-year extended arrangement under the Extended Fund Facility (EFF) for Jordan to support the country’s economic and financial reform program. This program aims at advancing fiscal consolidation to lower public debt and broad structural reforms to enhance the conditions for more inclusive growth.

Moving forward, it will remain critical for Jordan to continue diversifying its energy supply in the medium term in order to reduce its macroeconomic vulnerabilities. Sound economic policies and growth-enhancing reforms will also be necessary to reduce the country’s sensitivity to external shocks. Finally, creating conditions for increased private investment and improved competitiveness will remain indispensable for Jordan to stimulate job-creating growth.

Last Updated: Apr 01, 2017

On July 14, 2016, the World Bank Board of Directors approved a new WBG Country Partnership Framework (CPF) for Jordan for FY2017-2022. The new CPF builds on the Systematic Country Diagnostic which was circulated to the Board in February 2016. 

The overarching objective of the CPF is to help Jordan renew its social contract and promote economic and social inclusion. The CPF promotes an ambitious agenda for growth, jobs and inclusion while helping Jordan  address the impact of the Syrian crisis, including through innovative financing tools. The WBG is deploying concessional resources to support Jordan’s Syrian Crisis Response through an exceptional US$100 million International Development Association (IDA) allocation and the recent establishment of the Global Concessional Financing Facility.

As of March 2017, the World Bank’s active portfolio in Jordan included 11 projects valued at US$758 million in loans and grants. These projects cover a number of key sectors, including municipal services, education, energy, water, environment, social services, access to finance, and the business environment.

In recent 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 reform driven, budget-supporting “Development Policy Financing (DPF)” (US$250 million each).

The Bank has recently supported the fiscal sustainability and efficiency of the energy and water sectors through two other “DPFs” (US$250 million each). 

The Bank 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 tensions, as well as in competition for jobs.

In the context of the Jordan Compact, the Bank developed a US$300 million, concessional Program-for-Results operation which promotes economic opportunities for Jordanians and Syrian refugees.

A complementary Emergency Services and Social Resilience Grant of US$65.9 million leverages grants from the United Kingdom, Canada, Denmark, Sweden, Switzerland, and the State and Peacebuilding Fund. This project is helping municipalities strengthen their service delivery capacity, support local economic development, and foster social cohesion in host communities.

Last Updated: Apr 01, 2017

- The First Programmatic Energy and Water Sectors Reform Development Policy Loan (DPL) supported substantial reforms to improve the fiscal sustainability and efficiency of the energy and water sectors, including through the diversification of fuel sources for environmentally friendly and sustainable power generation and optimizing water use. DPF-supported reforms have helped ensure that costs in these sectors are spread equitably, infrastructure systems are operated sustainably, and resources are managed efficiently.

- 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, roads network improvements, lighting in the streets, and easing rising community tensions.

- 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 percent of the project’s beneficiaries came from outside Amman, where unemployment and poverty rates are high. Women-owned enterprises represented 85 percent of the beneficiaries. Youth, who suffer from the highest unemployment rates, represented more than 45 percent.
 
- 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 percent to 98.1 percent, and 60.4 percent to 76.9 percent, respectively.

- 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.

Last Updated: Apr 01, 2017


LENDING

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

*Amounts include IBRD and IDA commitments