Overview

  • In 2019, Jordan pursued important structural reforms, introducing new regulations to govern aspects of financial transactions, such as insolvency, digital payments, and public procurement, and in so doing, becoming one of the top 20 performers in the World Bank’s 2020 Doing Business report, which takes into account a country’s progress on making it easier for small- and medium-enterprises to operate.  

    In collaboration with the World Bank and other development partners, it has also 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. 

    Jordan still faces external regional challenges, however, with the crises in neighboring Syria and Iraq causing influxes of refugees, greater health and education costs, and disruption to its trade routes. Regional uncertainty and reduced external assistance will continue to put pressure on Jordan in the short- and medium-term. Real GDP growth was 1.9 percent in 2018, marginally lower than in 2017, and stood at 1.8 percent during the second quarter of 2019, compared to 2.1 percent for the same period last year. Prolonged weak economic growth is reflected in elevated unemployment indicators and a declining labor force participation rate. The unemployment rate edged up in the second quarter of 2019, reaching 19.2 percent, compared to 18.7 percent in the same quarter in 2018. Unemployment patterns consistently show high unemployment among females, youth, and university graduates. 

    In terms of fiscal performance, according to estimates for January–July 2019, consolidation continues to be challenging due to slippage on the domestic revenue side and limited flexibility to curtail spending. For this period, data puts the fiscal deficit (excluding grants) at 2.8 percent of GDP, higher than for the same periods in 2018 and 2017 when it stood at 2.7 percent and 2.3 percent respectively. The January–July 2019 deficit is 70 percent of the budgeted target deficit of 4.0 percent of GDP for 2019.

    Jordan’s balance of payments is showing significant improvement because of favorable terms of trade, which have helped curtail the cost of imports, largely due to a decline in international oil prices. Export growth is showing moderate pick-up; tourism receipts remain robust, but FDI flows remain stagnant, which remain a concern. The stability of Jordan’s economy relies on its access to international markets and the realization of the multilateral and bilateral commitments made to support it.

    Last Updated: Oct 01, 2019

  • The World Bank’s Board of Directors approved a new Country Partnership Framework (CPF) for Jordan in 2016 to cover the period FY2017–2022. This 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 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 September 2019, the World Bank’s active portfolio in Jordan comprised 10 projects valued at US$2.9 billion in grants, concessional financing, and low interest loans. The projects function in 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 improve conditions for Jordanian children and Syrian refugee children. And the US$500 million First Equitable Growth & 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 $1.45bn. The operation will continue to deepen the policy reforms established under the first DPF to boost inclusive growth and job creation. 

    International Finance Corporation (IFC)

    Jordan is the second-largest investment portfolio in MENA for the IFC, with a strong focus on infrastructure and manufacturing and a committed portfolio of US$899 million as of June 30, 2019. IFC’s strategy focuses on increasing private sector participation to support investments, jobs, and growth through direct investment; supporting Public–Private Partnerships (PPPs); and leading key business climate reforms, in line with Jordan’s 5-year reform plan. IFC is working with the World Bank on the review of the institutional framework governing PPPs, with a view to addressing inefficiencies in the law. Jordan has signed an MoU to establish the Jordan Project Pipeline Development Facility; IFC will provide capacity- building for the PPP unit in it; carry out pre-feasibility studies to selected PPP infrastructure projects; move projects to tendering; and fund PPP transaction advisory work until a tender is awarded. 

    IFC is acting as transaction advisor on two other active mandates, namely the King Hussein Bridge and the New Schools. Other new projects include a national quality infrastructure project to support the increase of exports; and 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 from six projects in Jordan stood at about US$622 million as of June 30, 2019. Jordan represents MIGA’s largest exposure in the Mashreq region; it has also insured a Jordanian-sponsored project in Iraq involving port logistics, for US$8 million. MIGA’s support for foreign private investors sends a strong signal that Jordan remains a viable investment destination. 

    Last Updated: Oct 01, 2019

  • Improved Municipal Service Delivery  

    The Emergency Services and Social Resilience Project helped 16 municipalities respond to the increased demand for services since the arrival of Syrian refugees. The project funded goods, municipal works, and basic services, easing community tensions and reaching more than 2 million Jordanians and close to 250,000 Syrian refugees, of which at least 45% were women. These included 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 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 percent to 98.1 percent, and 60.4 percent to 76.9 percent, respectively. 

    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 percent of the beneficiaries came from outside Amman, where unemployment and poverty rates are high. Women-owned enterprises comprised 85 percent of the beneficiaries; youth, who suffer the highest unemployment rates, more than 45 percent 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. 

    Maintaining Population Access to Basic Services  

    After the start of the Syrian crisis, the World Bank moved quickly to help Jordan cope with a massive influx of refugees. In 2013, a US$150 million project was launched to help both Syrian refugees and those Jordanians most affected by the influx maintain their access to essential healthcare and provide them basic household needs. This project reached 2.5 million beneficiaries.  

    Last Updated: Oct 01, 2019

Api


LENDING

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

*Amounts include IBRD and IDA commitments


PHOTO GALLERY

More Photos Arrow

In Depth

Oct 09, 2019

MENA Economic Update: Reaching New Heights: Promoting Fair Competition in the ...

GDP growth is projected to be 0.6% in the region in 2019, a fraction of what is needed to create enough jobs for the fast-growing working-age population in the Middle East and North Africa region.

Apr 01, 2019

MENA Economic Update: Reforms and External Imbalances: The Labor-Productivity ...

World Bank economists expect economic growth in the Middle East and North Africa (MENA) to continue at a modest pace of about 1.5 to 3.5 percent during 2019-2021, with some laggards and a few emerging growth stars.

Feb 06, 2019

The Mobility of Displaced Syrians: An Economic and Social Analysis

This report identifies key factors weighing on Syrian refugees contemplating a return home and analyzes how changing conditions in Syria might affect their decisions.

Additional Resources