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Overview

  • Reform highlights 

    In 2019, Jordan pursued important structural reforms, introducing new regulations to govern aspects of financial transactions, such as insolvency, digital payments, and public procurement. In so doing, the country became one of the top 20 performers in the World Bank’s 2020 Doing Business report, which takes into account progress on making it easier for small- and medium-enterprises to operate. Jordan made progress as well getting a Public-Private Partnership (PPP) Law through its Lower House of Parliament and brought its National Electric Power Company (NEPCO) to a near break-even point. 

    Working with the World Bank and other development partners, Jordan has developed a Five-Year Reform Matrix to lay the foundations for more sustainable, inclusive growth that can deliver on agendas involving jobs, youth, and gender. These medium-term reforms aim to make the economy more efficient and reorient it toward export-led growth by creating a better business and investment environment.  

    Economic performance 

    The Jordanian economy continued to experience sluggish economic growth in 2019. Real GDP in three quarters of the year grew by 1.9%--at almost the same level as last year. While economic growth benefited from rising net exports, thanks to positive terms of trade, it was constrained by weak domestic demand. Economic growth was insufficient to alleviate pressures on the domestic labor market. As a result, unemployment continued to rise, reaching 19.1% in 2019 compared to 18.6% in 2018.  

    Looking ahead, the impact of COVID-19 on the global economy is likely to significantly further dampen Jordan’s near-term growth prospects. Gradual recovery over the medium-term could capitalize, however, on lower oil prices and a steady reform momentum. 

    At the fiscal level, slippages continued for the second consecutive year due to weak revenue mobilization and limited flexibility to curtail spending, particularly on the recurrent side. The overall fiscal deficit (including grants and the use of cash) of the central government stood at just under 5% of GDP, about 1.5% of GDP higher than during the same period in 2018. Weak fiscal performance, together with lackluster economic growth, resulted in elevated public debt-to-GDP levels, with central government debt reaching 99.1% of GDP in 2019.  

    For 2020, fiscal consolidation will continue to be challenging, given significant downside risks due to higher than anticipated health and social safety spending and any additional measures that will be required to boost the economy. On the positive side, in 2019 Jordan’s external sector imbalances narrowed significantly because of favorable terms of trade, largely due to a decline in international oil prices which have helped curtail the cost of imports. The current account deficit during 2019 declined by almost 60% to US$1.23 billion (2.8% of GDP) compared to US$2.97 billion (7% of GDP) during 2018.  

    The COVID-19 outbreak and recent plunge in the international price of oil are expected to have opposite effects on Jordan’s current account deficit, which is projected to widen in 2020 and to then moderate over the medium-term as the impact of COVID-19 dissipates but lower oil prices persist. The positive impact of lower international oil prices is expected to be countered, however, by less external demand and its spill-over effects on the domestic economy through a decline in exports, remittances, travel, and foreign investments. With financing conditions already challenging, new global developments intensify Jordan’s dependence on official flows of funds from multilateral and bilateral donors, particularly at a time when large Eurobond payments are due in 2020. 

    Last Updated: May 01, 2020

  • The World Bank’s Board of Directors approved a new Country Partnership Framework (CPF) for Jordan in 2016 to cover the period FY2017–2022. The CPF lays out an ambitious agenda for growth, jobs, and greater inclusion, while helping Jordan address the impact of the Syrian crisis in various ways, including through innovative financing tools.

    The World Bank Group has used concessional resources to support Jordan’s Syrian Crisis Response through an exceptional International Development Association (IDA) allocation of US$100 million and the establishment of the Global Concessional Financing Facility (GCFF). This facility has been used to help fund a number of the projects set up in Jordan since. 

    As of March 2020, the World Bank’s active portfolio in Jordan comprised 13 projects, valued at about US$3.2 billion in low interest loans, concessional financing, and grants. The projects span several key sectors. A US$300 million Program-for-Results operation promotes economic opportunities for Jordanians and Syrian refugees. A US$50 million Emergency Health Project supports Jordan in providing primary and secondary health services to poor, uninsured Jordanians, and to Syrian refugees. The US$200 million Jordan Education Reform Support Program expands access to early childhood education and improves conditions for Jordanian children and Syrian refugee children. And the US$500 million First Equitable Growth and Jobs Development Policy Financing (DPF) supports Jordan to promote inclusive economic growth, create more jobs, and expand the National Aid Fund cash transfer program to cover an additional 85,000 households.  

    In June 2019, the Bank’s Board of Directors approved the Jordan Second Equitable Growth and Jobs DPF for a total amount of US$1.45 billion to continue implementing policy reforms established under the first DPF to boost inclusive growth and job creation. A US$200 million Youth, Technology, and Jobs project was approved on March 20, 2020. The project will improve digitally enabled income opportunities for youth and expand digitized government services in Jordan.

    International Finance Corporation (IFC) 

    Jordan is the second-largest International Finance Corporation (IFC) investment portfolio in MENA, with a committed portfolio of US$925.3 million as of January 2020. The portfolio is made up of loans (76%), equity (14%), risk management (9%), and guarantee (1%). IFC’s strategy focuses on increasing private sector participation to support investments, jobs, and growth through direct investment, supporting PPPs, and supporting the implementation of key business climate reforms in line with the Five-Year Reform Matrix.  

    On the public-private partnership (PPP) side, IFC is working with the WB on the review of the institutional framework governing PPPs and with the Government of Jordan (GOJ) to establish the Jordan Project Pipeline Development Facility (PPDF) with a pipeline of ready-to-invest projects. IFC is also acting as a transaction advisor for the GOJ on two active mandates, the King Hussein Bridge and New Schools. The current investment pipeline covers the water sector; micro-, small, and medium enterprises (MSME) financing; and export-oriented manufacturing and services. 

    IFC is working with the GOJ to reform the credit infrastructure framework to improve access to finance for MSMEs and broaden financial inclusion. IFC assisted the Government in modernizing the insurance regime, introducing a framework to secure transactions with movable, non-possessory collateral, and enhancing the credit reporting framework through the establishment of a credit bureau. IFC is also acting as a transaction advisor on an additional active mandate, namely trade facilitation. This project will improve the efficiency of international trade procedures by enhancing trade facilitation practices and removing regulatory and administrative bottlenecks to cross-border trade, which should reduce the time and cost for Jordanian importers and exporters to move goods, leading to a significant decrease in trade transaction costs.  

    Other new projects include a national quality infrastructure project to support the increase of exports; mapping the investor’s journey to streamline and simplify the process of starting a business in Jordan; reforming the licensing regime and streamlining the construction permit process. IFC’s current investment pipeline covers the water sector, small- and medium-business financing, and export-oriented manufacturing and services.  

    Multilateral Investment Guarantee Agency (MIGA) 

    MIGA’s outstanding gross exposure in Jordan stood at US$587 million as of March 13, 2020. Jordan remains MIGA’s largest exposure in the Mashreq region, and MIGA-supported projects in Jordan include gas and solar power, wastewater treatment, an airport, and bromine manufacturing. 

    Last Updated: May 01, 2020

    • Improved Municipal Service Delivery   

    The Emergency Services and Social Resilience Project helped 16 municipalities respond to the increased demand for municipal services since the arrival of the first wave of Syrian refugees in 2011. The project has funded goods, municipal works, and basic services, leading to an easing of community tensions. It has reached more than two million Jordanians and close to 250,000 Syrian refugees, of which at least 45% are women. These include solid waste collection, the rehabilitation of basic infrastructure, the improvement of road networks, and street lighting.   

    • Education Reform  

    The Second Education Reform for Knowledge Economy Project has covered many aspects of education, including the expansion of quality kindergartens and highly innovative, alternative childcare. A system was created allowing the Ministry of Education to publish its 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 percent and 60.4% to 76.9%, respectively. The Education Reform Support Program is building on the Second Education Reform for Knowledge Economy Project by expanding access to early childhood education, as well as improving student assessment, teaching, and learning conditions for Jordanian children and Syrian refugee children. 

    • Maintaining Health Services in Jordan 

    The Emergency Health Project is a results-based project that aims to maintain and deliver health care services at primary and secondary health care facilities of the Ministry of Health, in addition to improving the efficiency of health services through capacity building. Uninsured Jordanians and registered Syrian refugees will benefit from health services provided in the health care facilities. A total of one million people will receive essential health, nutrition, and population services through this project. 

    • Jobs for Women and the Youth  

    The Micro, Small and Medium Enterprise Development for Inclusive Growth project helped create over 2,000 private sector jobs for the most disadvantaged women and youth; 62% of the beneficiaries came from outside Amman, where unemployment and poverty rates are high. Women-owned enterprises comprised 85% of the beneficiaries; and youth, who suffer the highest unemployment rates, form more than 45% of the beneficiaries.  

    • Access to Legal Advice   

    The Access to Justice Project provided improved legal services to vulnerable communities, including poor Jordanians, as well as Iraqi, Palestinian, and Syrian refugees. The project was implemented by the Justice Center for Legal Aid, 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: May 01, 2020

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LENDING

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

*Amounts include IBRD and IDA commitments


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