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, in 2015, 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.

After four years of steady recovery, Jordan’s economy slowed down in 2015 for the first time since 2010, largely due to the effects of security spillovers from the regional crises. Real GDP growth was at 2.4% in 2015, compared to 3.1% in 2014. Going forward, real GDP growth is forecast to rebound slightly to 3% in 2016, reflecting additional investment projects in the medium term. A deflationary environment persisted in 2015, amidst expansionary monetary policy and tight fiscal policy.

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: Oct 01, 2016

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 to 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 $100million International Development Association (IDA) allocation and the recent establishment of the Concessional Financing Facility.

As of September 2016, the World Bank’s active portfolio in Jordan included 19 projects valued at US$516 million in loans and grants. These projects cover a number of key sectors, including municipal services, education, energy, water, environment, public sector governance, public administration, social services, access to finance, and the business environment.

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 reform driven, budget supporting “Development Policy Loans” (US$250 million each). The Bank has also recently supported the fiscal sustainability and efficiency of the energy and water sectors through a new multi-year “Programmatic Development Policy Loan” (first $250 operation presented to the Board in July 2015; follow on operation 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, Denmark, 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: Oct 01, 2016

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. DPL-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, improvements to the roads network, lighting in the streets, and addressing 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% 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 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: Oct 01, 2016


LENDING

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

*Amounts include IBRD and IDA commitments