W O R L D B A N K O P E R A T I O N S E V A L U A T I O N D E P A R T M E N T I S L A M I C D E V E L O P M E N T B A N K O P E R A T I O N S E V A L U A T I O N O F F I C E THE WORLD BANK THE ISLAMIC DEVELOPMENT BANK Jordan Supporting Stable Development in a Challenging Region A Joint World Bank­Islamic Development Bank Evaluation OED PUBLICATIONS Study Series 2002 Annual Review of Development Effectiveness--Achieving Development Outcomes: The Millennium Challenge Agricultural Extension: The Kenya Experience Agricultural Extension and Research: Achievements and Problems in National Systems Assisting Russia's Transition: An unprecedented Challenge Bangladesh: Progress Through Partnership Bridging Troubled Waters: Assessing the World Bank Water Resources Strategy Debt Relief for the Poorest: An OED Review of the HIPC Initiative Developing Towns and Cities: Lessons from Brazil and the Philippines The Drive to Partnership: Aid Coordination and the World Bank Financial Sector Reform: A Review of World Bank Assistance Financing the Global Benefits of Forests: The Bank's GEF Portfolio and the 1991 Forest Strategy and Its Implementation Fiscal Management in Adjustment Lending IDA's Partnership for Poverty Reduction India: The Challenges of Development India: The Dairy Revolution Information Infrastructure: The World Bank Group's Experience Investing in Health: Development Effectiveness in the Health, Nutrition, and Population Sector Lesotho: Development in a Challenging Environment Mainstreaming Gender in World Bank Lending: An Update The Next Ascent: An Evaluation of the Aga Khan Rural Support Program, Pakistan Nongovernmental Organizations in World Bank­Supported Projects: A Review Paddy Irrigation and Water Management in Southeast Asia Poland Country Assistance Review: Partnership in a Transition Economy Poverty Reduction in the 1990s: An Evaluation of Strategy and Performance Promoting Environmental Sustainability in Development Reforming Agriculture: The World Bank Goes to Market Social Funds: Assessing Effectiveness Uganda: Policy, Participation, People The World Bank's Experience with Post-Conflict Reconstruction The World Bank's Forest Strategy: Striking the Right Balance Zambia Country Assistance Review: Turning an Economy Around Evaluation Country Case Series Bosnia and Herzegovina: Post-Conflict Reconstruction Brazil: Forests in the Balance: Challenges of Conservation with Development Cameroon: Forest Sector Development in a Difficult Political Economy China: From Afforestation to Poverty Alleviation and Natural Forest Management Costa Rica: Forest Strategy and the Evolution of Land Use El Salvador: Post-Conflict Reconstruction India: Alleviating Poverty through Forest Development Indonesia: The Challenges of World Bank Involvement in Forests Uganda: Post-Conflict Reconstruction Proceedings Global Public Policies and Programs: Implications for Financing and Evaluation Lessons of Fiscal Adjustment Lesson from Urban Transport Evaluating the Gender Impact of World Bank Assistance Evaluation and Development: The Institutional Dimension (Transaction Publishers) Evaluation and Poverty Reduction Monitoring & Evaluation Capacity Development in Africa Public Sector Performance--The Critical Role of Evaluation Multilingual Editions Allègement de la dette pour les plus pauvres : Examen OED de l'initiative PPTE Appréciation de l'efficacité du développement : L'évaluation à la Banque mondiale et à la Société financière internationale Determinar la eficacia de las actividades de desarrollo : La evaluación en el Banco Mundial y la Corporación Financiera Internacional Côte d'Ivoire : Revue de l'aide de la Banque mondiale au pays Filipinas: Crisis y oportunidades Reconstruir a Economia de Moçambique : http://www.worldbank.org/oed W O R L D B A N K O P E R A T I O N S E V A L U A T I O N D E P A R T M E N T ISLAMIC DEVELOPMENT BANK OPERATIONS EVALUATION OFFICE Jordan Supporting Stable Development in a Challenging Region A Joint World Bank­Islamic Development Bank Evaluation Fareed M.A. Hassan Djelloul Al-Saci 2004 The World Bank Washington, D.C. http://www.worldbank.org/oed Islamic Development Bank http://www.isdb.org/ Jeddah, Saudi Arabia © 2004 The International Bank for Reconstruction and Development / The World Bank 1818 H Street, NW Washington, DC 20433 All rights reserved. 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Jordan--Social conditions. I. World Bank. II. Islamic Development Bank. III. Title. IV. World Bank operations evaluation study HC415.26.H385 2004 338.95695--dc22 2004047783 Printed on Recycled Paper Contents vii Acknowledgments ix Foreword, Prólogo, Avant-propos xiii Executive Summary, Résumen, Résumé Analytique xxi Abbreviations and Acronyms 1 1 Jordan's Socioeconomic Development 1 Geopolitical Situation 2 Economic Developments in the 1990s 2 Poverty and Social Conditions 3 External Debt and Assistance 7 2 Development Priorities and Constraints 7 Accelerating Broadly Shared Economic Growth to Reduce Poverty: A Top Priority 7 Large and Inefficient Government Expenditures 8 Water is Scarce and Inefficiently Used 8 Human Capital Development: A Parallel Priority to Growth 11 3 World Bank Services and Products 11 Nonlending Assistance 14 Lending 18 Efficiency of World Bank Assistance 19 4 The Development Effectiveness of World Bank Assistance 19 Macroeconomic Stabilization and Growth 20 Private and Financial Sector Development and Privatization 21 Poverty Reduction, Human Development, and Progress toward the MDGs 23 Water Resource Management 24 Sustainability and Institutional Development i i i J O R D A N : S U P P O R T I N G S TA B L E D E V E L O P M E N T I N A C H A L L E N G I N G R E G I O N 27 5 Contributors' Performance 27 World Bank Performance 28 Borrower Performance 29 Aid Partner Performance Issues 31 6 Islamic Development Bank Assistance to Jordan 31 IDB Assistance Strategy for Jordan 33 Overview of IDB Operations in Jordan, 1976­02 37 Project Post-evaluation in Jordan 39 7 Islamic Development Bank Sector Analysis 39 Overview 39 Industry and Mining 41 Public Utilities 43 Social Services 47 8 Conclusions, Recommendations, and Lessons 47 World Bank Findings 48 Islamic Development Bank Findings Annexes 51 The World Bank 53 A: Jordan at a Glance 55 B: Key Background Data 73 C: External Assistance to Jordan and Comparator Countries 77 D: Selected Economic and Sector Work for Jordan 79 E: OED and QAG Ratings for Jordan and Comparator Countries 85 F: Cost of World Bank's Programs for Jordan and Comparator Countries 87 G: Jordan: World Bank's Senior Management, 1991­01 89 H: Guide to OED's Country Assistance Evaluation Methodology 93 I: List of People Met on Mission in Jordan and Saudi Arabia (Islamic Development Bank) and World Bank and International Monetary Fund (IMF) Staff Interviewed 97 J: List of Water Measures and Policy Reforms Undertaken by the Government of Jordan and the Ministry of Water and Irrigation to Enhance the Water Sector and Ensure Financial Viability in Accordance with the Ministry Plans and Donors' Requirements 101 K: Comments from the Government of Jordan 105 L: Management Action Record 107 The Islamic Development Bank 109 M: IDB List of Organizations and Individuals Met 113 N: Summary of IDB Project Portfolio for Ordinary Operations in Jordan 119 O: Summary of IDB Post-Evaluated Projects in Jordan, 1991­02 121 Endnotes 125 Bibliography Boxes 12 3.1: World Bank Strategies 22 4.1: Jordan: Millennium Development Goals 24 4.2: Jordan's Water Strategy and Policies i v C O N T E N T S Figures 4 1.1: Gross Primary Enrollment 4 1.2: Illiteracy 5 1.3: Infant Mortality 8 2.1: Jordan: Government Expenditures Composition as Percentage of GDP 15 3.1: World Bank Commitments, Net Disbursements, and Net Transfers 20 4.1: Public and Private Investment 20 4.2: Real GDP and Per Capita GDP 35 6.1: Sectoral Distribution of IDB Approved Projects, 1976­02 36 6.2: IDB Projects Approved by Mode of Financing, 1976­02 37 6.3: Current Status of IDB Project Portfolio for Jordan by end-2002 Tables 2 1.1: Poverty Trends in Jordan, 1987­01 5 1.2: Selected Human Development Indicators in Jordan and Comparator Countries 6 1.3: Jordan: Net Receipts of External Financial Resources, 1990­99 15 3.1: Sectoral Distribution of World Bank Commitments, FY62­01 18 3.2: OED Evaluation Findings of Recently Evaluated Projects, Exit FY90s 33 6.1: Proposed and Actual Realization of CASS Three-Year Work Program, 1995­97 34 6.2: Total Approvals by the IDB for Jordan, 1976­02 34 6.3: Sectoral Distribution of IDB Approved Projects, 1976­02 35 6.4: IDB Projects Approved by Mode of Financing, 1976­02 36 6.5: Current Status of IDB Project Portfolio for Jordan by end-2002 37 6.6: Overall IDB Disbursement Profile for Jordan as of December 31, 2002 38 6.7: Projects Cofinanced by the IDB with the World Bank and Other International Financing Institutions, 1976­02 40 7.1: Projects Approved by the IDB for Jordan in the Industry and Mining Sector, 1976­02 42 7.2: Projects Approved by the IDB for Jordan in the Water Resources Subsector, 1976­02 42 7.3: Projects Approved by the IDB for Jordan in the Energy Subsector, 1976­02 43 7.4: Projects Approved by the IDB for Jordan in the Education Subsector, 1976­02 44 7.5: Projects Approved by the IDB for Jordan in the Health Subsector, 1976­02 45 7.6: Projects Approved by the IDB for Jordan in the Microfinance Subsector, 1976­02 v Acknowledgments T his report was prepared by a team under The report has benefited from helpful and the guidance of Fareed M.A. Hassan constructive suggestions from numerous people. (Senior Evaluation Officer, the Opera- Special thanks are due Ridley Nelson, Shan- tions Evaluation Department, the World Bank) tayanan Devarajan, and Michael Lav, together and Djelloul Al-Saci (Head, the Operations Eval- with former and current staff of the Jordan coun- uation Office, the Islamic Development Bank). try team, in particular, Joseph Saba, Osman Ashok Khanna and Jack W. van Holst Pellekaan Ahmed, George Schieber, Regina Bendokat, Mae (consultants), George T. Keith Pitman (OEDST), Chu Chang, Ayesha Vawda, Domin Chung, Rad- and S. Ramachandran and Dinara Seijaporva wan Shaban, Dipak Dasgputa, T.G. Srinivsan, (OEDCR) contributed key background papers. Carlos Silva-Jauregui, and Paolo Zacchia, for Members of the IDB team were Muinul Hasan their cooperation at all stages of the evaluation. and Salem Sassi. Robert Buckley, Laurie Effron, and Jorge Garcia- The evaluation partnership was launched in Garcia served as peer reviewers for the report. July 2001 under the guidance of Robert Pic- Caroline McEuen edited the report. Pierre-Joseph ciotto, then Director-General of Operations Eval- Kirgbo assisted with translation. Gonzalo Salinas uation at the World Bank, and Ruben Lamdany, provided statistical analysis. Janice Joshi and then OED Country Evaluation and Regional Agnes Santos provided administrative support. Relations (OEDCR) Manager at the World Bank, Special thanks are due to the officials of the and Bader Eddine Nouioua, Adviser, Operations Government of the Hashemite Kingdom of Jor- Evaluation and Audit, IDB, and Mohamed dan for their valuable assistance and comments Samater, former Head of OEO. Gregory Ingram, and to the civil society and donor representatives the current Director-General, and Kyle Peters, interviewed in the country. The country evalu- Senior Manager, OEDCR, provided overall guid- ation also benefited significantly from the assis- ance to the team, with substantial input into the tance and inputs of the respective World Bank, formulation of the report. IDB, and IMF staff. Director-General, Operations Evaluation: Gregory K. Ingram Director, Operations Evaluation Department: Ajay Chhibber Senior Manager, Country Evaluation and Regional Relations: R. Kyle Peters Adviser, Operations Evaluation and Audit, IDB: Bader Eddine Nouioua Head, Operations Evaluation Office, IDB: Djelloul Al-Saci Task Managers: Fareed M.A.Hassan and Djelloul Al-Saci v i i F O R E W O R D Foreword Prólogo Avant-propos ~NOL A ENGLISH ESP FRANÇAIS This is the first time that the Esta es la primera vez que el C'est la première fois que le Operations Evaluation Department Departamento de Evaluación de Ope- Département de l'évaluation des opé- (OED) of the World Bank and the raciones (DEO) del Banco Mundial y rations (OED) de la Banque mondiale Operations Evaluation Office (OEO) la Oficina de Evaluación de Operacio- et le Bureau de l'évaluation des opé- of the Islamic Development Bank nes (OEO) del Banco Islámico de rations (OEO) de la Banque islamique (IDB) have collaborated in evaluating Desarrollo (BIsD) han colaborado en de développement (BIsD) collaborent their assistance program in any coun- la evaluación de su programa de asis- pour évaluer leur programme d'aide try. The two institutions carried out a tencia a un país. Ambas instituciones dans un pays. Les deux institutions joint assessment of Jordan's eco- realizaron una evaluación conjunta ont effectué une évaluation conjointe nomic and social development since del desarrollo económico y social de du développement économique et 1990 and the challenges facing the Jordania desde 1990 y de los desafíos social de la Jordanie depuis 1990 et country. The assessment of each que el país tiene ante sí. La evalua- analysé les grands problèmes qui se institution's assistance program was ción del programa de asistencia de posent au pays. L'évaluation du pro- prepared in parallel, but coverage cada institución se llevó a cabo en gramme d'assistance de chacune des and method differ, and, therefore, the forma paralela, aunque con cobertura institutions a été conduite en paral- evaluation results are not always y métodos diferentes, razón por la lèle, mais le champ couvert et la comparable. cual los resultados de las evalua- méthode diffèrent, de sorte que les This Country Assistance Evaluation ciones no siempre son comparables. résultats ne sont pas toujours (CAE) looks at the effectiveness of World En la presente evaluación de la asis- comparables. Bank assistance during the 1990s from tencia al país se examina la efectividad Cette évaluation de l'aide à la Jor- three perspectives: an analysis of the de la asistencia del Banco Mundial danie a pour but de juger de l'efficacité Bank's services and products, develop- durante el decenio de 1990 desde tres de l'assistance de la Banque mondiale ment effectiveness, and the contribution perspectivas: un análisis de los servicios pendant les années 90 sous trois angles : of the Bank and its development part- y productos del Banco, la efectividad en l'analyse des services et des produits de ners to development outcomes. The términos de desarrollo y la contribución la Banque, l'efficacité des actions de evaluation builds on background stud- del Banco y sus asociados en el desarro- développement et la contribution de la ies prepared by OED staff and draws on llo en relación con los efectos directos Banque et de ses partenaires aux réali- internal World Bank reports and inter- en el desarrollo. La evaluación, que se sations sur le plan du développement. views with government officials, Bank basa en los estudios de antecedentes Les auteurs de l'évaluation s'appuient staff, donors, nongovernmental organ- preparados por el personal del DEO, sur les documents de référence pré- izations (NGOs), and civil society. The tiene en cuenta también los informes parés par les services de l'OED et tient background papers are available on internos del Banco Mundial y las entre- compte des rapports internes de la request. A joint OED­OEO mission vis- vistas con funcionarios de gobierno, Banque mondiale et de ses entretiens ited Jordan in October 2002. The visit personal del Banco, donantes, orga- avec les autorités jordaniennes, les was facilitated by arrangements made by nizaciones no gubernamentales (ONG) agents de la Banque, les bailleurs de staff of the Jordanian Ministry of Plan- y la sociedad civil. Los interesados fonds, les organisations non gouverne- ning and the IDB. Annexes I and M pueden solicitar los documentos de mentales (ONG) et la société civile. Les contain a list of people met. Their coop- antecedentes respectivos. Una misión documents de référence sont disponi- eration and assistance is gratefully conjunta DEO-OEO viajó a Jordania en bles sur demande. Une mission con- acknowledged. octubre de 2002. La visita fue facilitada jointe OED­OEO s'est rendue en The report is organized as follows: gracias a las gestiones de funcionarios Jordanie en octobre 2002. Les disposi- i x J O R D A N : S U P P O R T I N G S TA B L E D E V E L O P M E N T I N A C H A L L E N G I N G R E G I O N Chapter 1 assesses Jordan's eco- del Ministerio de Planificación tions prises par le ministère jor- nomic and social development. de Jordania y del BIsD. En los danien du Plan et les services de Chapter 2 identifies the main Anexos I y M figura una lista de la BIsD ont facilité le travail de ~ development priorities and con- NOL las personas entrevistadas. Se la mission. Les annexes I et M A straints facing Jordan. These two reconocen con aprecio la coo- donnent la liste des personnes chapters are common to the peración y la asistencia que rencontrées. Leur coopération ENGLISH ESP evaluation reports of both the brindaron. FRANÇAIS et l'aide qu'elles ont apportée World Bank and the IDB. The El informe se organiza del ont été extrêmement appréciées. subsequent chapters examine the effec- siguiente modo. En el Capítulo 1 se Ce rapport est réparti en huit chapi- tiveness of World Bank assistance in evalúa el desarrollo económico y social tres : le premier évalue le développe- addressing these challenges from the de Jordania. En el Capítulo 2 se identi- ment économique et social de la three perspectives mentioned above fican las principales prioridades y con- Jordanie, et le deuxième identifie les (Annex H summarizes OED's CAE dicionamientos de desarrollo que tiene principales priorités de développement methodology). Chapter 6 details the ante sí Jordania. Ambos capítulos son du pays et les contraintes auxquelles il IDB's assistance to Jordan, and Chapter comunes a los informes de evaluación se heurte. Ces deux chapitres se re- 7 follows with a sector analysis of that del Banco Mundial y del BIsD. En los trouvent dans les rapports d'évaluation aid. The last chapter presents the con- capítulos subsiguientes se examina la respectifs de la Banque mondiale et de clusions and recommendations of both efectividad de la asistencia del Banco la BIsD. Les chapitres 3 et 5 examinent the World Bank and the IDB. Mundial para abordar estos desafíos l'efficacité de la Banque mondiale dans The assistance of peer reviewers in desde las tres perspectivas antes men- l'action engagée pour s'attaquer à ces providing detailed comments on an ear- cionadas (en el Anexo H se resume la problèmes sous les trois angles sus- lier draft is gratefully acknowledged. metodología de las evaluaciones de mentionnés (l'annexe H donne une des- Those, as well as other comments asistencia a los países aplicada por el cription succincte de la méthodologie received during OED's management DEO). En el Capítulo 6 se detalla la utilisée par l'OED pour son évaluation). review meeting, have been taken into asistencia del BIsD a Jordania y en el Le chapitre 6 détaille l'assistance account in the evaluation. Comments Capítulo 7 se hace un análisis sectorial apportée par la BIsD à la Jordanie, et from the Regional staff have also been de esa asistencia. En el último capítulo le chapitre 7 présente une analyse sec- reflected in the report. The Jordanian se exponen las conclusiones y reco- torielle de cette aide. Les conclusions et Minister of Planning's responses to an mendaciones tanto del Banco Mundial recommandations de la Banque mon- earlier draft prepared by OED (Annex como del BIsD. diale et de la BIsD font l'objet du der- K) and to CAE background papers have Se agradecen las observaciones deta- nier chapitre. been incorporated, where appropriate, lladas de los expertos evaluadores de Les observations détaillées formu- in the main text of the report, or in una versión preliminar del informe. lées par les pairs à la suite de l'examen notes attributed to the Minister. The Durante la evaluación se tuvieron en d'une version antérieure de ce rapport comments made by the Minister on the cuenta esas observaciones, así como ont été extrêmement appréciées. Il a été draft report prepared by OEO have los comentarios recibidos durante la tenu compte, dans l'évaluation, de ces been duly incorporated in the final IDB reunión de examen por los directivos observations ainsi que des autres com- report. del DEO. También se han reflejado en mentaires reçus lors de la réunion el informe las observaciones del perso- d'examen de la direction de l'OED. Le nal de la Oficina Regional. Las res- rapport a également tenu compte des puestas del Ministro de Planificación observations émanant des services de la de Jordania en relación con una versión Région. Les réponses données par le preliminar del informe preparado por el ministre jordanien du Plan concernant DEO (Anexo K) y con los documentos un avant-projet du rapport établi par de antecedentes de la evaluación de l'OED (annexe K) et les documents de asistencia al país se han incorporado, référence préparés pour cette évaluation según el caso, en el texto principal del ont été incorporées lorsqu'il y avait lieu informe o en notas atribuidas al dans le corps du rapport ou dans des x F O R E W O R D Ministro. Los comentarios for- notes attribuées au ministre. Les mulados por el Ministro sobre observations formulées par la versión preliminar del informe celui-ci au sujet du projet de ~NOL preparado por el DEO se han rapport établi par l'OED ont été A incorporado debidamente en el dûment incorporées dans le rap- informe final del BIsD. port de la BIsD. ESP FRANÇAIS Gregory K. Ingram Director-General Operations Evaluation The World Bank Group x i E X E C U T I V E S U M M A R Y Executive Resumen Résumé Summary analytique ~NOL A ENGLISH ESP FRANÇAIS This Country Assistance Eval- Esta evaluación de la asisten- L'évaluation de l'aide à la Jor- uation was prepared in collaboration cia a Jordania se preparó en cola- danie a été effectuée en collaboration with the Islamic Development Bank. boración con el Banco Islámico de avec la Banque islamique de déve- Jordan's socioeconomic development Desarrollo (BisD). El desarrollo loppement. Le développement socio- in the 1990s and the challenges fac- socioeconómico de Jordania en el économique du pays dans les années ing the country were assessed jointly; decenio de 1990 y los desafíos que 90 et les problèmes auxquels il est each institution's assistance program afronta el país se evaluaron en forma confronté ont fait l'objet d'une éva- was evaluated in parallel. conjunta; en cambio, el programa de luation conjointe ; le programme de Jordan, a small lower-middle-income asistencia de cada institución se exa- chacune des institutions a été évalué country, figures prominently in the minó en forma paralela. en parallèle. geopolitics of the Middle East. Its open Jordania, un pequeño país de ingreso Petit pays à revenu intermédiaire economy is based on few natural mediano bajo, ocupa un lugar promi- (tranche inférieure), la Jordanie occupe resources: only 6 percent of Jordan's nente en la geopolítica de Oriente Medio. une place importante dans la géopoli- land is arable and water availability Su economía abierta se basa en un tique du Moyen-Orient. Son économie ranks among the world's lowest, but número reducido de recursos naturales: ouverte est fondée sur des ressources mineral resources are significant (mainly sólo el 6% de la tierra de Jordania es naturelles limitées: les terres arables potash and phosphate). This weak eco- arable y la disponibilidad de agua es représentent seulement 6 % de la super- nomic base is supplemented by large, una de las más bajas del mundo, pero ficie du pays et ses ressources en eau though volatile, remittances from the sus recursos minerales son importantes sont parmi les plus faibles au monde, one-third of the labor force that works (principalmente potasa y fosfato). Esta cependant les ressources minières du in the Gulf countries. Half of Jordan's exigua dotación económica se comple- pays sont importantes (potasse et phos- exports and a quarter of its imports are menta con una cuantía elevada --aunque phate pour l'essentiel). Cette faible assise with its neighbors. This ties its fortunes inestable-- de remesas recibidas del économique est toutefois complétée par firmly to those of the region, which has tercio de la fuerza laboral que trabaja en les envois de fonds importants, mais très been beset by prolonged turmoil that los países del Golfo. La mitad de las fluctuants, des Jordaniens expatriés, qui has had a direct impact on Jordan's exportaciones de Jordania se destina a représentent un tiers de la main-d'oeuvre economy. The economy barely grew sus países vecinos y el país recibe una employée par les pays du Golfe. La at the rate of its population growth rate cuarta parte de sus importaciones de moitié des exportations de la Jordanie et during the 1990s, resulting in stagnant estos mismos países. Por este motivo, su le quart de ses importations s'effectuent real per capita incomes. situación está estrechamente vinculada avec les pays voisins. La richesse du The World Bank's estimate of Jor- con la de toda la región, que se ha visto pays est donc étroitement liée à celle de dan's incidence of poverty increased perjudicada por una prolongada agita- la région, mais celle-ci est en proie à un from 3 percent in 1987 to 12 percent in ción que ha incidido de manera directa conflit interminable qui a un impact 1997--a result of the loss of income en la economía de Jordania. La econo- direct sur l'économie de la Jordanie. Le and employment caused by the 1991 mía apenas se expandió a la par de su taux de croissance économique du pays Gulf War--but it has leveled off in the tasa de crecimiento demográfico durante a tout juste suivi celui de la population past four years. However, there is con- el decenio de 1990, y ello se tradujo en pendant les années 90, de sorte que le troversy about the poverty incidence. un estancamiento de los ingresos reales revenu par habitant a stagné en valeur Many Jordanian analysts, using various per cápita. réelle. poverty lines and surveys, estimate La estimación del Banco Mundial res- D'après les estimations de la Banque poverty to be much higher than World pecto de la incidencia de la pobreza en mondiale, l'incidence de la pauvreté Bank estimates. Health and education Jordania aumentó del 3% en 1987 al 12% dans le pays est passée de 3 % en 1987 x i i i J O R D A N : S U P P O R T I N G S TA B L E D E V E L O P M E N T I N A C H A L L E N G I N G R E G I O N indicators in Jordan compare en 1997 --como resultado de à 12 % en 1997 -- à cause de la favorably with those in other las pérdidas de ingresos y pues- baisse des revenus et de l'emploi countries in the region at the tos de trabajo causadas por la suite à la guerre du Golfe de ~ same income level; challenges NOL Guerra del Golfo de 1991--, 1991 --, mais elle s'est stabilisée A relate to improving efficiency pero se ha estabilizado en los durant les quatre dernières an- and quality of services. Other últimos cuatro años. Sin nées. Selon beaucoup d'analystes ENGLISH ESP challenges are accelerating embargo, hay controversia en FRANÇAIS jordaniens, qui se fondent sur growth and alleviating poverty, cuanto a la incidencia de la divers seuils de pauvreté et reducing public spending and improv- pobreza. Muchos analistas jordanos, diverses enquêtes, la pauvreté est nette- ing its efficiency, and enhancing the usando diversas encuestas y umbrales de ment plus importante que ce que ne management of scarce water resources. pobreza, estiman que ésta es mucho laissent entrevoir les estimations de la Donor assistance to address these chal- más elevada que las estimaciones del Banque mondiale. Les indicateurs de lenges is higher on a per capita basis Banco Mundial. Los indicadores de salud santé et d'éducation soutiennent avanta- than the regional average. y educación de Jordania se comparan geusement la comparaison avec ceux The World Bank's strategy since favorablemente con los de otros países des autres pays de la région qui ont un 1990, based on wide-ranging and influ- de la región de igual nivel de ingreso; los niveau de revenu identique ; encore ential analytic and advisory activities, problemas se vinculan con el mejora- faudrait-il améliorer l'efficacité et la was to support macroeconomic stabi- miento de la eficiencia y la calidad de los qualité des services. Les autres défis que lization and pro-market structural servicios. Otros desafíos se cifran en ace- doit relever la Jordanie consistent à accé- reforms to foster growth. The increased lerar el crecimiento y aliviar la pobreza, lérer la croissance et atténuer la pauvreté, focus on the social sectors was aligned reducir el gasto público y mejorar su réduire les dépenses publiques et amé- with the Millennium Development Goals eficiencia y realzar la ordenación de los liorer l'efficacité de ces dépenses, enfin (MDGs). The strategy was relevant to limitados recursos hídricos del país. La adopter une gestion plus rationnelle des the government's priorities, outlined in asistencia de los donantes para abordar maigres ressources en eau du pays. Ra- a series of five-year economic and social estos problemas es más elevada, per menée au nombre d'habitants, l'as- development plans. cápita, que el promedio regional. sistance fournie par les bailleurs de fonds The World Bank has had a relatively La estrategia del Banco Mundial desde pour aider le pays à faire face à ces small role in financial assistance to Jor- 1990, basada en una gama amplia e problèmes a atteint un niveau plus élevée dan. Annual average net disbursements influyente de actividades de análisis y que la moyenne régionale. for fiscal years 1990­2000 were US$35 asesoramiento, tuvo por objeto apoyar La stratégie définie par la Banque million, but net transfers were negative la estabilización macroeconómica y las mondiale depuis 1990, fondée sur une for most of the period. Policy-based reformas estructurales favorables al mer- série de solides analyses et d'activités de lending, in conjunction with various cado para fomentar el crecimiento. La conseil, visait à soutenir la stabilisation IMF programs, accounted for 63 percent mayor atención que se prestó a los sec- macroéconomique et les réformes axées of total lending and addressed trade, tores sociales se armonizó con los obje- sur les lois du marché en vue de stimuler agriculture, energy, financial, private tivos de desarrollo del milenio (ODM). la croissance. En vue de s'aligner sur les sector, and, recently, public sector Esta estrategia estuvo en consonancia objectifs de développement pour le reform. Investment loans supported con las prioridades enunciadas por el Millénaire (ODM), elle a mis davantage mainly human development and water Gobierno en una serie de planes quin- l'accent sur les secteurs sociaux. La stra- projects. quenales de desarrollo económico y tégie sus-indiquée est conforme aux Collaboration with the IMF supported social. priorités retenues par les autorités dans Jordan's efforts to stabilize the econ- El Banco Mundial ha desempeñado toute une série de plans quinquennaux omy, an impressive achievement given una función relativamente pequeña en de développement économique et social. the 1989 debt crisis and the disruption la asistencia financiera a Jordania. La La Banque mondiale a eu un rôle caused by the 1991 Gulf War. The World cuantía media anual de desembolsos relativement modeste en matière d'assis- Bank's programs, in particular, were netos durante los ejercicios económicos tance financière à la Jordanie. Le montant successful in promoting policy reforms. del período de 1990­2000 ascendió a annuel moyen des décaissements nets Substantial tariff, trade, and financial US$35 millones, pero las transferencias pour les exercices 1990­2000 s'élevait à sector reforms, together with the removal netas fueron negativas durante la mayor 35 millions de dollars EU, mais les x i v E X E C U T I V E S U M M A R Y of disincentives for investment parte de ese período. Los prés- transferts nets étaient négatifs and the privatization of govern- tamos en apoyo a reformas de pendant la plus grande partie de ment enterprises, were achieved. políticas, junto con diversos pro- cette période. Les prêts en faveur ~ World Bank assistance also con- NOL gramas del Fondo Monetario de réformes, octroyés à l'occa- A tributed to significant progress in Internacional, constituyeron el sion de divers programmes du the agriculture, water, and social 63% del total del financiamiento FMI représentaient 63 % du total. ENGLISH ESP sectors. Price controls for food, y se destinaron a la reforma del FRANÇAIS Ces prêts concernaient les fruits, and vegetables were ter- comercio, la agricultura, la ener- échanges, l'agriculture, l'énergie, minated, producer subsidies for wheat gía, el sector financiero, el sector privado les finances, le secteur privé et, plus ré- and barley were removed, and the land y, recientemente, el sector público. Los cemment, la réforme du secteur public. markets in the Jordan Valley were dereg- préstamos para proyectos de inversión Les prêts d'investissement visaient pour ulated. With World Bank support, Jordan brindaron apoyo principalmente a los l'essentiel à soutenir les projets axés sur made excellent progress in almost all proyectos de desarrollo humano y abas- le développement humain et l'eau. areas covered by the MDGs, and is likely tecimiento de agua. La collaboration avec le FMI a permis to meet the target levels by 2015. How- La colaboración con el Fondo Mone- de soutenir l'action engagée par la Jor- ever, these gains have been achieved in tario Internacional respaldó los esfuerzos danie pour stabiliser son économie. Les an inefficient manner and the cost in de Jordania por estabilizar la economía, résultats dans ce domaine sont remar- public expenditures has been relatively un logro notable dada la crisis de la quables compte tenu de la crise de la high. deuda de 1989 y los problemas causa- dette survenue en 1989 et des perturba- The World Bank's program did not dos por la Guerra del Golfo de 1991. Los tions provoquées par la guerre du Golfe support a significant reduction in large programas del Banco Mundial, en par- de 1991. Les programmes de la Banque government expenditures that the ana- ticular, lograron promover reformas de mondiale en particulier ont permis de lytical work identified as problematic, but políticas. Se introdujeron reformas sus- promouvoir des réformes de politique which the government was reluctant to tanciales en los aranceles, el comercio y économique. La Jordanie a pu ainsi en- address. Other important issues such as el sector financiero, junto con la elimi- gager d'importantes réformes concernant labor markets and poverty should also nación de los desincentivos a la inver- les droits de douane, le commerce et le have received greater attention, espe- sión y la privatización de empresas secteur financier, en même temps qu'elle cially since high unemployment and estatales. La asistencia del Banco Mun- levait les obstacles à l'investissement et poverty were of major concern. New irri- dial contribuyó también a que se hicie- privatisait des entreprises publiques. gation regulation did not significantly ran progresos importantes en la L'assistance de la Banque mondiale a enhance water use efficiency or con- agricultura, el abastecimiento de agua y par ailleurs favorisé la réalisation de pro- servation. World Bank­supported pri- el sector social. Se abolieron los contro- grès substantiels dans l'agriculture, l'eau vate management in urban areas les de precios de los alimentos, las frutas et le secteur social. Les mesures de con- modestly improved water use efficiency, y las verduras y se eliminaron las sub- trôle des prix sur les produits de sub- reduced costs, and significantly increased venciones a los productores de trigo y sistance, les fruits et les légumes ont été cost recovery. Overall, the outcome of cebada; además se liberalizaron los mer- levées, les subventions à la production the World Bank's relatively small assis- cados inmobiliarios en el Valle del Jordán. pour le blé et l'orge ont été supprimées tance program in the 1990s is rated mod- Con el apoyo del Banco Mundial, Jorda- et les marchés fonciers de la Vallée du erately satisfactory based on its nia hizo excelentes progresos en casi Jourdain ont été déréglementés. Avec le substantial relevance and modest effi- todas las esferas abarcadas por los ODM, concours de la Banque mondiale, la cacy. As to the sustainability of the y cabe presumir que el país alcanzará las Jordanie a pu réaliser des progrès remar- achievements, Jordan's vulnerability to metas previstas para 2015. Sin embargo, quables dans presque tous les domaines adverse regional events remains high estos avances se han obtenido de manera couverts par les ODM et elle devrait at- and the benefits of the World Bank's ineficiente, con un costo relativamente teindre les objectifs fixés en 2015. assistance face considerable risks. The elevado en términos de gasto público. Toutefois, ce bilan a été obtenu de ma- World Bank's contribution to institu- El programa del Banco Mundial no nière inefficace et le coût des dépenses tional development has, on average, dio apoyo a una reducción significativa publiques est relativement élevé. been modest. del cuantioso gasto público que se había Le programme de la Banque mon- This evaluation recommends that considerado problemático en los traba- diale n'a pas contribué à une réduction x v J O R D A N : S U P P O R T I N G S TA B L E D E V E L O P M E N T I N A C H A L L E N G I N G R E G I O N future World Bank assistance jos analíticos, pero que el drastique des dépenses publi- focus on public expenditure gobierno se mostraba renuente ques, jugées excessives d'après restructuring, enhanced water a abordar. También se debería les rapports d'analyse, mais que ~ management and conservation, NOL haber prestado más atención a les autorités hésitaient à réduire. A and poverty reduction. Gov- otros problemas importantes, Il aurait fallu porter une attention ernment expenditures could be como los mercados de trabajo y plus grande à d'autres problèmes ENGLISH ESP reduced and the quality and effi- la pobreza, sobre todo porque el FRANÇAIS importants, tels que les marchés ciency of social expenditures, elevado nivel de desempleo y la du travail et la pauvreté, deux especially those that many public expen- pobreza eran causa de gran preocupa- domaines qui du fait de leur ampleur, ont diture reviews have identified as being ción. El nuevo reglamento de riego no été une préoccupation majeure. La nou- poorly managed, could also be mejoró considerablemente la eficiencia velle réglementation de l'irrigation n'a pas improved. The World Bank should sup- del uso o la conservación del agua. La véritablement contribué à une utilisation port, in coordination with other donors, ordenación privada apoyada con recur- plus efficace des ressources en eau ou a comprehensive approach to water sos del Banco Mundial en las zonas à leur conservation. Dans les zones ur- resources management: promoting urbanas apenas mejoró la eficiencia en baines, le transfert de la gestion de l'eau incentives for more efficient use of el uso del agua, abarató los costos y au secteur privé, opéré avec le soutien water, upgrading infrastructure to reduce aumentó considerablemente la recupe- de la Banque mondiale, a permis d'amé- costs and high levels of water losses, ración de costos. En general, los liorer dans une certaine mesure l'effica- and facilitating efficient investments. resultados del programa de asistencia cité de l'utilisation de l'eau, de réduire les The World Bank should conduct a col- del Banco Mundial en el decenio de coûts et d'accroître sensiblement leur re- laborative poverty analysis to reach a 1990, que fue relativamente pequeño, se couvrement. Globalement, le bilan du consensus on the incidence of poverty consideran moderadamente satisfacto- programme d'assistance relativement and to ensure a sound basis for future rios teniendo en cuenta su sustancial modeste de la Banque mondiale pendant poverty reduction programs. Given high pertinencia y modesta eficacia. En cuanto les années 90 est jugé assez satisfaisant and persistent unemployment, a study a la sostenibilidad de los logros, la vul- car malgré sa faible efficacité, il a pu of the labor market is needed to provide nerabilidad de Jordania a acontecimien- répondre relativement bien aux besoins. the basis for measures to reduce unem- tos negativos en la región sigue siendo Pour ce qui est de la durabilité des résul- ployment and alleviate poverty. elevada y los beneficios de la asistencia tats obtenus, il convient de noter que la Jordan joined the Islamic Develop- del Banco Mundial corren riesgos con- vulnérabilité de la Jordanie aux évène- ment Bank (IDB), along with 21 other siderables. La contribución del Banco ments défavorables de la région demeure pioneering members, on 12 August 1974 Mundial al desarrollo institucional ha élevée et les effets positifs de l'assistance and is a major beneficiary of IDB's sido, por término medio, modesta. de la Banque mondiale sont exposés à financing. The scope of the present En la presente evaluación se reco- des risques très importants. La contribu- Country Assistance Evaluation (CAE) mienda que la asistencia del Banco Mun- tion de la Banque mondiale au déve- was limited to the IDB's project financ- dial en el futuro se concentre en la loppement institutionnel a été dans ing activities. The CAE was intended to reestructuración del gasto público, el l'ensemble plutôt modeste. focus on the IDB's financing to Jordan, mejoramiento de la ordenación y conser- Les auteurs de cette évaluation pré- particularly in sectors where its financ- vación del agua y la reducción de la conisent de centrer à l'avenir l'aide de la ing has been substantial, such as indus- pobreza. Se podría reducir el gasto Banque mondiale sur la restructuration try and mining, public utilities, and público y también se podrían realzar la des dépenses publiques, l'amélioration health and education. The IDB's assis- calidad y la eficiencia del gasto social, de la gestion et de la conservation des tance to Jordan from various sources sobre todo de los gastos que, de acuerdo ressources en eau, et la lutte contre la (ordinary operations, trade financing, con un gran número de análisis del gasto pauvreté. Il est possible de réduire les and special assistance) amounted to público, se consideran mal administra- dépenses de l'État et concomitamment US$1.14 billion as of the end of 2002. dos. El Banco Mundial debería apoyar, d'améliorer la qualité et l'efficience des Out of US$450.378 million financed en coordinación con otros donantes, un dépenses sociales, en particulier celles under ordinary operations, US$355.84 enfoque completo de la ordenación de que de nombreux examens des dépenses million (or 79 percent) has been allo- los recursos hídricos: promover incenti- considèrent comme mal gérées. La cated to the three sectors, as mentioned vos para un uso más eficiente del agua, Banque mondiale devrait, en coordina- x v i E X E C U T I V E S U M M A R Y above. The total amount dis- mejorar la infraestructura para tion avec d'autres bailleurs de bursed by the Bank for projects reducir los costos y los elevados fonds, soutenir une approche and technical assistance opera- niveles de las pérdidas de agua détaillée pour la gestion des ~ tions approved in favor of Jor- NOL y facilitar unas inversiones efi- ressources en eau : promouvoir A dan up to the end of 2002 was cientes. El Banco Mundial debe- des mesures incitatives destinées ID 240.75 million, or about 70 ría realizar un análisis de la à accroître l'efficacité de l'utilisa- ENGLISH ESP percent of the net approved pobreza con la colaboración de FRANÇAIS tion de l'eau, améliorer l'infra- amount. otros participantes para formar structure pour réduire les coûts The IDB's assistance to Jordan was consenso sobre la incidencia de ésta y et le niveau élevé des déperditions d'eau, primarily targeted to the areas of indus- sentar sólidas bases para los futuros pro- et encourager les investissements effi- try and mining during the 1970s and gramas de reducción de la pobreza. caces. La Banque mondiale devrait effec- 1980s to be in line with the priorities set Habida cuenta del nivel elevado y per- tuer une analyse de la pauvreté en by the government at that time. Empha- sistente del desempleo, es imprescindi- collaboration avec d'autres partenaires sis gradually shifted to other segments ble realizar un estudio del mercado afin de réaliser un consensus sur les mé- of development, such as water laboral que sirva de fundamento para las thodes de calcul de l'incidence de la resources, health care, and human medidas encaminadas a reducir el des- pauvreté et de jeter des bases solides resources development. According to empleo y aliviar la pobreza. pour les programmes futurs de réduction official sources, IDB-financed projects Jordania ingresó al Banco Islámico de de la pauvreté. Étant donné l'importance in Jordan rank high in the government Desarrollo (BIsD), junto con otros 21 et la persistance du chômage, il faudrait priorities. These projects were well miembros iniciales, el 12 de agosto de effectuer une étude du marché du l'em- designed and chosen to be consistent 1974 y es un importante beneficiario del ploi afin de définir les mesures à prendre with the overall development goals of financiamiento del BIsD. El alcance de pour réduire le chômage et atténuer la Jordan. The IDB's assistance has been la presente evaluación de la asistencia al pauvreté. acknowledged to be crucial for Jordan país se limitó a las actividades de finan- Le 12 août 1974, la Jordanie est de- in the transfer of resources that had ciamiento de proyectos del Banco. La venue membre de la Banque islamique contributed to the growth of key sectors evaluación debía concentrarse en el de développement (BIsD), aux côtés of the economy: industry and mining financiamiento del BIsD a Jordania, en des 21 autres pays fondateurs, est un bé- (increased phosphates and potash pro- particular en los sectores en los que ésta néficiaire important des financements duction), utilities (increased availability había sido sustancial, como los sectores de cette institution. La présente évaluation of water and electrical energy), and de industria y minería, servicios públicos n'a concerné que les activités de finance- social services (provision for additional y salud y educación. La asistencia del ment de projets de la BisD. Elle devait health services and education infra- BIsD a Jordania procedente de diversas étudier essentiellement les financements structure). fuentes (operaciones ordinarias, financia- de la BIsD en Jordanie surtout dans les Some of the IDB projects involving miento del comercio y asistencia espe- secteurs où ses concours étaient sub- the industry and mining sector were cial) ascendía a US$1.140 millones al fin stantiels, tels que les mines et l'industrie, financed by other donors, mainly the de 2002. De los US$450,378 millones les services d'utilité publique, la santé et World Bank and the European Invest- correspondientes a operaciones ordina- l'éducation. L'aide fournie par la BIsD via ment Bank. Because of the IDB's inter- rias, US$355,845 millones (79%) se han diverses sources (opérations ordinaires, ventions and collaboration with other asignado a los tres sectores antes men- financement du commerce extérieur et donors, mining and industry in Jordan cionados. El total desembolsado por el assistance spéciale) s'élevait à 1,14 mil- has evolved into a strong and profitable Banco con destino a proyectos y opera- liard de dollars à la fin de 2002. Sur les sector with competent and forward- ciones de asistencia técnica aprobados 450,378 millions de dollars accordés au looking management. The water para Jordania hasta el fin de 2002 ascen- titre des opérations ordinaires, 355,84 mil- resources projects financed by the IDB día a DI 240,75 millones, o sea alrede- lions de dollars (soit 79 %) concernent have contributed to achieve the objec- dor del 70% del monto neto aprobado. les trois secteurs susmentionnés. Les tives of fulfilling the need for potable La asistencia del BIsD a Jordania se décaissements de la BIsD pour les projets water and providing sewerage systems orientó principalmente a los sectores de et les opérations d'assistance technique in some parts of the country. The IDB- la industria y la minería en los decenios approuvés en faveur de la Jordanie à la financed power plants have also made de 1970 y 1980 en consonancia con las fin de 2002 s'élevaient à 240,75 millions x v i i J O R D A N : S U P P O R T I N G S TA B L E D E V E L O P M E N T I N A C H A L L E N G I N G R E G I O N significant contributions in im- prioridades determinadas por el de dinars, soit 70 % des montants proving electricity generation, gobierno en esa época. Esa nets approuvés. distribution and transmission orientación se modificó gradual- L'aide apportée par la BIsD à ~ systems in Jordan. Furthermore, NOL mente a favor de otros sectores la Jordanie était essentiellement A the IDB has been responsive to de desarrollo, como los recursos concentrée sur l'industrie et les the needs of the education sec- de agua, la atención de la salud mines pendant les années 70 et ENGLISH ESP tor, mainly by providing assis- y el desarrollo de los recursos FRANÇAIS 80, conformément aux priorités tance for construction and/or humanos. Según fuentes oficia- établies à l'époque par les expansion of schools. The IDB has pro- les, los proyectos financiados por el BIsD autorités jordaniennes. Puis la part rela- vided support for establishing several en Jordania tienen un lugar importante tive de ces secteurs a progressivement health care facilities. However, the over- entre las prioridades del Gobierno. Estos diminué au profit d'autres domaines du all results in terms of long-term policy proyectos se diseñaron y escogieron ati- développement tels que les ressources en reform have been below expectations. nadamente para conformarse a las metas eau, les soins de santé et la valorisation The health sector is still facing the prob- de desarrollo generales de Jordania. Se des ressources humaines. Selon des lems of over-capacity in some hospitals, ha reconocido que la asistencia del BIsD sources officielles, les projets financés par management inefficiency, and high costs ha sido crucial para Jordania en la trans- la BIsD en Jordanie occupent une place inherent in public health facilities. ferencia de recursos que estimularon el importante dans les priorités du gou- A major lesson learned from the CAE crecimiento de sectores clave de la eco- vernement. Ces projets ont été bien exercise for Jordan is that the IDB nomía: la industria y la minería (aumento conçus et choisis de manière à répondre should be more involved at the prepa- de la producción de fosfatos y potasa), aux objectifs de développement géné- ration stage of projects. Provision for servicios públicos (aumento de la dispo- raux du pays. L'assistance de la BIsD est technical assistance financing, particu- nibilidad de agua y energía eléctrica) y jugée comme étant d'une importance larly for project design and prepara- servicios sociales (suministro de servicios capitale pour la Jordanie grâce au trans- tion, should be intensified. Projects with de salud adicionales e infraestructura fert de ressources qui a favorisé la crois- financing gaps may be co-financed by para la educación). sance de secteurs essentiels de the IDB with other financiers, such as Algunos proyectos del BIsD en el l'économie : l'industrie et les mines (aug- the Co-ordination Group of Arab Funds sector de la industria y la minería fueron mentation de la production des phos- and Multilateral Development Banks. financiados por otros donantes, princi- phates et de la potasse), les services The IDB should also intensify its efforts palmente el Banco Mundial y el Banco d'utilité publique (amélioration de l'ap- to extend assistance for capacity build- Europeo de Inversiones. Debido a las provisionnement en eau et en électricité) ing of the executing agencies that have intervenciones del BIsD y a la colabora- et des services sociaux (élargissement strong relationships with the IDB, par- ción con otros donantes, el sector de la de la gamme des services de santé offerts ticularly government agencies and non- industria y la minería de Jordania se ha et de l'infrastructure de l'éducation). governmental organizations (NGOs). transformado en un sector dinámico y Certains des projets de la BIsD réalisés Other lessons of experience highlighted rentable, con una gestión competente e dans le secteur de l'industrie et des mines by the CAE are: (a) the impact of the imaginativa. Los proyectos sobre recur- ont été financés par d'autres bailleurs de project on the economy as a whole sos hídricos financiados por el BIsD han fonds, principalement la Banque mon- should be assessed at the identification contribuido a satisfacer las necesidades diale et la Banque Européenne d'Inves- stage, prior to its inclusion in the proj- de agua potable y a instalar sistemas de tissement. Grâce aux interventions de la ect pipeline for the country, and (b) alcantarillado en algunas partes del país. BIsD et à sa collaboration avec d'autres the status of preparation of individual Asimismo, las centrales eléctricas finan- donateurs, l'industrie et les mines sont projects and their readiness--concept ciadas por el BIsD han permitido mejo- devenues un secteur solide et rentable, stage, feasibility study, and detailed rar los sistemas de generación, qui est géré de façon compétente et design--should be ascertained. distribución y transmisión de electricidad orienté sur l'avenir. Les projets de res- In the case of Jordan, the IDB may fur- en Jordania. Además, el BIsD ha aten- sources en eau financés par la BIsD ont ther contribute in financing projects in the dido a las necesidades del sector de contribué à réaliser les objectifs en ma- areas of information technology and educación, sobre todo brindando asisten- tière de satisfaction des besoins en eau human resource development, in accor- cia para la construcción y ampliación potable et à mettre en place des réseaux dance with top priorities set mainly in de escuelas, y ha dado apoyo para ins- d'assainissement dans certaines régions x v i i i E X E C U T I V E S U M M A R Y Jordan's new Economic and talar varios establecimientos de du pays. Les projets d'électricité Social Transformation Program. atención de salud. Sin embargo, qu'elle a financés ont également These contributions may be los resultados globales, en térmi- contribué de manière notable à ~ made, in addition to its continued NOL nos de reformas de políticas a améliorer les réseaux de produc- A support to the industrial, infra- largo plazo, han sido inferiores tion, de distribution et de trans- structure, and social sectors. As a las expectativas. El sector de la port d'électricité en Jordanie. En ENGLISH ESP part of its future assistance salud encara todavía problemas FRANÇAIS outre, la BIsD a été sensible aux agenda, the IDB could consider de capacidad excedentaria en besoins du secteur de l'éduca- investing in non-conventional water algunos hospitales, ineficiencia en la tion, notamment en apportant une aide resources (such as wastewater infra- gestión y los elevados gastos propios à la construction et l'expansion d'écoles. structure and dam construction), as well de los establecimientos de salud pública. Elle a participé à la mise en place de plu- as water demand management projects Una lección importante extraída del sieurs établissements de soins de santé. such as water loss reduction and reha- proceso de la evaluación de asistencia a Toutefois, les résultats globaux en termes bilitation and restructuring of the existing Jordania es que el Banco debería parti- de réformes à long terme du secteur ne water network. Greater emphasis should cipar más en la etapa de preparación de sont pas à la hauteur des prévisions. Le also be given to the areas of mainte- los proyectos. Se deberían aumentar los secteur de la santé est toujours confronté nance, training, and capacity building of recursos para financiar la asistencia téc- à divers problèmes : surcapacité dans cer- water sector institutions. Furthermore, nica, en particular para el diseño y la pre- tains hôpitaux, inefficacité de la gestion the IDB could target its future assistance paración de proyectos. Los proyectos et coûts élevés inhérents aux installations to projects that serve the agricultural strat- con insuficiencias de financiamiento de santé publique. egy in Jordan, especially in the areas of pueden ser cofinanciados por el BIsD L'enseignement important qui se dé- rainfed land and water harvesting. Finally, junto con otras fuentes de financiamiento, gage de cette évaluation de l'aide à la Jor- lines of micro-finance facilities may be como el Grupo de Coordinación de danie est que la Banque devrait participer extended to local banks for the devel- Fondos Árabes y bancos multilaterales de davantage à la phase de préparation des opment of small farms in the country. desarrollo. El Banco debería intensificar projets. Il faudrait accroître les finance- también sus esfuerzos por brindar asis- ments au titre de l'assistance technique, tencia para el fortalecimiento de la capa- particulièrement au stade de la concep- cidad de los organismos de ejecución tion et de la préparation des projets. Les que tienen relaciones estables con el projets dont le financement n'est pas BIsD, en particular los organismos del totalement couvert pourraient être cofi- sector público y las organizaciones no nancés par la BIsD et d'autres bailleurs gubernamentales (ONG). Otras lecciones de fonds tels que le Groupe de Coordi- de la experiencia destacadas por la eva- nation des Fonds Arabes et les Banques luación de asistencia son las siguientes: Multilatérales de Développement. La a) el efecto del proyecto sobre la econo- BIsD devrait aussi intensifier ses appuis mía en general se debería evaluar en la institutionnels aux agences d'exécution etapa de identificación antes de su inclu- qui ont d'étroites relations avec elle, en sión en el plan de proyectos en tramita- particulier les organismes publics et les ción para el país, y b) se debería organisations non gouvernementales determinar el estado de la formulación (ONG). Deux autres enseignements se de cada proyecto y su grado de prepa- dégagent de l'évaluation de l'aide à la Jor- ración: etapa de conceptualización, estu- danie : i) il faudrait évaluer l'impact du dio de viabilidad y diseño detallado. projet sur l'économie dans son ensemble En el caso de Jordania, el BIsD puede au stade de l'identification, avant même hacer mayores contribuciones al finan- de l'inclure dans le portefeuille des ciamiento de proyectos en las esferas de projets ; et ii) il faudrait s'assurer de l'état la tecnología de la información y el de préparation de chaque projet : stade desarrollo de los recursos humanos, de conceptuel, étude de faisabilité et avant- acuerdo con las máximas prioridades projet détaillé. x i x J O R D A N : S U P P O R T I N G S TA B L E D E V E L O P M E N T I N A C H A L L E N G I N G R E G I O N enunciadas principalmente en Dans le cas de la Jordanie, la el nuevo Programa de Transfor- BIsD peut aussi contribuer au mación Social y Económica de financement des projets dans les ~NOL Jordania, además de continuar domaines de la technologie de A su apoyo a los sectores de la l'information et de la valorisation industria y la infraestructura y al des ressources humaines, confor- ESP sector social. En el marco de su FRANÇAIS mément aux principales priorités futuro programa de asistencia, el énoncées essentiellement dans BIsD podría considerar la posibilidad le nouveau Programme de transformation de efectuar inversiones en recursos hídri- économique et sociale du pays. Elle cos no convencionales (como la infraes- pourrait faire ces contributions tout en tructura de aguas servidas y la continuant d'apporter une aide à l'in- construcción de presas), así como en dustrie, aux infrastructures et aux secteurs proyectos de ordenación de la demanda sociaux. Dans le cadre de son futur de agua, tales como los proyectos de programme d'assistance, la BIsD pourrait reducción de las pérdidas de agua y los étudier la possibilité de s'impliquer proyectos de rehabilitación y reestruc- davantage dans des activités non turación de la red de agua existente. Se classiques du secteur de l'eau (telles que debería hacer más hincapié también en les équipements pour le traitement des los aspectos de mantenimiento, capaci- eaux usées et la construction de tación y fortalecimiento de la capacidad barrages), ainsi que dans des projet liés de las instituciones del sector del agua. à la gestion de la demande de l'eau, Además, el BIsD podría focalizar su telles que la réduction des pertes d'eau futura asistencia en proyectos que coad- ainsi que la restructuration du réseau yuven a la estrategia agrícola en Jorda- actuel de l'eau. Il faudrait aussi mettre nia, sobre todo en las esferas de las davantage l'accent sur la maintenance, la tierras de secano y la captación de agua. formation et le renforcement des Por último, se podrían conceder líneas capacités des institutions du secteur de de microfinanciamiento a los bancos l'eau. La BIsD pourrait en outre centrer locales para el desarrollo de pequeñas son assistance future sur les projets qui explotaciones agrícolas en el país. servent la stratégie agricole de la Jordanie, en particulier dans les domaines de l'agriculture pluviale et de la collecte de l'eau. Enfin, des facilités pourraient être accordées à des banques locales pour l'octroi de microcrédits afin de faciliter le Gregory K. Ingram développement de petites exploitations Director-General agricoles dans le pays. Operations Evaluation The World Bank Group Bader Eddine Nouioua Adviser Operations Evaluation and Audit Islamic Development Bank x x ABBREVIATIONS AND ACRONYMS AAA Analytic and advisory activities APC Arab Potash Company ARC Aqaba Railways Corporation ASAL Agricultural Sector Adjustment Loan CAE Country Assistance Evaluation CAS Country Assistance Strategy CASS Country Assistance Strategy Study CEM Country Economic Memorandum CIP Community Infrastructure Project COD Country Operations Department DRS Debt reporting system EC European Community EFF Extended Fund Facility ERDL Economic Reform and Development Loan ESAL Energy Sector Adjustment Loan ESW Economic and sector work EU European Union FY Fiscal year GDP Gross domestic product GNP Gross national product IBRD International Bank for Reconstruction and Development (World Bank) ID Islamic dinar IDA International Development Association IDB Islamic Development Bank IDI Institutional development impact IFC International Finance Cooperation IMF International Monetary Fund ITPAL Industry and Trade Adjustment Loan JBC Jordan Bromine Company JCFC Jordan Cement Factories Company JD Jordanian dinar JMC Jordan Magnesia Company JPMC Jordan Phosphate Mines Company JVA Jordan Valley Authority Kfw Kreditanstalt für Wiederaufbau (German Agency for Reconstruction) MDF Mediterranean Development Forum MIGA Multilateral Investment Guarantee Agency MNA Middle East and North Africa Region MDGs Millennium Development Goals NAF National Aid Fund NEPCO National Electric Power Company NGO Nongovernmental organization OCR Ordinary capital resources OED Operations Evaluation Department, World Bank OEO Operations Evaluation Office, Islamic Development Bank PER Public Expenditure Review x x i J O R D A N : S U P P O R T I N G S TA B L E D E V E L O P M E N T I N A C H A L L E N G I N G R E G I O N PSA Private Sector Assessment PSRL Public Sector Reform Loan QAG Quality Assurance Group QIZ Qualified Industrial Zone SBA Stand-by Arrangement SPP Social Productivity Program TA Technical assistance UNRWA United Nations Relief Works Agency USAID United States Agency for International Development WAJ Water Authority of Jordan WBI World Bank Institute WTO World Trade Organization Note: All $ (dollar) figures in this evaluation refer to U.S. dollars, unless otherwise stated. x x i i 1 Jordan's Socioeconomic Development Geopolitical Situation J ordan's geography and history have directly affected its socioeconomic development. Established from parts of the Ottoman Empire at the end of World War I, Jordan became an independent monarchy in 1946. Over the following decades, Jordan's borders shifted following major develop- ments in its politically charged region. Its population rose following many waves of the Council of Ministers. The King appoints the migration--450,000 immigrants from Palestine Council (cabinet), which is led by the Prime Min- (1948­50); 400,000 immigrants from the West ister. The cabinet is responsible to the Cham- Bank and Gaza (1967); and 300,000 Jordanian ber of Deputies. The bicameral National nationals from Gulf States following the 1991 Gulf Assembly has legislative power: The 110-mem- crisis. The migration, coupled with a high nat- ber Chamber of Deputies is elected to a four- ural growth rate, led to an annual population year term and the King appoints the 55-member growth rate of 4.4 percent during 1979­94 (Jor- Senate. The current Parliament elected in 1997 danian Department of Statistics 2001). Although was dissolved in June 2001. After two post- the population growth rate is falling, it is still one ponements amid uncertainties created by esca- of the highest in the world. Jordan's population lating regional conflicts, new elections were of 5.3 million is expected to double in about 20 scheduled for spring 2003, but took place in June years, which will have serious implications for 2003. future socioeconomic development, requiring The Cold War, Arab-Israeli conflict, and the heavy investments in social services and strain- Gulf oil boom all contributed to high levels of ing limited natural resources, especially water. grants and concessional loans to Jordan between Jordan is one of the most water-scarce countries 1973 and 1982. Economic growth averaged 10 in the world. The country shares both surface percent yearly, but dropped sharply in 1983 and groundwater resources with other water- with declining foreign grants, remittances, and deprived nations in the region, creating a set of exports to the region. Average annual growth complex relationships. during 1983­89 was less than 1 percent per The Kingdom is a constitutional monarchy year. To maintain the same consumption levels, with executive authority vested in the King and Jordan borrowed externally and ran sizable 1 J O R D A N : S U P P O R T I N G S TA B L E D E V E L O P M E N T I N A C H A L L E N G I N G R E G I O N budget deficits. By 1989, Jordan was unable to (crops and livestock) is arduous, contributing meet its external obligations, precipitating a cri- about 4 percent of GDP in 2000 (Central Bank sis that led to an International Monetary Fund of Jordan 2000). Services (mainly transport, com- (IMF)/World Bank-supported stabilization pro- munications, real estate, and business-related gram and a major Paris Club debt rescheduling. services) dominate the economy, accounting The adjustment was successful: The fiscal deficit for more than two-thirds of GDP in 2000. The and inflation fell and most prices became mar- contribution of the secondary sectors (predom- ket determined. Economic recession, however, inately mining--processing of phosphates and significantly reduced real per capita income potash--manufacturing, and construction) (table 1.1), and with the advent of the 1991 amounted to 30 percent of GDP. Gulf crisis, Jordan's aid and trade were further The economy barely grew at the rate of its disrupted. This, combined with a high rate of population during the late 1990s, resulting in population growth, has led to stagnant per capita declining real per capita incomes.1 Investment incomes for the past two decades. remained low. Government investment contin- ued to decline, reaching 6 percent of GDP in Economic Developments in the 1990s 1999.2 Although private investment rose to 26 per- A small, lower-middle-income country, Jordan cent of GDP in 1993 (most in housing of expa- had a per capita income of $1,750 in 2001 (Atlas triate workers returning after the Gulf crisis), it method). About 92 percent of its land is semi- declined later by more than half. Nonhousing pri- arid, and the arable land (6 percent) is subject vate investment languished at around 5 percent to the vagaries of water availability. Other nat- of GDP for over a decade (1985­95), but has since ural resources are limited. This has led to reliance risen slowly to about 8 percent of GDP. on migration to the oil-producing Arab countries of about one-third of the labor force, mainly Poverty and Social Conditions skilled and semiskilled workers. Worker remit- Jordan's incidence and intensity of poverty is tance inflows amounted to about 20 percent of significantly higher than prevailed in the late gross domestic product (GDP) in 2000. Imports 1980s (table 1.1). In the early 1990s, the Gulf cri- are about two-thirds and exports about one- sis disrupted economic growth and employ- third of GDP, reflecting Jordan's small size and ment in the region and caused the return of many its openness. The large trade deficit is almost off- migrant workers, leading to a surge in unem- set by worker remittances and foreign grants. ployment and poverty. The number of poor Given that cultivable land is limited, agriculture increased sixfold during 1987­92 and remained T a b l e 1 . 1 P o v e r t y T r e n d s i n J o r d a n , 1 9 8 7 ­ 0 1 1999 2000 2001 1987 1992 1997 (projected) (projected) (projected) Incidence: Headcount index (% of population) 3.0 14.4 11.7 12.0 11.8 11.6 Number of poor people (000's) 85 554 538 564 578 585 Intensity: Poverty gap (% of poverty line) 0.3 3.6 2.5 ­­ ­­ ­­ Inequality: Gini coefficient 0.36 0.40 0.36 0.36 0.36 0.36 GDP per capita index (1987=100) 100 78.7 81.4 81.3 81.9 82.6 ­­ Not available. Sources: Shaban, Abu-Ghaida, Al-Naimat 2001, table 8, p. 25; Adams and Page 2001, Annex 2, table 2b; for projections see World Bank 2002, p. 11. 2 J O R D A N ' S S O C I O E C O N O M I C D E V E L O P M E N T unchanged until 1997; available evidence sug- (UNDP 2001).5 Nevertheless, this progress has gests it has leveled off in the past four years. been achieved in a costly manner: health and Inequality, as measured by the Gini coefficient, education expenditures are 9.1 percent and 5.6 did not change between 1987 and 1997. The percent of GDP, compared with a MNA average poverty incidence was higher in rural areas of 4.3 percent and 4.5 percent. In consequence, (18 percent) than in urban areas (10 percent) in there is excess capacity in facilities and person- 1997 (Annex B, table B.2). The two household nel. For example, Jordan has 1.6 physicians per surveys in 1992 and 1997 showed that the unem- thousand population, twice the MNA average, and ployed had the highest incidence of poverty, at 1.7 beds per thousand population. But the hos- 16.4 and 26.3 percent respectively (Shaban, Abu- pital occupancy rate is only 63 percent, well Ghaida, and Al-Naimat 2001).3 The incidence of below a generally accepted norm of 80 percent poverty is estimated at 11.6 percent, although (World Bank 1997). Therefore, a key challenge high population growth has increased the num- for the Jordanian economy is improving the effi- ber of the poor by 47,000 in the last four years. ciency of social services to preserve its social There is considerable controversy about the gains, while at the same time reducing expen- level of Jordan's poverty. Many Jordanian ana- diture levels to support macrostability and growth. lysts, using various poverty lines and surveys, Improvements in the quality of life in Jordan estimated poverty to be much higher than Bank have not always been evenly distributed between estimates.4 The Jordanian Ministry of Social males and females (table 1.2). Compulsory edu- Development (2002), in Poverty Alleviation for cation for girls and boys through grade 10, com- a Stronger Jordan: A Comprehensive National bined with child labor laws, has helped bridge Strategy, noted that "Depending upon the the gap between female and male school enroll- poverty line used, anywhere from 15 to more ment rates. Yet women's participation in eco- than 30 percent of the population falls below that nomic activities and community leadership is still line." Regardless of which estimate is used, it is low, constrained by social norms and discrimi- clear that Jordan's poverty is still sufficiently natory practices.6 According to the 1997 Income high to cause considerable concern and to and Expenditure Survey, women's unemploy- underline the urgency of ensuring that policies ment rate (35 percent) is more than twice the rate and strategies are defined to reduce poverty. for men (14 percent), and when employed, they Jordan has made excellent progress in devel- earn only 80 percent of men's wages. No woman oping its human capital over the last 25 years (fig- was elected to the 1997 Chamber of Deputies ures 1.1­1.3), although these achievements have (Parliament), and only three women were cho- been accomplished at high cost and with con- sen to be members of the nonelective Senate.7 siderable inefficiency. The country's social indi- In the 1999 municipal elections, only eight women cators are better than average for Middle East and were elected as council members, and none as North Africa (MNA) countries, as well as for mayor of the 304 municipalities. other middle-income countries (table 1.2). For example, Jordan has one of the lowest illiteracy External Debt and Assistance rates in MNA and among lower-middle-income Jordan remains heavily indebted--a legacy of countries. During the past 25 years, life macropolicies pursued in the late 1980s--despite expectancy at birth has risen from 60 to 71 years. debt forgiveness, rescheduling, and government Infant mortality fell by nearly 50 percent, and, buyback.8 The ratio of total debt to GDP stood although fertility rates are declining, the annual at 105 percent in 2000 (although it had declined natural growth rate is still high because of the drastically from its 1991 level of 180 percent). increase in the number of women entering their External debt amounted to 84 percent of GDP peak childbearing years. The Human Develop- in 2000. The ratio of debt-service payments to ment Report ranks Jordan 88 out of 162 countries exports of goods and services (liquidity ratio) also based on its human development index, ahead fell to 15 percent in 1999.9 However, debt- of other MNA countries at similar income levels rescheduling agreements have left Jordan with 3 J O R D A N : S U P P O R T I N G S TA B L E D E V E L O P M E N T I N A C H A L L E N G I N G R E G I O N F i g u r e 1 . 1 G r o s s P r i m a r y E n r o l l m e n t 120 100 80 60 40 20 0 1975 2000 Jordan MNA Lower-middle income F i g u r e 1 . 2 I l l i t e r a c y 80 70 60 50 40 30 20 10 0 1975 2000 Jordan MNA Lower-middle income an inflexible debt-service profile that persists over vulnerability to external shocks is offset, to some the medium term.10 This inflexible debt profile extent, by a high level of official reserves, which implies that cautious macroeconomic and debt rose substantially, from $0.4 billion at end-1995 management is warranted because, if debt-serv- to $2.6 billion at end-2001 (seven months of ice difficulties do arise, options for restructuring imports). However, with a large fiscal deficit debt will be extremely constrained. Jordan's and high external debt ratios, Jordan remains vul- 4 J O R D A N ' S S O C I O E C O N O M I C D E V E L O P M E N T F i g u r e 1 . 3 I n f a n t M o r t a l i t y 140 120 100 80 60 40 20 0 1975 2000 Jordan MNA Lower-middle income S e l e c t e d H u m a n D e v e l o p m e n t T a b l e 1 . 2 I n d i c a t o r s i n J o r d a n a n d C o m p a r a t o r C o u n t r i e s Middle East and Lower and Jordan North Africa middle income 1975­80 1999­00 1975­80 1999­00 1999­00 Life expectancy (years) 60 71 46 68 69 Total fertility rate (births per woman) 8.0 4.0 6.6 3.0 2.0 Infant mortality (per thousand births) 49 26 125 43 33 Access to an improved water source (% population) .. 96 69a 89 80 Gross primary enrollment (% of school-age population) 72 104 69 97 107 Male 79 104 .. 103 107 Female 65 104 .. 90 107 Gross secondary enrollment (% of age group) 48 93 29 64 70 Adult illiteracy (% of pop. 15 years and above) 39 10 67 34 15 Male 22 5 56 24 9 Female 56 16 77 46 21 .. Not available. Note: Data refer to the most recent year available during the period specified. a. Figures are from 1980. Source: World Bank, World Development Indicators, various years; details in Annex B, tables B.4 and B.5. 5 J O R D A N : S U P P O R T I N G S TA B L E D E V E L O P M E N T I N A C H A L L E N G I N G R E G I O N nerable to adverse events in a volatile region. nearly doubled in the 1995­99 period, follow- While the budget deficit is quite high, about one- ing the October 1994 peace agreement between half of the deficit (3.5 to 4 percent) has been cov- Jordan and Israel.11 Also, Jordan is one of the ered by external grants over the years. largest recipients of Islamic Development Bank Largely due to its political importance, Jor- (IDB) assistance, with $450 million in project dan received large net financial flows (includ- financing since 1976 (or $4 per capita annually). ing grants and private flows), averaging $622 Assistance has become an important part of million annually (10 percent of GDP) over the a comprehensive political and economic 1990­99 period (table 1.3). Jordan received an relationship, which has many dimensions, such annual average of $150 per capita in net flows as the Middle East peace process and trade from 1990 to 1999, exceeding those for other accords. For example, the 2001 U.S.-Jordan MNA countries at similar income levels. The Free-Trade Agreement eliminates tariffs and Bank has had a relatively small but stable role other trade restrictions between the two coun- in assistance to Jordan, with its share of net flows tries. Jordan's 1999 Euro-Mediterranean Asso- about 7 percent ($9 per capita annually) for the ciation Agreement with the EU is expected to 1990s. The share of other donors, such as the lead to a gradual establishment of a free-trade United States and the European Union (EU), zone in 2010. J o r d a n : N e t R e c e i p t s o f E x t e r n a l T a b l e 1 . 3 F i n a n c i a l R e s o u r c e s , 1 9 9 0 ­ 9 9 ( y e a r l y a v e r a g e s ) 1990­99 1990­94 1995­99 ($m) % ($m) % ($m) % Total receipts, neta 622 100 564 100 679 100 IBRD 41 7 29 5 53 8 EC/ EU 143 23 95 17 191 28 Germany 59 10 75 13 43 6 Japan 161 26 174 31 147 22 United States 135 22 95 17 175 26 Arab countries and agencies 44 7 87 15 1 0 a. Total includes both official and private flows, from all sources, excluding the Islamic Development Bank. Note: IBRD = International Bank for Reconstruction and Development; EC/EU = European Community/European Union. Source: OECD 2003; details in Annex C, table C.1. 6 2 Development Priorities and Constraints Accelerating Broadly Shared Economic Growth to Reduce Poverty: A Top Priority P overty reduction remains the top priority for the government, and a National Strategy for Poverty Alleviation was launched in May 2002. Declining economic growth rates, coupled with rapid population growth, have contributed to a greater number of Jordanians living in poverty. Although GDP per capita growth performance in 2000­01 is bet- ter than in 1996­99, it is still modest (about 1 percent), and insufficient to make significant gains in employment and poverty reduction. Along with a higher pace of economic growth, improvements are needed in the qual- ity of growth to ensure broader participation along with poverty targeting. Large and Inefficient Government households and businesses (World Bank data). Expenditures The civil service has traditionally served as a Jordan's government expenditures, hovering source of employment for the fast-growing labor around 40 percent of GDP for the past two force. The rise in public sector employment con- decades, are higher than in comparable countries, tributed to the decline in labor productivity in util- even allowing for Jordan's greater military expen- ities such as water and power (World Bank 1994, ditures.1 Expenditures rose in the 1970s, financed p. 13) and needed infrastructure investment has by grants from Jordan's neighbors during the oil been neglected for decades. It also led to rising boom. But when these grants declined, the Jor- pension expenditures, with an annual growth rate danian government reduced capital, not current of about 10 percent. Government salaries (includ- spending (figure 2.1). Besides the military, large ing all benefits) exceed those in the private sec- government expenditures are allocated to wages, tor in most grades.2 The persistently high pensions, and interest payments (7, 5, and 4 unemployment rate of around 14 percent may be percent of GDP, respectively) (IMF 2000). In partly because of government-induced rigidities addition, the composition and efficiency of (in 2002 the government raised the already bind- expenditures are of concern. Despite employing ing monthly minimum wage from Jordanian 40 percent of the labor force, the public sector dinar (JD) 80, or $112, to JD 85, or $120).3 Impor- remains a poor provider of public services to tant priorities include reducing the size of the 7 J O R D A N : S U P P O R T I N G S TA B L E D E V E L O P M E N T I N A C H A L L E N G I N G R E G I O N J o r d a n : G o v e r n m e n t E x p e n d i t u r e s F i g u r e 2 . 1 C o m p o s i t i o n a s P e r c e n t a g e o f G D P % of GDP 60 Total government expenditures 50 40 30 20 10 Capital expenditures 0 1975 1980 1985 1990 1995 2000 public sector, containing the wage bill, separat- Authority of Jordan (WAJ) loses about half the ing public sector employment from welfare, and water supplied (best practice is considered to be enhancing the level and quality of public serv- less than 15 percent), and cost recovery is low ices to better position Jordan to attract invest- because of losses and inadequate tariffs, result- ments. Without these, domestic savings and ing in large government subsidies to WAJ that private investment will remain anemic, with exceed 1 percent of GDP (World Bank internal adverse effects on economic growth. Recently, data). The government has devoted effort to the government launched a public sector reform addressing water issues (Annex J), but further program with the support of the Bank, as dis- actions are needed to increase water use effi- cussed in Chapter 3. ciency and strengthen water institutions, includ- ing organizational and administrative reforms, Water is Scarce and Inefficiently Used cost recovery, and enhancement of wastewater Agriculture, high population growth, and to allow greater reuse in agriculture and indus- urbanization place enormous pressure on the try. Institutional reforms have started, catalyzed Kingdom's scarce water resources. On a per by the private management contract for Amman, capita basis, freshwater availability in Jordan but the pace is not commensurate with the rap- ranks among the world's lowest.4 Currently, idly growing supply problem. agriculture consumes about 66 percent of water, despite its 4 percent share of GDP, and a rural Human Capital Development: A Parallel population that accounts for only 21.3 percent Priority to Growth of the total population. Despite scarcity, water Jordan is not well endowed with natural resources use efficiency is low, with high levels of unac- and developing its human capital has tradition- counted-for-water and low levels of cost recov- ally been emphasized. While average indicators ery. In the Jordan Valley, even with considerable of literacy and health are good, the profile of the external assistance to improve agricultural water poor indicates that the educational attainment of management and infrastructure, and a policy to the household is well below average and directly charge for water, about 45 percent of irrigation affects the incidence of poverty. An analysis of water is lost because of inaccurate metering, theft, the poverty profiles for 1992 and 1997 shows that and the use of water for flushing salt buildup in a lower level of education strongly correlates the soil. Conversely, private pumping of ground- with higher poverty.6 Also, Jordan's young pop- water for agriculture in the highlands is effec- ulation (37.8 percent under age 15 in 2002), cou- tively free because of a lack of political will to pled with the high population growth rate, creates apply regulations on use.5 In Amman, the Water considerable demand for social services.7 While 8 D E V E L O P M E N T P R I O R I T I E S A N D C O N S T R A I N T S the government has expanded and developed the highly subsidized prices. Households where the education sector, challenges relate to reviewing main provider is in poor health are concentrated the cost efficiency of the educational system at in the lowest part of the income distribution. For all levels, addressing priorities for future educa- example, a survey in 1996 showed that one in tional development, and vastly improving the three households in the bottom decile of the quality of education. Jordan spends a generous population include a main provider with chronic amount (9.1 percent of GDP) on health (well in health problems, as opposed to only 7 percent excess of most middle-income and even some of the highest-income households (Hanssen- industrial countries), yet there is still room for Bauer, Pedersen, and Tiltnes 1998). The coverage improving the efficiency and equity of the health of traditional public health services--sanitation, system. Twenty percent of the population lacks water safety, and immunization--is not yet quite formal insurance coverage, although they can universal; about 40 percent of the poorest decile receive health services from the public sector at lack toilets and a quarter rely on unsafe water. 9 3 World Bank Services and Products T his chapter evaluates Bank services and products deployed to help Jordan address its development priorities. These include nonlend- ing assistance (policy dialogue and strategic advice and economic and sector work [ESW]) and lending. This evaluation concludes that the Bank's analyses and advice were sound, with few exceptions. Jordan's project rat- ings have been high relative to all projects Bankwide and to other coun- tries in the MNA Region. Ongoing lending is less risky than average for the Bank's portfolio. Nonlending Assistance World Bank strategies were relevant and con- sonant with Jordan's development priorities out- Policy Dialogue and Strategic Analysis lined in a series of five-year economic and social World Bank programs were guided by Country development plans (Ministry of Planning 1993, Assistance Strategy (CAS) documents (box 3.1), 1999). For example, the 1993­97 plan was aimed with a consistent objective of promoting rapid, at private sector and export-led growth founded equitable, and sustainable private sector and on maintaining macroeconomic stability while export-led growth, through three main themes: liberalizing trade, deepening the financial sec- · Improve the macroeconomic situation, in col- tor, and enhancing the regulatory framework. laboration with the IMF, through structural The 1994 Country Economic Memorandum reforms in trade, the financial sector, and the (CEM; World Bank 1994a) commented that the regulatory environment, enterprise reforms, 1993­97 plan, which emphasized monetary and and privatization. fiscal stability as a basis for growth, also required · Address critical infrastructure constraints to structural reforms. These reforms in trade, bank- growth, particularly in water and energy, with ing, and public enterprises were the main thrust an effort to induce private sector participation. of the World Bank's 1995 country strategy. The · Address human resource constraints effi- World Bank's 1999 country strategy coincided ciently in education, health care, and social with the recent 1999­03 five-year development protection. plan that sought to raise the rate of economic 1 1 J O R D A N : S U P P O R T I N G S TA B L E D E V E L O P M E N T I N A C H A L L E N G I N G R E G I O N B o x 3 . 1 W o r l d B a n k S t r a t e g i e s 1993 World Bank Strategy: An outward-oriented 1995 World Bank Strategy: A renewed focus and private sector­led growth strategy on promoting a rapid, outward-oriented Goals. The 1993 strategy complemented the IMF stabi- private sector­led growth strategy lization program with structural reforms designed to Goals. The objective for the 1995 strategy was to pro- address constraints to private sector and export-led mote rapid and sustainable outward-oriented growth growth. The objective was to create an efficient that was private sector­based and environmentally enabling environment for private investment in indus- friendly. The strategy to achieve this objective was try, trade, services, and infrastructure. The strategy similar to that of the earlier period: (a) introducing targeted support for (a) sustainable growth in the pro- trade, financial, regulatory, and public enterprise ductive sectors and improvements in energy, water, and reforms and privatization measures necessary to estab- transport infrastructure; (b) reducing poverty, slowing lish an enabling environment for sustainable growth population growth, and protecting the environment; and to reduce poverty and unemployment; (b) address- and (c) mobilizing external financing on concessional ing critical infrastructure constraints, such as water, terms. The IMF Stand-by Arrangement (SBA)/Extended with an effort to introduce private sector participa- Fund Facility (EFF) supported the earlier stabilization tion; and (c) addressing human resource constraints and reform measures during 1988­94. more efficiently in education, health care, and family Assistance program. The lending program aver- planning and to assist in protecting the poor during eco- aged about $100 million per year. It included two quick- nomic adjustment. disbursing sector adjustment loans (FY94 Energy and Assistance program. Under the base case scenario, FY95 Agriculture), constituting 55 percent of the lend- including adjustment operations, lending averaged ing volume, and three investment operations--indus- $140 million per year during fiscal years (FY) 1996­99 try/energy, transport, and health. Other than sector (a 40 percent increase from its level in the previous reports to provide the foundation for the energy and agri- strategy), placing Jordan near the top of all borrowers culture adjustment loans, the other sector work pro- in per capita terms (at $33 per year). The base case sce- grammed was a poverty assessment. nario assumes adherence to the IMF EFF program and growth. The plan articulated the goals more tions covered 40 percent of domestic manufac- clearly than it articulated how the government turing and more than 65 percent of import value, would achieve them.1 The plan's measures--for and replacing them with low and uniform tar- example, privatization and upgrading infra- iffs, was the right approach. Trade hurdles were structure, especially water--echo the Bank's lowered only slowly and after being painfully country strategy. Similarly, the World Bank's negotiated with the Bank under its first policy- 2002 country strategy reflects Jordan's develop- based lending. The Bank's view at the time (not ment priorities as outlined in the Social and just for Jordan, but also in other countries) was Economic Transformation Program. The that trade should be freed gradually and be increased focus on the social sectors in the Bank complemented by credit lines for industrial strategies has been appropriate and is reason- recovery. ably aligned with the Millennium Development Similarly, the Bank's analysis and its recom- Goals (MDGs). mendations on privatization and private sector The World Bank's advice and analyses were development were sound. The 1994 CEM was generally sound, although some exceptions are followed by a short but comprehensive Private mentioned below. Jordan is a small country, Sector Assessment (PSA) in 1995. The main con- and opening it to trade was appropriately empha- straint on the private sector was a slew of reg- sized as the high tariff and nontariff barriers of ulations that delayed investments and increased the 1980s were distortionary. Quantitative restric- their costs. They were ranked by importance 1 2 W O R L D B A N K S E R V I C E S A N D P R O D U C T S progress in structural and sectoral adjustment agreed one-third of lending under the base case and 55 per- to with the Bank. A series of three successive one- cent under the high case (two follow-up PSRL loans tranche policy loans (totaling $320 million) was the totaling $150 million). Triggers for the base case sce- centerpiece of the 1995 strategy. By contrast, the low nario include a satisfactory macroeconomic frame- case scenario would limit lending to about $20 to $30 work and continuation of, and satisfactory progress in, million for one operation yearly, to maintain a minimum structural reforms, privatization, and public sector presence. The strategy envisaged a study on Jordan's reform. Planned ESW included reviews of public entry into an EU Partnership Agreement and the World expenditure, education, water, and social structure, Trade Organization (WTO). In addition, studies on health and an update of a strategy for the health sector. and higher education were under way. 2002 World Bank Strategy: A continuation 1999 World Bank Strategy: An update of the of earlier program earlier strategy Goals. The objectives remain the same as the 1999 Goals. The 1999 strategy substantially reiterated the strategy: sustained growth to create jobs and reduce objectives of the 1995 strategy, while noting the short- poverty. falls in achieving its objectives of accelerating eco- Assistance program. Proposed lending for FY03­05 nomic growth, emphasizing private investment and is expected to range from $100 in the low case to export development, promoting human development, $305 million in the base case, and $380 million in the and improving water resource management. An addi- high case. Follow-up to earlier programs (the pro- tional objective was to undertake public sector reform. posed PSRL III, $110 million, FY04, and education proj- Assistance program. The fiscal 2000­02 proposed ect, $120 million, FY03) accounts for about 80 percent lending ranged from $100 million in the low case, to of total Bank lending in the base case. Triggers for the $300 million in the base case, and $450 in the high base case scenario include meeting macroeconomic case. Additionally, $200 million in guarantees were targets and progress in privatization and public sec- envisaged for the base case and high case scenarios. tor reform. Planned ESW included a Public Expendi- Adjustment lending (that is, FY01 Public Sector Reform ture Review (PER), a poverty assessment, and reviews Loan [PSRL I], $120 million) would account for about of the energy sector and labor market. based on a survey, and their disparate effects on B.10) summarizes the recommendations. Health small and large firms were discussed. The PSA spending could be reduced if the government reiterated the need to privatize enterprises and did not build hospitals but, instead, reimbursed discussed the regulatory framework needed to the poor for using private hospitals with excess privatize firms. The chapter on the financial sec- capacity. Educational costs could be contained tor was equally clear and coherent: It pointed if existing capacity were used more efficiently, out that the problems were not in commercial class size were increased, and double-shift banks but in specialized government banks, schools were maintained (World Bank data, such as the Housing Bank, Industrial Develop- 1991). A significant part of public spending ment Bank, and the Agricultural Credit Corpo- stems from large public employment. Such ration. But there was little progress until the late employment rose throughout the region fol- 1990s, despite the passage of several laws and lowing the 1970 oil boom, but, while this is declarations of intent. sometimes described as the "social contract" to World Bank strategies during the 1990s were distribute the wealth, there are more effective silent on reducing the level of government ways of doing so. However, the reforms that the expenditures, despite sufficient analytical work strategies supported did not significantly reduce identifying how these expenditures could be government expenditures or improve their allo- reduced and better targeted (for example, World cation.2 The fault may not be the Bank's alone. Bank 1994a). Annex B (tables B.8, B.9, and Government officials looked to what they could 1 3 J O R D A N : S U P P O R T I N G S TA B L E D E V E L O P M E N T I N A C H A L L E N G I N G R E G I O N realistically accomplish during their short tenures, sistent unemployment. The share of resources which would argue against tackling expenditure allocated to Jordan's ESW--averaging 15 percent issues, since they require protracted effort. a year during the 1990s--was below the At the beginning of the new decade, Bank Bankwide average (18 percent) and far below strategies for FY01­04 emphasized public sec- the MNA average (21 percent) (Annex F). tor reforms. These reforms addressed the qual- ity and accessibility of public services to Lending households and businesses, as well as the judi- Since it began operations in Jordan in 1962, the cial system and the civil service, and marked the World Bank has committed $2.1 billion for 67 beginning of much-needed reform. projects (table 3.1). The structure of the Bank's portfolio changed rapidly in the 1990s with the Economic and Sector Work introduction of policy-based lending. Annual ESW was relevant, of high quality, conformed average lending commitments for FY90­00 were to the Bank's assistance strategy, and provided $102 million, net disbursements were $35 million, a solid basis for policy dialogue with the gov- and net transfers were negative for most of the ernment. As Jordan is a small country, opening period, as old loans were being repaid and serv- it to trade was rightly emphasized (for example, iced (figure 3.1).3 International Bank for Recon- World Bank 1994a). The Bank's technical sup- struction and Development (IBRD) exposure in port, through ESW, assisted Jordan's accession Jordan is high, which has been a factor tending to the World Trade Organization (WTO) in 2000 to constrain lending.4 The International Finance and its partnership agreement with the EU in Cooperation (IFC) has invested in the financial 1999. Removing hurdles to the private sector was sector, tourism, and infrastructure, with $94 mil- the focus of much of the ESW (for example, lion of committed exposure. The Multilateral World Bank 1994a; 1995a). In addition, the Investment Guarantee Agency's (MIGA's) first Bank's Foreign Investment Advisory Service guarantee in FY01 insured a fertilizer and animal (FIAS) and United States Agency for International feed supplement project with $39.1 million. Development (USAID) (World Bank FIAS and USAID 1998) conducted an investor survey and Adjustment Lending advised on reorganizing the Jordan Investment The FY90 Industry and Trade Policy Adjustment Commission. Other ESW sought to address Loan (ITPAL, $150 million), accompanied by a known policy shortcomings in such sectors as Fund Stand-by Arrangement (of about $100 mil- agriculture, water, and energy (for example, lion over 18 months), started the structural World Bank 1997b, 2001a). The reports--some reforms and bolstered the country's reserves. prepared in collaboration with Jordanian ITPAL objectives were to reduce trade barriers and experts--were of satisfactory quality. The Qual- rationalize industrial infrastructure. The ITPAL ity Assurance Group (QAG) assessed the 1999 was in two tranches, the first, for $75 million, was review of the public sector, finding it "concise released in early 1990, but the second tranche was and to the point...addressing a clear knowledge delayed by the Gulf War (September 1990 to Feb- gap...[and] leading to clear recommendations." ruary 1991). The second tranche was released5 Although the report was expensive, it received only after the dinar was devalued and additional a QAG overall rating of satisfactory--pointing to budgetary measures were undertaken to restore the quality of the task team--and a highly sat- macroeconomic stability. isfactory rating for scope and relevance. A sum- The Energy Sector Adjustment Loan (ESAL, mary evaluation of key reports, based largely on $80 million, FY94), based on an energy sector the methodology used by QAG, is provided in study, sought to restructure the energy sector and the Country Assistance Evaluation (CAE) back- restore its financial viability by allowing private ground papers, listed in the Bibliography. sector involvement in generation and distribu- One omission in ESW was an analysis of tion. The sector remained financially unsound labor market rigidities, given the high and per- despite eight earlier Bank projects (between 1 4 W O R L D B A N K S E R V I C E S A N D P R O D U C T S S e c t o r a l D i s t r i b u t i o n o f W o r l d T a b l e 3 . 1 B a n k C o m m i t m e n t s , F Y 6 2 ­ 0 1 1962­01 1962­79 1980­89 1990­01 Sector US$M % US$M % US$M % US$M % Agriculture 101 5 14 10 0 0 87 7 Economic policy/multisectora 630 30 0 0 0 0 630 53 Education/ health, nutrition, and population/social protection 416 0 11 8 240 30 165 14 Finance, industry, and mining 168 8 40 30 68 9 60 5 Infrastructureb 455 21 36 26 284 36 135 11 Electricity, power, and energy 298 15 30 22 188 24 80 7 Water supply, sanitation, and urban development 354 17 35 26 202 25 117 10 TOTAL 2,124 100 136 100 794 100 1,194 100 Memo items Adjustment 750 35 0 0 0 0 750 63 Investment 1,374 65 136 100 794 100 444 37 a. Includes, Economic Reform and Development Loan (ERDL) I-III (US$320 million), Trade Adjustment (US$150 million), Export Development (US$40 million), and Public Sector Reform Loan (PSRL) (US$120 million). b. Electricity, power, energy, telecommunications, and transportation. Source: World Bank, Business Warehouse 2002. 1973 and 1990, for a total of $227 million), ESAL's objectives were clearly relevant and which mainly financed physical investments. were substantially achieved, in spite of a lengthy The loan closed in 1997 after the $20 million sec- delay. Electricity tariffs were adjusted to reflect ond tranche of the ESAL was delayed by two their long-run marginal cost. Electricity genera- years, and the $20 million third tranche by two tion, transmission, and distribution were fully and a half years, because of delays in imple- separated and are slated for privatization. An menting what was agreed. independent regulatory commission that reports W o r l d B a n k C o m m i t m e n t s , N e t F i g u r e 3 . 1 D i s b u r s e m e n t s , a n d N e t T r a n s f e r s Commitment Net disbursements Net transfers 250 200 150 100 US$m 50 0 -50 -100 90 91 92 93 94 95 96 97 98 99 00 01 Year 1 5 J O R D A N : S U P P O R T I N G S TA B L E D E V E L O P M E N T I N A C H A L L E N G I N G R E G I O N directly to the prime minister was formed in late of the energy sector conditions in the ESAL. 2000 and the commissioners were appointed. ERDLs shared the same objective as the earlier After price adjustments for petroleum prod- adjustment loans: to increase economic growth ucts--fuel oil, gas, and kerosene--in 1993 and through closer integration with the global econ- 1996, which conformed to ESAL conditionality, omy and to attract greater investment. The loans there was a hiatus in price adjustments, as inter- supported elimination of the remaining trade bar- national oil prices remained low. Oil prices riers and adoption of international trade and began to rise in 2000. The government tracked investment procedures and practices. Addition- international price movements and made adjust- ally, these loans sought to enhance the sound- ments in 2001 and 2002 to bring domestic prices ness and efficiency of the banking system and in line with international levels. to promote the development of capital markets The Agriculture Sector Adjustment Loan and long-term savings institutions by modern- (ASAL, $80 million) was approved in 1995,6 izing the legislative and institutional framework along with a $7 million technical assistance loan for the financial sector. Finally, the loans sought (Agriculture Sector Technical Support Project, to improve opportunities for the private sector ASTSP). The objective was to promote efficient through privatization and improved regulations. use of water resources through better pricing, A package of trade, investment, and financial deregulating markets, restructuring institutions, sector reforms and privatization was imple- and improving planning and investment in the mented under the three ERDLs. Jordan's trade sector. Irrigation tariffs were raised by 150 per- tariff structure was simplified and lowered to cent from 6 fils to 15 fils ($0.01 to $0.025) per comply with WTO requirements. The customs cubic meter in 1997, far less than the quadru- department estimates that the weighted average pling that was agreed to under the ASAL.7 Price tariff rate fell from 34.4 percent in 1987 to 13.5 controls for food, fruits, and vegetables were percent in 2000. Customs administration and ended; producer subsidies for wheat, barley, valuation procedures were modernized to con- and tomatoes were removed; and the land mar- form to international practice. Jordan has further ket in the Jordan Valley was deregulated, legal- integrated into the global economy with a major izing long-term leases of land. Although shift in trade policy that included an Association agricultural exports grew by 11 percent per year Agreement with the EU in 1999, membership in over the period 1995­98, a World Bank report the WTO in 2000, and a free-trade agreement noted that it is not possible to conclude that the with the United States in 2001. The free-trade desired shifts from water-intensive crops to low- agreements with the United States enabled a water-use crops have taken place. The loan and Qualified Investment Zone (QIZ) to be set up the technical assistance were, at best, only mod- for tariff-free and quota-free exports to the estly successful in strengthening the Ministry of United States. A Special Economic Zone has Water and Irrigation, Ministry of Agriculture, also been set up in Aqaba. Several laws, includ- and Jordan Valley Authority (JVA). ing investment promotion, customs, banking, and The ESAL and ASAL proved difficult to imple- privatization, have been implemented (Annex B, ment smoothly, leading the Bank to shift from table B.6). A privatization agency was estab- multiple-tranche loans--with their attendant dis- lished. An Institutional Development Fund grant bursement delays when conditions were not ($480,000) contributed to initial institution build- met--to single-tranche adjustment loans in 1995.8 ing at the agency and Bank-administered, USAID- The successive series of three one-tranche Eco- funded technical assistance was critical in nomic Reform and Development Loans (ERDL facilitating transactions. After some initial delays, I-III) were the pillars of the 1995 strategy, the pace of privatization picked up after mid- accounting for 60 percent of total lending (or 2000. Of the 40 companies originally targeted for $320 million) over FY96­99. Expanded single- privatization, 34 have been privatized.9 Most tranche adjustment lending was questioned by important, six of eight major transactions have the Board, which noted the delays in fulfillment been completed, and the remaining two are 1 6 W O R L D B A N K S E R V I C E S A N D P R O D U C T S well under way (Annex B, table B.7). By mid- Bank-assisted education projects were either 2002, 51 privatization transactions were com- closed or still under implementation during the pleted with proceeds of more than $900 million, 1990s; they amounted to $283 million in IBRD although the sale of 48 percent of Jordan loans (or 14 percent of total lending). The Telecommunications alone accounted for $610 outcomes of these projects were satisfactory in million (according to Executive Privatization terms of the implementation of their own nar- Commission estimates of May 20, 2002). While row objectives of providing improved facilities the core airline segment is awaiting a buyer, other and teacher training. However, the projects parts of Royal Jordanian Airlines have already did not include measurable indicators of qual- been sold. Privatization of the power and min- itative and institutional aspects to assess ing sectors is being prepared. In addition, 45 progress.11 small shareholdings, held by a government hold- In the water supply and sanitation sector, the ing company, have been divested. Finally, the Bank has one ongoing operation, following Ministry of Supply has been abolished and food seven closed projects approved during 1960­86 subsidies and price controls have been removed. for a total of $156 million. The closed opera- Despite structural reforms and macroeconomic tions focused primarily on building infrastruc- stability, strong and sustainable growth in real ture rather than institutions and, hence, there output has not been achieved. were few improvements in WAJ finances, tar- The first Public Sector Reform Loan (PSRL, iff reforms, and reduction of unaccounted-for- $120 million) in a planned series of three suc- water. However, the ongoing Amman Water cessive single-tranche PSRLs was approved in and Sanitation Management Project (FY99, $55 May 2001, and the second for $120 million in million) supports development of enabling June 2002. However, the conditions relate to institutions, investment to reduce water losses, "inputs" (for example, upgrading computers in and improvements to billing systems. The proj- courts and having a new civil service bylaw), ect introduced a performance-based private not "outputs" (such as quality of government management contract for the Greater Amman service or reduction in expenditures that the area, servicing about half of the population. PERs have identified as being poorly spent). Fur- Although the project is still under implemen- thermore, the PSRL-I tackles civil service reform, tation, the indications are that the manage- and a recent OED review of Bank assistance in ment contract is yielding benefits, partly because this area finds that adjustment loans are partic- the government increased the average water ularly ill-suited to this (OED 1999). Although it and sewerage tariffs for Amman by 30 and 60 is too early to evaluate their outcomes, it may percent, respectively, during project prepara- have been more prudent to support some of tion. The contractor has managed to reduce these measures10 through lending instruments expenditures on operations and maintenance that allow adequate time for implementation, through efficiency savings and significantly such as investment or adaptable lending (OED improved billing and collections such that, for 1999), and to focus on outcomes rather than the first time, income now exceeds operating inputs. expenses. Some problems are emerging, how- ever. The contractor does not have the author- Investment Lending ity to pay suppliers. Its financial credibility is Investment loans were designed to address damaged when the government is slow to pay critical infrastructure and human resource con- bills, for example, for electricity or external straints. Annex E, table E.3, shows overall sat- contractors. Enforcing legal action for illegal isfactory project performance rating by sector, water use and delinquent payment of bills and the background papers commissioned for appears to be difficult and points to the need this CAE provide detailed analysis. The edu- for better adminstration of these issues. Levels cation sector is among the largest and most sig- of unaccounted-for-water have marginally nificant activities in the Bank program. Seven declined to just under 50 percent. 1 7 J O R D A N : S U P P O R T I N G S TA B L E D E V E L O P M E N T I N A C H A L L E N G I N G R E G I O N O E D E v a l u a t i o n F i n d i n g s o f T a b l e 3 . 2 R e c e n t l y E v a l u a t e d P r o j e c t s , E x i t F Y 9 0 s Total Satisfactory Likely evaluated outcome sustainability Substantial ID Country (US$M) (%) (%) (%) Jordan 1,192 93 75 50 Adjustment lending 630 100 87 75 MNA 12,873 69 47 33 Algeria 3,055 46 5 20 Egypt 1,565 82 36 35 Morocco 4,298 66 58 39 Tunisia 1,706 85 87 28 Bankwide 198,940 76 62 41 Source: Operations Evaluation Department rating database 2002. Also see Annex E. OED Findings on Closed Projects rated by QAG as at risk as of December 2002. Jordan's project ratings have been high--in Jordan's commitments at risk of 14 percent are terms of outcome, sustainability, and institu- below the Bankwide average of 18 percent and tional development (ID) impact--relative to all the MNA average of 27 percent (Annex E, projects Bankwide and to other countries in the table E.2). MNA Region (table 3.2). This is true for both adjustment and investment lending. However, 63 Efficiency of World Bank Assistance percent (by value) of adjustment loans had mod- The Jordanian country assistance program is erately satisfactory outcomes. relatively expensive (Annex F) because of small project size (half the Bankwide average). The Portfolio Performance: Quality Assurance average program cost of $26 per $1,000 of net Group Assessments commitment for satisfactory and nonrisky proj- The Bank's current portfolio comprises eight ects is higher than the MNA average of $21 and operations with commitments of $255 million. the Bankwide average of $16 for the 1990s. But About half of the commitments are for human among the 22 countries with similar project size development projects, a third for urban devel- (of $35­$55 million), Jordan's average program opment (building new infrastructure and tourism cost is right in the middle. The efficiency ratio, development), and the remainder for water however, is confined to the cost per dollar lent supply and sanitation. Project implementation by the Bank and does not reflect the substan- and development impact ratings are satisfactory tial additional cofinancing resources mobilized-- with the exception of one project, which was a ratio of $1.02 on every Bank dollar. 1 8 4 The Development Effectiveness of World Bank Assistance T his chapter evaluates World Bank assistance by assessing its contri- bution to Jordan's development outcomes. This is done by examin- ing, in more detail, the progress on each of the objectives of the Bank's assistance strategy: (a) macroeconomic stabilization and growth; (b) poverty reduction and human development; and (c) water resource management. OED rates the outcome of the Bank's assistance Stand-by Arrangement and the Extended Fund program as moderately satisfactory. Macroeco- Facility), helped the government set a sound nomic indicators suggest successful stabiliza- framework for stabilization and adjustment and tion, given the 1989 debt crisis and the disruption stave off Jordan's financial crisis. However, the caused by the Gulf War. Although real per capita fiscal deficit (including grants) remained above income remained stagnant during most of the 4 percent of GDP through 2000.1 Dependence 1990s, this was a commendable achievement on foreign grants and borrowing for fiscal bal- considering the political and economic difficul- ance continues. ties Jordan faced. Significant progress was made The World Bank's high growth projections of in meeting the MDGs. While poverty has not sub- the 1990s (over 6 percent annually) were unre- stantially decreased since 1997, it remained alistic,2 especially considering the low level of below the level in countries at similar income investment (both government and private, non- levels. Progress in the water sector has been housing) since 1985 (figure 4.1). Annual growth more modest than had been hoped. barely exceeded the high population growth rate, resulting in stagnant real per capita income Macroeconomic Stabilization (figure 4.2). and Growth Noting that growth fell short of forecasts, the Macroeconomic stability (single-digit inflation) 1999 strategy indicated that the decline occurred and comfortable foreign exchange reserves because Jordan faced several unforeseeable fac- were impressive achievements given the 1989 tors that were outside its control (World Bank debt crisis and the disruption caused by the 1991 1999). The stalled regional peace negotiations, Gulf War (Annex B, table B.1). The macroeco- the loss of political euphoria, and the East Asia nomic dialogue, through the Bank policy-based crisis were branded as the culprits, rather than lending and IMF programs (for example, the decades of low investment.3 1 9 J O R D A N : S U P P O R T I N G S TA B L E D E V E L O P M E N T I N A C H A L L E N G I N G R E G I O N F i g u r e 4 . 1 P u b l i c a n d P r i v a t e I n v e s t m e n t 30 Private fixed investment 25 20 Government 15 capital expenditures 10 Private non- 5 residential fixed investment 0 1 9 7 5 1 9 8 0 1 9 8 5 1 9 9 0 1 9 9 5 2 0 0 0 Preliminary data suggest that GDP growth tion changes, privatization, and financial sector picked up to more than 4 percent in 2000 and reforms. Jordan's trade hurdles were removed. 2001. After a period of slow export growth in The investment regime is friendly to domestic the 1995­00 period, export growth increased to and foreign investors and the pace of privatiza- more than 20 percent in 2001. Jordan's QIZs have tion has picked up. Nevertheless, while macro- been an important reason for the increased economic indicators suggest successful exports. Jordan also diversified its products and stabilization, economic growth was slow until markets, helped by the U.S.-Jordan Free-Trade 2000, even as wide-ranging structural reforms Agreement. were implemented. Private investment has fallen in the reform period by more than one-half, Private and Financial Sector from 26 percent of GDP to 11 percent between Development and Privatization 1993 and 1998, while private nonresidential Bank-supported reforms included trade policy investment has improved (rising to 8 percent of and administration reforms, investment regula- GDP), although this level is still not high enough F i g u r e 4 . 2 R e a l G D P a n d P e r C a p i t a G D P GDP 1995 GDP per capita, dinars, million 1995 dinars 6 ,0 0 0 1,6 0 0 Real GDP per capita 1,4 0 0 5 ,0 0 0 1,2 0 0 4 ,0 0 0 1,0 0 0 3 ,0 0 0 8 0 0 6 0 0 2 ,0 0 0 Real GDP 4 0 0 1,0 0 0 2 0 0 0 0 19 7 5 19 8 0 19 8 5 19 9 0 19 9 5 2 0 0 0 2 0 T H E D E V E L O P M E N T E F F E C T I V E N E S S O F W O R L D B A N K A S S I S TA N C E to produce the rates of capital accumulation mate of the poverty line should take account of needed for faster growth. The expected flood of information from the current survey and assess foreign investment did not materialize.4 Growth changes over time in the structure of food and might have been more likely if the Bank had other basic consumption needs of those house- urged lower government spending, because this holds at or close to the poverty line. Every would increase domestic savings, and perhaps attempt should be made before the next poverty private investment. assessment is completed (it is hoped as a col- Important reforms intended to facilitate and laborative effort between the government and strengthen financial intermediation by Jordan's the Bank) to achieve consensus on the appro- financial system--banks, nonbank financial insti- priate poverty line. tutions, contractual savings institutions, and the With the support of the Bank and other securities markets--have been successfully donors, Jordan made substantial progress in implemented. Jordan has a healthy and sophis- almost all areas covered by the MDGs and is ticated financial system for its level of develop- likely to meet the target levels by 2015 (box 4.1). ment. Deposits in the banking system, excluding The Bank contributed to many of these out- sizable deposits in the West Bank and Gaza comes, primarily through its assistance. Poverty branches, exceed Jordan's GDP. Almost 75 per- reduction and human development were the cent of the deposits go to the private sector, the basis for 30 percent of all Bank lending to Jor- rest to the government. Nonbank financial inter- dan during the 1990s. Most of this went to edu- mediation in Jordan is relatively small, although cation, a pattern repeated from previous decades. the Amman Stock Exchange's capitalization, at In addition to lending, the World Bank pro- 77 percent of GDP, is one of the highest ratios vided analytical and advisory services, particu- in emerging markets. Annual trades amount to larly in poverty and health. only 5 percent of GDP and new issues are rare. Without the Bank's ongoing support in devel- Expectations of attracting substantial listings oping an operational approach for the Social Pro- from regional companies have not yet materi- ductivity Program (SPP),6 originally requested by alized because of regional unrest. the government, the Bank's assistance would probably have been less focused on targeting the Poverty Reduction, Human Development, poor. The target populations are the poor in and Progress toward the MDGs refugee camps, squatter settlements, rural areas, and in urban pockets of poverty. The SPP is Controversy over poverty estimates not yet expected to help increase access of the poor to resolved. As mentioned earlier, there is a range basic social services and to create job opportu- of estimates of poverty in Jordan. One of the nities. The SPP also attracted the participation of Bank's roles should be to close the large gap other major donors, such as USAID and the between estimates so that the focus can be IDB, and was one of several strategies used by shifted to policy and strategy to reduce poverty. the government for poverty reduction. These Both of the Bank's poverty assessments reviewed activities, although not yet complete, appear to the range of poverty estimates and concluded be meeting their objectives. that the Bank's approach was defensible on The considerable Bank support to schools and practical and theoretical grounds. This evalua- health centers, and more recently to universities tion agrees with the Bank's estimate and notes and hospitals, supplemented government that Jordan's 1997 incidence of poverty is low resources substantially and also attracted a num- compared with other MNA countries at similar ber of cofinanciers. From 1990 to 2001, the Bank income levels.5 Unfortunately, household surveys contributed $220 million to capital expenditures in Jordan are conducted only every five years, in basic education that represented 34 percent so trends in poverty can be discerned only at of total government capital spending. Bank pro- long intervals. The results of a 2002 household grams have been credited with improving basic survey will be available in 2003. Any future esti- education and health services. For example, 2 1 J O R D A N : S U P P O R T I N G S TA B L E D E V E L O P M E N T I N A C H A L L E N G I N G R E G I O N J o r d a n : M i l l e n n i u m D e v e l o p m e n t B o x 4 . 1 G o a l s Indicator 1990 1995 1999­00 Goals 2015 1. Eradicate extreme poverty and hunger Population below $1 a day (%) <2 2.0 <2 1.51 Prevalence of child malnutrition (% of children under 5) 6.4 6.4 5.1a 3.68 Income share held by lowest 20% .. .. 7.6a .. 2. Achieve universal primary education Net primary enrollment ratio (% of relevant age group) 66.3 67.5 96.5 100 Youth literacy rate (% ages 15­24) 97.0 98.4 99.3 100 3. Promote gender equality Ratio of girls to boys in primary and secondary education (%) 93.2 96.5 96.5 100 Ratio of young literate females to males (% ages 15­24) 97.3 99.0 100 100 4. Reduce child mortality Under 5 mortality rate (per 1,000) 34.0 34.2 30.3 11.33 Infant mortality rate (per 1,000 live births) 30.0 28.5 26 8.3 Immunization, measles (% of children under 12 months) 87.0 92.0 94.0 .. 5. Improve maternal health Maternal mortality ratio (modeled estimate, per 100,000 live births) .. 41.0 .. 13.5 Births attended by skilled health staff (% of total) 87.0 97.0 .. 100 6. Combat HIV/AIDS, malaria, and other diseases Prevalence of HIV, female (% ages 15­24) .. .. 0.02 b Tuberculosis cases detected under DOTS (%) .. .. 33 b 7. Ensure environmental sustainability Access to an improved water source (% of population) 97.0 .. 96.0 98.5 Access to improved sanitation (% of population) 98.0 .. 99.0 99.0 8. Develop a global partnership for development Personal computer (per 1,000 people) .. 6.4 22.5 .. Fixed line and mobile telephones (per 1,000 people) 57.9 60.5 151.2 .. Note: DOTS = directly observed treatment short-course. a. Numbers reflect 1997 funding. b. Halt and begin to reverse. Source: World Bank 2002b. there has been a 23 percent growth in basic and sonnel in either the health or education sectors secondary school enrollment, and Jordan's lit- without the Bank's assistance.7 eracy rate surpasses average literacy rates for East The Bank has played a small role in the Asia and Latin America. There has also been a health sector and major reforms remain to be substantial decline in the number of rented addressed. The primary goal of Bank assistance houses used as primary and secondary schools. to the health sector, as stated in Bank strategies, The facilities and services at primary and com- was to improve the efficiency of the system and prehensive health centers have also been the quality of service delivery.8 Over the past 10 enhanced, although further improvements are years, Jordan's public health expenditures have needed in the efficiency of services. Jordan increased dramatically, but the improvements in would probably not have as many trained per- health services expected from Bank-assisted 2 2 T H E D E V E L O P M E N T E F F E C T I V E N E S S O F W O R L D B A N K A S S I S TA N C E programs have not been fully realized yet. While more for water, as recommended by the Bank, the Bank has (after long delay) started to intro- at the same time as they were being squeezed duce management information systems, little so by elimination of subsidies. Yet when the Bank far has been achieved in health policy reform. is sensitive to the political economy of Apart from supporting continued improvements reform­­its acceptability and timing­­it can be in efficiency, it is strategically necessary for the successful. The reform of the Amman urban Bank and other donors to press for more effec- water tariffs (now among the highest in the tive policy leadership and coordination among Middle East) and the adoption of a private sec- the numerous public and private health care tor management contract are good examples of providers. Steps toward implementation of the the Bank's successful efforts. universal health insurance scheme have been The Bank could have been more persuasive minimal. if concerns about the effect of increased irriga- Areas that require closer monitoring by the tion-water tariffs on employment and the labor government and that warrant Bank support market (an area neglected by the Bank) had been include improving the efficiency of social expen- allayed. If agricultural water tariffs had been ditures. Although progress has been made in raised to the Bank's recommended level and allo- achieving gender equality, especially in educa- cation left to the market, and unaccounted-for- tion, women's participation in economic and water reduced to internationally accepted norms, political activities still needs improvement. it is likely that some large investment to increase supplies (for example, the proposed $600 mil- Water Resource Management lion Disi-Amman water conveyor for a MIGA Even though agriculture uses the most water, the guarantee) could have been significantly delayed Bank's attention to water use in the sector was or reduced, at least in the medium term, thus notably absent during 1961­90, as it focused on relieving strain on government finances.11 An urban use. Subsequently, the preparation of the OED evaluation of the last three water supply Bank's 1993 water resources management pol- projects concluded that the Bank's willingness icy catalyzed attention to comprehensive water to support rapid capacity expansion, without resources management in its member countries.9 addressing the demand-side and without heed The objective of the Bank's strategy for Jordan to better financial management of water insti- was to support efficient utilization of water tutions, was a contributing factor to this unsat- resources through agriculture, trade, water, and isfactory state of affairs. institutional reforms. The Bank supported these The Bank's policy dialogue and analytical objectives through public dialogue, technical work leveraged legislation and government poli- assistance, and adjustment and investment lend- cies. The government developed Jordan's Water ing. However, the Bank's contribution to Jordan's Strategy and Policies for 2002 and an ambitious water sector has declined in the past decade investment program for the years 2002­11.12 and is small compared with other donors.10 The strategy stresses the need to develop and Substantial progress has been made in achiev- improve water resource management, with an ing the Bank's objectives, but some important emphasis on sustainability. Particular objectives aspects have not yet been fully implemented. include maximizing water use efficiency and Barriers to agricultural trade were removed. The promoting integrated use of multiple sources, Bank's technical assistance (TA) significantly including water rights under international treaties, enhanced capacity for agricultural research, but minimizing pollution and degradation of qual- it has not yet led to effective technology trans- ity, and resource mining. Water and wastewater fer and extension services. While water meter- projects associated with regional peace processes ing led to better knowledge of groundwater are accorded special attention for construction, use, it did not improve water conservation or operation, and maintenance. The strategy targets income from water sales. Political capital was lim- full recovery of operation and maintenance costs ited and did not extend to making farmers pay on profitable undertakings in industry, com- 2 3 J O R D A N : S U P P O R T I N G S TA B L E D E V E L O P M E N T I N A C H A L L E N G I N G R E G I O N J o r d a n ' s W a t e r S t r a t e g y B o x 4 . 2 a n d P o l i c i e s Clause 11 on Resource Development: The full potential approached. The role of water tariffs shall be con- of surface water and groundwater shall be tapped to sidered as a tool to attract private investment in water the extent permissible by economic feasibility and by projects. social and environmental impacts. Clause 44: Cost recovery shall be linked to the aver- Clause 30 on Shared Water Resources: Bilateral age per capita share of GDP and its level. It shall be con- and multilateral cooperation with neighboring states nected to the cost of living and the family basket of shall be pursued, and regional cooperation shall be consumption. However, profitable undertakings in advocated, preferably within the provisions of a industry, tourism, commerce, and agriculture shall be Regional Water Charter. made to pay the fair water cost. Clause 17 on Resource Management: Priority is Clause 45: Until cost recovery is full, and national given to the sustainability of use of the previously savings become at levels capable of domestic financ- developed resources. ing of development projects, project financing will Clause 43: Recovery of the cost of utilities and the depend on concessionary loans, private borrowing, or provision of services shall be targeted. Recovery of other arrangements. operation and management cost shall be a standard practice. Capital cost recovery shall be carefully Source: Jordanian Ministry of Water and Irrigation 2002. merce, tourism, and agriculture, and indicates it these reforms were needed. As Jordan has joined will subsidize these costs in nonprofitable sec- WTO, trade and investment policy reforms are tors according to ability to pay (box 4.2). The unlikely to be reversed. Financial sector reforms government is actively pursuing commercial- have also taken root and the privatization pro- ization and privatization of urban water and gram has quickened. However, there are three wastewater services in Amman, the Northern risks to sustainability: (a) existing regional con- Governorates, and Aqaba. flicts­­including military action against Iraq, a Given the government's increased receptive- major trading partner and a source of financial ness to reform, the Bank, in coordination with assistance­­pose risks; (b) the large fiscal deficit other donors, should assist Jordan in imple- and high external debt increase Jordan's vul- menting a comprehensive approach to water nerabilities to external shocks; and (c) persist- resources management.13 While efficient domes- ent pockets of poverty, high unemployment, tic water management can avert, or at least sig- and postponement of parliamentary elections nificantly delay, regional water disputes, regional could raise social pressure and create political water management may be more appropriate for instability. countries that are water interdependent, and Institutional changes in Jordan's policy, reg- the Bank has the potential to ameliorate the ulatory, and legal environment were accom- MNA regional water problem.14 However, the plished with the help of Bank assistance. New interaction of many interests and tensions, espe- organizations were established and now are cially when water-short countries share resources, operating successfully, such as the Securities creates cooperation difficulties.15 Commission and the Executive Privatization Commission. Other organizations were restruc- Sustainability and Institutional tured, such as the customs administration and Development bank supervision. A broad range of investment, Despite the initial wavering government com- competition, and customs laws were imple- mitment to energy reforms and privatization, mented (Annex B, table B.6). The Bank's assis- there is now wide agreement in Jordan that tance was modestly successful in inducing 2 4 T H E D E V E L O P M E N T E F F E C T I V E N E S S O F W O R L D B A N K A S S I S TA N C E organizational and administrative reform and in in performance or cost. Neither WAJ nor JVA have strengthening institutions in the agriculture, undergone more than modest reorganization. water, education, and health sectors. Overstaffing WAJ recently signed a private sector Bank-sup- of water organizations remains. The growth of ported management contract for Amman water unskilled staff and a lack of a professional cadre supply, which modestly improved water use and incentives continue to undermine organi- efficiency and significantly increased cost recov- zational effectiveness. As the Performance Assess- ery. New water regulation did not substantially ment Report for the ASAL concludes, "Attention improve water conservation or income from to institutional reform of the agriculture and water sales. Similarly, efficiency did not improve water sectors was late, partial, and ineffective" significantly in the education and health sectors, (OED 2003, p. 1). A World Bank internal report and the cost in public expenditures was relatively for the ASAL notes that within the Ministry of high, although substantial progress was made Agriculture, while the organization chart has toward meeting the MDGs. Overall, institutional been changed, there is no apparent improvement development impact is rated as modest. 2 5 5 Contributors' Performance World Bank Performance T he Bank prepared a full set of due diligence ESW: poverty assessment, public expenditure review, country economic memorandum/devel- opment policy review, and sectoral reviews. Bank performance dur- ing the 1990s ensured that issues identified by its high-quality analytical work were addressed, with a few exceptions, mentioned below. In particular, in the area of public expenditure fers from the Bank would have been large and management, the loans did not incorporate all negative without new loans, and this was also of the Bank's analytical work. There were areas a factor in the Bank's lending decisions. Had (for example, government overstaffing) where the these pressures not existed, some Bank-assisted government did not feel a consensus existed for projects might have been smaller and appraised reform. The Bank could have been more per- in a more deliberate manner, with a focus on the suasive and pushed harder for cuts in government most important issues.1 expenditures, especially because its analytical Negotiations for the ASAL were cordial but dif- work provided ample examples where this could ficult. It became clear at the time the ASAL was be done without undercutting the government's approved that the second increase in the water social spending decisions. With patience, per- tariff was politically unrealistic and would be sistence, and sound analytical work, the Bank has jeopardized by the need for disbursements to had an impact on the view of government in meet a balance of payments financing gap, a other areas (for example, privatization). delay that the Bank, as chair of the Country Con- The fragile political environment facing Jor- sultative Group, could not accept.2 The Bank dis- dan throughout the 1990s had an adverse impact bursed its tranche but did not work with the on its economy through lower export income government and cofinancier, Kreditanstalt für and remittances. This, in turn, affected Jordan's Wiederaufbau (KfW), on alternatives to achieve need for external financial assistance, to which the policy objective, perhaps on a longer sched- the Bank responded positively with a regular ule.3 Subsequently, the Bank's partnership in the pipeline of large projects, particularly adjust- sector languished, and follow-up has been rel- ment lending. As indicated earlier, with old atively minimal, reducing the Bank's effective- loans being serviced and repaid, the net trans- ness in the late 1990s. 2 7 J O R D A N : S U P P O R T I N G S TA B L E D E V E L O P M E N T I N A C H A L L E N G I N G R E G I O N The impact of construction and training in all conditionality have been completed. Despite educational projects financed by the Bank and wavering commitment to energy reforms and pri- other donors would have been more effective vatization, which delayed implementation, the if the Bank and its partners had engaged the Jor- borrower's follow-through has been substan- danian authorities during the 1980s and 1990s tial, especially in the past two years. The bor- in a review of policy issues for the whole sec- rower removed most quantitative restrictions tor, rather than the narrow focus on basic edu- and reduced tariffs, liberalized investment pro- cation and, later, on higher education. For cedures, implemented several laws, and under- example, the Bank's assistance would have been took financial sector and tax reforms. Jordan more strategic and had greater impact on the joined the WTO and signed free-trade agree- quality of education, at all levels, if the Bank had ments with the EU and the United States. Jordan adopted a broader, sectorwide approach in its now has one of the most transparent and open analytical work, which would have highlighted business environments in the region. the strategic choices that needed to be made. The borrower provided excellent support for Instead, everything became important, with the Bank-assisted projects. For example, trade, result that core programs received the same finance, and investment reforms enjoyed strong attention as non-core programs. The result has government commitment, evidenced by the been a lack of focus on priorities. quick resumption of implementation when the The Bank mobilized a high cofinancing ratio 1991 Gulf crisis eased. Government officials for its support. Between FY90 and FY01, the worked closely with Bank staff in all aspects of Bank attracted $1,212.4 million in cofinancing preparation, including identifying project com- against $1,194 million in IBRD commitments, ponents and formulating implementation organ- leveraging $1.02 on every IBRD dollar.4 izations. There were generally no procurement The synthesis of poverty analyses into a frame- problems, and some officials requested additional work for poverty reduction--the Social Produc- training in procurement. tivity Program--was constructive and underlines There was, however, limited enthusiasm on the importance of targeting pockets of poverty the part of the borrower for raising irrigation fees with the development of an integrated approach and for curbing public expenditures. There is and a sound series of investments. considerable debate among high-level policy- The Bank supported the Mediterranean Devel- makers in Jordan about the relevance of water opment Forum (MDF), a regional consortium of pricing to ensuring efficient use. Many high- think tanks and universities that have placed dif- level officials believe that administrative alloca- ficult policy issues on the agenda. The fourth tion is a more socially equitable policy than MDF conference, organized by the World Bank pricing. Indeed, a senior government official Institute (WBI), was held in Amman in October noted that the cost (JD 5 million per year) of pro- 2002 and attracted 500 representatives from the viding water to the Jordan Valley, which enabled governments, the private sector, and civil society sustainable livelihoods for the 300,000 people of the region. Coverage included trade and invest- engaged in agriculture, was relatively small com- ment, unemployment, empowering local gov- pared with the costs that would be incurred if ernments, and the digital divide. Participants rated very high water charges caused farmers to aban- the conference highly, and the WBI evaluation don the land and migrate to Amman for employ- concluded that the MDF provided a good platform ment. This social welfare dimension of water for regional collaboration and policy dialogue. represented the greatest divergence of views between the Bank and the government in the Borrower Performance agricultural sector.5 By comparison, in the urban The borrower has implemented wide-ranging water supply and sanitation sector, the Bank and and complex structural reforms, including trade, government are in accord about the need for energy, investment, financial sector reforms, realistic water charging and institutional change, and privatization. All loan covenants and almost although good administration is an issue, par- 2 8 C O N T R I B U T O R S ' P E R F O R M A N C E ticularly for those unwilling to pay for water. Sim- ration with the IMF has been successful in sta- ilar safety net concerns (bolstered by a fall in Gulf bilizing the Jordanian economy and laying the employment after 1991) maintain large govern- foundations for structural reforms through var- ment employment in other sectors. ious Fund programs, totaling $492 million (that is, SBAs in 1989 and 1992, EFF in 1994, Aid Partner Performance Issues expanded EFF in 1995, and an Extended The Bank provided leadership in donor coor- Arrangement in 1999). dination by organizing Consultative Group meet- Since 1998, the Bank's participation in donor ings in 1993, 1994, and 1996. The Bank was an meetings, particularly in the recently created active participant in donor meetings until 1998. Donor Coordination Group, has lapsed to an ad Strategic selectivity among donors has been hoc basis when missions were in Amman. Most free of "turf battles." The Bank participates of the Bank's development partners in Jordan actively in macroeconomic, finance, transport, felt they were not consulted on many important education, health, social protection, and, issues and that the Bank appeared to operate recently, public sector reform. USAID is more in isolation.6 Some felt that the Bank's privileged heavily involved in population programs and is position with the government crowded out also involved, along with the EU, in microfi- other donor initiatives. Some donors suggested nance and small and medium-size enterprises. a World Bank office in Amman. Clearly this is The Germans work closely with the government an issue for Bank management. But the Bank on water issues and the Japanese focus on needs to strengthen its coordination with other tourism development and exports promotion. donors and build a collaborative agenda for IDB assistance focuses on industry and mining, change on the basis of its analytical work and public utilities, and the social sectors. Collabo- global best practice. 2 9 6 Islamic Development Bank Assistance to Jordan IDB Assistance Strategy for Jordan S ector Strategy. During the 1970s and 1980s, the IDB's strategy for development assistance to Jordan was mainly targeted to the devel- opment of industry and mining, in line with priorities of the govern- ment. The government gradually shifted emphasis to other areas of development such as water resources, health care, and human resources development, which IDB has also incorporated into its strategy. In formulating its three-year work program for work program for project financing activities in its Jordan during the period 2003­05 (1424H- member countries. Jordan was among the first few 1426H),1 IDB's assistance focused on infra- member countries in which the IDB conducted its structure development (water, sewerage, and CASS in December 1994 for the three-year period roads), mining (downstream industries), and 1995­97 (1416H-1418H). For the first time in a human resource development (health and edu- member country, a review of the previous CASS cation). In addition, provision of technical assis- was conducted for Jordan in February 1999 to tance for capacity building of executing agencies develop a three-year revised work program for was also envisaged. Cofinancing was proposed 1999­01 (1420H-1422H). Subsequently, another with the Co-ordination Group of Arab Funds and three-year work program for the period 2003­05 other multilateral development financing insti- (1424H-1426H) was prepared, based on the out- tutions to meet project-financing requirements. come of a country dialogue mission to Jordan in In conformity with Jordan's current Economic August 2002. and Social Transformation Program, informa- tion technology and human resource develop- CASS Objectives. The main aim of CASS is to ment have been accorded top priority. identify and design projects that reflect the pri- orities of both the member countries and the Country Strategy. As part of its medium-term IDB. The CASS enables the development of an strategic agenda, the IDB has adopted the prepa- integrated and coherent assistance program, ration of the Country Assistance Strategy Study which would enhance the effectiveness of the (CASS) as a basic tool for formulating a three-year Bank's activities and lead to a more effective dia- 3 1 J O R D A N : S U P P O R T I N G S TA B L E D E V E L O P M E N T I N A C H A L L E N G I N G R E G I O N logue with member countries. Within the limits oped for Jordan based on the CASS exercise. of its resources, the Bank places high importance Out of 16 projects that were proposed in the on the responsiveness of its project portfolio to CASS, 10 projects (that is, 62.5 percent) were the development needs and requirements of its appraised and approved by the Bank over the member countries. A CASS is launched to build three-year period, which is a relatively good an effective and relevant pipeline of projects that performance. pave the way for preparation of a three-year · The total amount of project financing actually work program for the concerned Country Oper- extended to Jordan over the three-year period ations Department (COD) of the Bank. When- was $112 million for the 10 projects approved, ever a CASS exercise or a policy dialogue mission as compared with the proposed average is undertaken, the concerned COD generally amount of $199 million for 16 CASS projects considers two types of projects: first-priority (56 percent). projects and second-priority projects. The latter · The distribution between nonconcessional are taken as backup projects in case some of the and concessional financing for the projects first-priority projects do not materialize. approved over the three-year period has been The specific objectives of the initial CASS for in the ratio of 90:10. This ratio reflects a good Jordan (1995­97) were determined as follows. performance if compared with expectations. 1. The proposed sectoral allocation of IDB financing: It is worth mentioning here that two more proj- a) Enhancement of the productive sector-- ects, as envisaged in the three-year work pro- the mineral-based manufacturing subsec- gram, were approved in the following year tor and its related infrastructure in the (1999). If this is considered, the performance for Dead Sea area. The proposed allocation the period will substantially improve to 12 out was set at 55 percent over three years. of 16 CASS projects (75 percent). However, the b) Assistance to the agricultural sector number of projects processed (8 as against 18) (including irrigation projects), which rep- and the amount approved ($91 million as against resented 16 percent of the proposed allo- an average of $215 million) within the framework cation over three years. of the reviewed CASS for the period 1999­01 indi- c) About 14 percent of the proposed financ- cates less satisfactory results if compared with the ing was accounted for by the water previous three-year program. But in this partic- resource sector. ular case, the assessment should take into con- d) About 10 percent of the proposed alloca- sideration that some projects are always included tion was projected for human resource in the work program as a margin of security. development, mainly health and education. Furthermore, 13 projects have been identified 2. A 20:80 split between concessional for inclusion in the project pipeline developed (loan/technical assistance) financing and rev- by the CASS at a total financing cost of $242 mil- enue-generating financing (leasing/install- lion for the period 2003­05 (1424H-1426H). ment sale). Two projects were expected to involve the trans- port and communications sector; five, the edu- Implementation of CASS. The pertinence of the cation sector; three, the health sector; one, the CASS could be assessed through a useful com- public utility sector; one, the mining and indus- parison of what had been proposed in the try sector, and one, the "other" sector. three-year work program for Jordan with the It is evident that emphasis was placed in the achievements made during the period 1995­97. latest CASS three-year program on human These are summarized in table 6.1. resources development (eight projects), while the The salient observations to be pointed out importance of the mining sector has decreased from the table are as follows: drastically, from more than 50 percent in the ear- · It appears that there has been a significant lier CASS to only 8 percent of the total allocated deviation from the project pipeline devel- amount. 3 2 I S L A M I C D E V E L O P M E N T B A N K A S S I S TA N C E I N J O R D A N P r o p o s e d a n d A c t u a l R e a l i z a t i o n T a b l e 6 . 1 o f C A S S T h r e e - Y e a r W o r k P r o g r a m , 1 9 9 5 ­ 9 7 Percent of Number of Achievement allocation projects (US$M) CASS 3-year period Sector Proposed Actual Proposed Actual Proposed Actual 1995­97 Mining and industry 55 54 9 2 109 61 (1416H-1418H) Agriculture (including irrigation) 16 ­­ 2 ­­ 32 ­­ Water resources 14 ­­ 2 ­­ 28 ­­ HRD 10 15 2 6 20 16 Energy ­­ 23 ­­ 1 ­­ 26 Other 5 8 1 1 10 9 Subtotal 100 100 16 10 187­211a 112 1999­01 Mining and industry 43 61 2 2 92 56 (1420H-1422H) Agriculture (including irrigation) 9 0.5 ­­ 1 19 0.4 Water resources 17 ­­ 3 ­­ 37 ­­ Transport and communication 25 28 4 1 54 25.3 HRD 6 10 3 3 13 9.2 Energy ­­ ­­ 1 ­­ ­­ ­­ Other ­­ 0.5 5 1 ­­ 0.1 Subtotal 100 100 18 8 180­250a 91 2003­05 Mining and industry 8 1 20 (1424H-1426H) Public utility 12 Yet 1 Yet 30 Yet Transport and communication 43 to be 2 to be 103 to be Health 22 imple- 3 imple- 53 imple- Education 14 mented 5 mented 35 mented Other 1 1 1 Subtotal 100 13 242 ­­ Not available. Note: Estimates are made wherever data are not available. HRD = Human Resource Development. a. Average used. Source: IDB data. Implementation of the work program for the Overview of IDB Operations in Jordan, period 2003­05 is yet to start, and its perform- 1976­02 ance will be judged with keen interest. Jordan joined IDB, along with 21 other pio- There is a general consensus in Jordan on neering members, on August 12, 1974. Jordan's the relevance and efficacy of the IDB's coun- subscribed and paid-up capital at end-2002 stood try assistance strategy. IDB's assistance was at around ID 20 million and ID 13 million, primarily targeted to the industrial and mining respectively. Jordan is a major beneficiary of development of the country during the 1970s IDB's financing. Total approvals by IDB in favor and 1980s, which was in line with the priori- of Jordan (excluding cancellations) from various ties of the government. Emphasis gradually sources (project, trade, and special assistance shifted to other areas such as water resources, financing) amount to $1.14 billion from 1976 to health care, and human resources develop- the end of 2002. The distribution of these ment. approvals is represented in table 6.2. 3 3 J O R D A N : S U P P O R T I N G S TA B L E D E V E L O P M E N T I N A C H A L L E N G I N G R E G I O N The present Country Assistance Evaluation IDB's ordinary operations were concentrated (CAE) focuses on the evaluation of the project- on the industry and mining sector, accounting financing portfolio of the Bank during the period for $165.93 million, which corresponds to 36.8 1976­02. percent of total approvals, followed by public Since inception, the IDB has approved a total utilities (21.4 percent); social services (20.8 per- of 51 projects, including technical assistance cent); transport, communication, and storage operations from ordinary capital resources (OCR) (19.6 percent); and agriculture, fishing, and for an amount of $450.38 million for Jordan forestry (1.3 percent). (39.6 percent of total financing). The summary of the IDB project portfolio for Jordan is given Mode-wise Distribution. Projects approved by in the following paragraphs, while the details are mode of financing (excluding cancellations) are presented in Annex N. presented in table 6.4. The distribution of ordinary operations by Sectoral Distribution. The sectoral distribution mode of financing shows a concentration in of IDB's OCR-financed projects in Jordan, leasing (54.2 percent), followed by installment excluding cancellations, is indicated in table sale (18.9 percent), loan (11.8 percent), and 6.3. Istisna'a2 (6.7 percent). T o t a l A p p r o v a l s b y t h e I D B T a b l e 6 . 2 f o r J o r d a n , 1 9 7 6 ­ 0 2 Number of Amount approved Percent of Type of financing operations ID million US$ million approvals Project financing (including technical assistance) 51 343.604 450.377 39.66 Trade operations 85 564.626 685.133 60.32 Special assistance 1 0.200 0.250 0.02 Total 137 908.430 1,135.760 100 Source: IDB data. S e c t o r a l D i s t r i b u t i o n o f I D B T a b l e 6 . 3 A p p r o v e d P r o j e c t s , 1 9 7 6 ­ 0 2 Percent of Number of Amount approved approved Sector operations ID million US$ million amounts Agriculture, fishing, and forestry 2 5.296 5.800 1.29 Industry and mining 15 126.556 165.926 36.84 Transport, communication, and storage 8 67.345 88.102 19.56 Public utilities 6 69.130 96.370 21.40 Social services 18 74.684 93.539 20.77 Miscellaneous 1 0.485 0.500 0.11 Multisector 1 0.108 0.140 0.03 Total 51 343.604 450.377 100 Source: IDB data. 3 4 I S L A M I C D E V E L O P M E N T B A N K A S S I S TA N C E I N J O R D A N S e c t o r a l D i s t r i b u t i o n o f I D B F i g u r e 6 . 1 A p p r o v e d P r o j e c t s , 1 9 7 6 ­ 0 2 Miscellaneous 0.11% Agriculture, fishing & Multisector forestry 0.03% 1.29% Social services 20.77% Industry & mining 36.84% Public utilities 21.40% Transport, communication & storage 19.56% Portfolio Assessment. From 1976 until the end Disbursements. The total amount disbursed by of 2002, the Bank approved 51 ordinary oper- the Bank for projects and technical assistance ations (both project financing and technical operations approved in favor of Jordan up to the assistance operations), totaling $450.38 million end of 2002 was ID 240.75 million, or 70.1 per- net of cancellations. The status of this global port- cent of the net approved amount. The overall folio at the end of 2002 is depicted in table 6.5. disbursement profile for Jordan at the end of Of the 51 projects approved by the Bank, for 2002 is shown in table 6.6. an amount of $450.38 million, 18 projects (for The actual total disbursements made for the $188.09 million, or 41.8 percent) are ongoing approved projects, which were under imple- and 33 projects (for $262.28 million, or 58.2 per- mentation as of December 31, 2002, was ID 41.27 cent) have been completed, while 13 projects million. This represents 12.0 percent of the total (amounting to $153.96 million, or 34.2 percent) approved amount. The repayment/disbursement were cancelled. ratio for the overall portfolio is 44.4 percent. P r o j e c t s A p p r o v e d b y M o d e T a b l e 6 . 4 o f F i n a n c i n g , 1 9 7 6 ­ 0 2 Percent of Number of Amount approved approved Financing mode operations ID million US$ million amount Equity 7 26.287 33.188 7.37 Installment sale 7 65.140 84.940 18.86 Istisna'a 2 22.704 30.300 6.72 Leasing 14 183.569 244.135 54.21 Loan 9 42.159 52.895 11.75 Technical assistance 12 3.745 4.919 1.09 Total 51 343.604 450.377 100 Source: IDB data. 3 5 J O R D A N : S U P P O R T I N G S TA B L E D E V E L O P M E N T I N A C H A L L E N G I N G R E G I O N P r o j e c t s A p p r o v e d b y M o d e o f F i g u r e 6 . 2 F i n a n c i n g , 1 9 7 6 ­ 0 2 60 50 40 30 million US$ 20 10 0 Equity Installment Istisna'a Leasing Loan Technical sale assistance Mode Cofinancing. Between 1976 and the end of 2002, was in the industry and mining sector (51.8 per- the total cofinancing amount approved by var- cent), followed by public utilities (19.6 percent); ious development financing institutions for Jor- the social services sector (18.3 percent); and dan stood at $1.24 billion. In this respect, the IDB the transport, communication, and storage sec- has cofinanced 21 projects in Jordan for a total tor (7.9 percent). The details of these cofinanc- amount of $230.10 million with a number of ing arrangements are shown in table 6.7. regional and international financing institutions, More specifically, seven projects (six com- including the World Bank. This represents 51.1 pleted and one ongoing) amounting to $264.31 percent of the total IDB project portfolio for Jor- million were cofinanced between the IDB and dan. According to the sectoral distribution for the World Bank ($105.19 million contributed by these 21 projects, the concentration of projects the IDB and $159.12 million by the World Bank). C u r r e n t S t a t u s o f I D B P r o j e c t T a b l e 6 . 5 P o r t f o l i o f o r J o r d a n b y e n d - 2 0 0 2 Percent of Status of Number of Amount approved approved approved projects operations ID million US$ million amount Completed 33 203.996 262.283 58.24 Cancelled 13 122.696 153.956 34.18 Ongoing 18 139.608 188.094 41.76 Total approvals, excluding cancelled projects 51 343.604 450.377 100 Disbursements 51 240.746 -- 70.07 Post-evaluated 9 -- -- -- Source: IDB data. 3 6 I S L A M I C D E V E L O P M E N T B A N K A S S I S TA N C E I N J O R D A N C u r r e n t S t a t u s o f I D B P r o j e c t F i g u r e 6 . 3 P o r t f o l i o f o r J o r d a n b y e n d - 2 0 0 2 Ongoing, Completed, 41.76% 58.24% Cancelled 34.18% These projects were financed through seven The salient features of the lessons learned modes of financing: two leasing, two install- from these post-evaluated projects are stated ment sale, one equity, one Istisna'a, and one below, while the summary of the post-evaluated loan. IDB-World Bank cofinanced projects rep- projects in Jordan is provided in Annex O. resent about 9 percent of the total project cost · Completion reports should be prepared by the ($2,979.19 million). Bank to allow post-evaluation to be more focused on impact evaluation aspects. Project Post-evaluation in Jordan · The financing beneficiary's maintenance abil- Nine­­out of 33 completed­­projects were post- ities should be thoroughly assessed to deter- evaluated in Jordan during the period 1991­02 mine the installed capacities of the project in (1412H-1423H). Two were in the public utilities terms of availability and utilization. sector, three in industry, two in education, one · Whenever an integrated project is involved, in health, and one in communications. With the evaluation approach should also take regard to performance rating of these projects, account of each of its components. It should four were considered successful, four partly also provide a separate assessment of each successful, and one not successful in accor- independent component through re-estimat- dance with the criteria set out in the Operations ing its financial internal rate of return/eco- Evaluation Guidelines. nomic internal rate of return. O v e r a l l I D B D i s b u r s e m e n t P r o f i l e T a b l e 6 . 6 f o r J o r d a n a s o f D e c e m b e r 3 1 , 2 0 0 2 Amount (ID million) Percent Number of Disbursement Repayment Repayment to Mode of financing operations Approved Disbursed Repaid to approval to approval disbursement Leasing 14 183.569 145.588 55.055 79.31 30.00 37.82 Installment sale 7 65.140 32.509 30.656 49.91 47.06 94.30 Equity 7 26.287 28.186 0.967 107.22 3.68 3.43 Istisna'a 2 22.704 3.409 0.000 15.02 0.00 0.00 Loan 9 42.159 28.811 18.892 68.34 44.81 65.57 Technical assistance 12 3.745 2.241 1.264 59.84 33.75 56.40 Total 51 343.604 240.746 106.834 70.07 31.09 44.38 Source: IDB data. 3 7 J O R D A N : S U P P O R T I N G S TA B L E D E V E L O P M E N T I N A C H A L L E N G I N G R E G I O N P r o j e c t s C o f i n a n c e d b y t h e I D B w i t h t h e W o r l d B a n k a n d O t h e r T a b l e 6 . 7 I n t e r n a t i o n a l F i n a n c i n g I n s t i t u t i o n s , 1 9 7 6 ­ 0 2 Amount approved Cofinancier (US$ million) Percent IDB 230.098 18.59 World Bank 159.120 12.85 Other financial institutions 848.712 68.56 Total 1,237.930 100 Source: IDB data. · For any change in the executing agency, the capabilities should have been duly assessed Bank should ensure whether the original at appraisal and not those of the government objectives and scope of the project have been body, which was referred to only with a view revised. Such a change should be reflected in to meeting the IDB's requirements. the amended financing agreement to be · The unaccounted-for-water rate is a key issue signed. to be considered in assessing the operational · The quality and continuity of technical staff performance of water resource projects, such employed by the executing agency enhanced as the Zarqa Ruseifa Water Supply project. the implementation of the telecommunications Future appraisal of similar projects should project. This also ensured a sound relation- focus on ways to improve their command. ship between the Bank and the executing · The success of the Secondary Schools proj- agency. ect was mainly attributed to the priority · The feasibility study on the Rehab and Risha accorded to education and training in Jordan. Power project was not available. This study · For specific education projects, using proto- could have better clarified project viability and type school designs did not account for phys- improved the quality of the appraisal report ical constraints and demographic characteristics prepared by the Bank. of the areas, resulting in the possibility of · The Bank embarked upon the appraisal and additional costs or wastage of resources. subsequent approval of the Rehab and Risha · The eventual success of the Arab Potash Pro- Power project after its turnkey contract was duction Expansion project was a product of signed. This did not give the Bank a chance the efforts made to promote the company's to critically review and clear all the tender doc- managerial and technological capabilities. uments. This could have also led to enlarged · For sustainability purposes, and to ensure project scope and cost at a later stage. adequate funds to meet operations and main- · A nongovernmental organization (NGO) was tenance costs of the project, careful consid- the effective executing agency of the Al Amal eration should be given to the cost recovery Cancer project, not a government hospital as aspects when designing future health projects. indicated in the appraisal report. The NGO's 3 8 7 Islamic Development Bank Sector Analysis Overview J ordan is increasingly becoming a service-oriented economy, as the serv- ice sector constituted 70.4 percent of GDP in 2000 (at factor cost), whereas industry, including mining and quarrying, constituted 25.8 per- cent. Mining, processing of phosphates and potash, represents Jordan's largest industry. By its physical nature, Jordan is an arid country dan is the world's third-largest supplier of raw and water resources are scarce. Agriculture, phosphates. therefore, forms a small part of the economy (3.8 Phosphate mining is controlled by a joint- percent of GDP). It has limited oil, gas, and nat- stock monopoly, the Jordan Phosphate Mines ural resources. Over the last decade, the coun- Company (JPMC), established in 1935. Produc- try has been enjoying well-developed education tion of rock phosphates averages about 3.7 mil- and health care systems aimed at providing lion tons per year. Known reserves are adequate social services to its citizens. for decades of production at current or even higher levels. The export earnings of JPMC in Industry and Mining 2001 reached $189 million. JPMC has also The mining sector in Jordan is based on the achieved some success in developing down- exploitation of the vast reserves of raw phos- stream activities, such as fertilizers. phates and potash. More recently there has The Arab Potash Company (APC), which is been a focus on the creation of the value being progressively privatized, has grown added activity of semi-processing of raw phos- steadily since its inception in 1956, boosting its phates and potash. Jordan's main exports are basic potash production and expanding its primarily mineral-based resources and their downstream activities. Potash production by derivatives, such as fertilizers, bromine, and APC in 2001 was 2 million tons and is expected magnesia, which form more than 30 percent to rise to 2.2 million tons by 2002. The foreign of total export earnings. Exports of phosphates, exchange earnings of APC in 2001 reached potash, fertilizers, and related products $192 million. Both as APC and through its amounted to $412 million in 2001. With pro- holding company, Jordan Dead Sea Industries duction in 2001 of some 5.9 million tons, Jor- Company (JODICO), the company is devel- 3 9 J O R D A N : S U P P O R T I N G S TA B L E D E V E L O P M E N T I N A C H A L L E N G I N G R E G I O N P r o j e c t s A p p r o v e d b y t h e I D B T a b l e 7 . 1 f o r J o r d a n i n t h e I n d u s t r y a n d M i n i n g S e c t o r , 1 9 7 6 ­ 0 2 Amount SI Mode of approved Status of No. Project name financing (US$ million) implementation 1 Jordan Petroleum Refinery Equity 9.300 Completed 2 Jordan Phosphate Mines (ex-Jordan Fertilizer Industry) Equity 5.240 Completed 3 Arab Potash Company Equity 12.000 Completed 4 Jordan Phosphate Mines Company Equity 1.822 Completed 5 Jordan Foundry Leasing 11.600 Completed 6 Feasibility Study for Dead Sea Chemical Complex TA 1.050 Completed 7 Jordan Phosphate Mines (ex-Jordan Fertilizer Industry) Equity 2.100 Completed 8 Jordan Cement Factories Equity 1.620 Completed 9 Arab Potash Company I. sale 8.000 Completed 10 Al-Shidiyah Phosphate Mines I. sale 11.000 Completed 11 Arab Potash Production Expansion Leasing 17.053 Completed 12 Arab Potash Company (Additional I) Equity 1.106 Completed 13 Top Grade Dead Burned Magnesia Leasing 28.035 Ongoing 14 Potassium Nitrate and Di-Calcium Phosphate Leasing 27.000 Completed 15 Bromine and Bromine Derivatives Leasing 29.000 Completed Total 165.926 Note: TA = Technical assistance; I. sale = installment sale. Source: IDB data. oping a number of fertilizers and chemical strategic sector and the recipient entities, the projects. absorption capacity of the financing beneficiary For almost three decades, the IDB has con- reduced the inherent risks. Some of the IDB proj- tributed to the development of the industry and ects in this sector were also financed by other mining sector in Jordan, in line with the gov- donors (mainly the World Bank and the Euro- ernment priorities. The IDB's financing in Jordan pean Investment Bank). Industry and mining in started with equity financing of two well-organ- Jordan has evolved into a strong and profitable ized companies with great potential (JPMC and sector with competent and forward-looking man- APC). In relation to its total financing of $450.38 agement. For example, JPMC was able to com- million in Jordan during the period 1976­02, the mand a market share of 15 percent of the global IDB's contribution to the industry and mining sec- phosphate demand. APC has further strength- tor has been substantial (about 37 percent of total ened its position in the international potash portfolio), as shown in table 6.3. industry by securing international certificates The total amount financed by the IDB in the such as ISO 1400 and ISO 9001, which testifies industry and mining sector during this period is to its compliance with the environmental stan- $165.93 million for 15 projects, including one dard and quality management system, respec- technical operation, the details of which are tively. Although both JPMC and APC are publicly shown in table 7.1. listed companies, the government was the major The concentration of IDB's financing in the shareholder at the time of the CAE. The gov- mining sector (JPMC, APC, and their subsidiaries) ernment intends to reduce its holdings in both has been on the higher side. However, because companies and hopes to find dynamic investors of the potentialities and viability of both this to provide administrative and marketing expert- 4 0 S E C T O R A N A LY S I S ise, as well as to boost profitability. IDB's cur- regarding the sale of government shares in two rent shareholding stands at 5 percent of APC cap- other projects, Jordan Cement Factories Com- ital and 0.5 percent of JPMC capital. At the time pany (JCFC) and Aqaba Railways Corporation this CAE was conducted, APC had started its pri- (ARC), where the IDB has equity participation. vatization process and had already agreed to sell Furthermore, the government is no longer will- half of its shares (26 percent). ing to issue sovereign guarantee for projects in Since 1997 the IDB has also participated in these sectors in accordance with the privatiza- the financing of downstream projects aimed at tion policy. This matter, however, has been diversification of potash products through the conducive to delay in approving the projects for production of other derivatives geared for export the country. from the Dead Sea potash production complex, such as magnesium oxide, potassium sulphate, Public Utilities and bromine. The Jordan Bromine Company Another important feature of Jordan's economy (JBC) project, which is a joint venture between is the inadequacy of public utilities, mainly water Albemarle (an American company) and JPMC, and energy. In this connection, the IDB has with equal shares, has benefited from IDB financ- been supportive in contributing to the devel- ing. The project commenced its commercial opment of water resources and power supplies operation in November 2002, as scheduled. It in Jordan. The public utilities sector is the sec- was able to realize a savings of about $10 mil- ond-largest recipient of IDB's financing (21 per- lion in project costs because of the economies cent of its total portfolio). accrued from contract packaging, as contracts had been awarded to several vendors under Water Resources. Jordan is one of the most various lots. water-scarce countries in the world. The water Conversely, the ongoing Jordan Magnesia reserves (aquifers) are being replenished at a Company (JMC) project, which was also financed slow pace because of the aridity of the land as by the IDB, is facing implementation difficulties. well as the high population growth and urban- This is mainly attributed to the turnkey contract ization. In areas such as the Jordan Valley, irri- awarded to a Turkish-Canadian company, which gation is extensively used for agriculture, which was subsequently terminated (July 2002) because consumes the bulk of water resources, account- of breach of commitments. At the time of ter- ing for 69 percent of total consumption. mination, about 95 percent of the work was The IDB financed three projects (including completed; but the remaining portion is highly one technical assistance operation) in the water technical and complex. Steps have been taken resources subsector, for a total of $33.08 million, to accelerate project completion, but it is too during the period under review; the details are early to judge the outcome. outlined in table 7.2. During the later half of the 1990s, the gov- The first financing extended to the water sub- ernment of Jordan embarked on a policy of pri- sector by the IDB was for the Zarqa Rusaifa Water vatization of key sectors of the economy, Supply and Sewerage project (Phase I) in 1982. particularly the mining, water, electricity, and The project was able to achieve its objectives of telecommunication sectors. The government, fulfilling the needs of about 30,000 people for which has major stakes in the two largest indus- potable water and providing a sewerage system trial ventures, JPMC (71 percent) and APC (26 to about 17,000 people. But the financial situa- percent), decided to reduce its holdings in a sig- tion of the WAJ, which managed the project, kept nificant way. It hopes to find strategic investors deteriorating and the level of revenues fell short to provide administrative and marketing expert- of meeting its capital expenditures, recurrent ise to both these companies and to boost their costs, and debt servicing. profitability. The IDB also has 0.5 percent and Lack of water has considerably pegged Jor- 5 percent shareholdings, respectively, in these dan's development. Heavy investments in two companies. Progress has also been made industry and tourism, coupled with rapid pop- 4 1 J O R D A N : S U P P O R T I N G S TA B L E D E V E L O P M E N T I N A C H A L L E N G I N G R E G I O N P r o j e c t s A p p r o v e d b y t h e I D B T a b l e 7 . 2 f o r J o r d a n i n t h e W a t e r R e s o u r c e s S u b s e c t o r , 1 9 7 6 ­ 0 2 Amount SI Mode of approved Status of No. Project name financing (US$ million) implementation 1 Zarqa Rusaifa Water Supply and Sewerage (Phase I) Loan 7.800 Completed 2 Feasibility Study for Deep Groundwater Aquifer of Wadi Araba TA 0.280 Completed 3 Southern Ghors and Eastern Shores of the Dead Sea Installment sale 25.000 Ongoing Total 33.080 Source: IDB data. ulation growth, will create a rapidly rising Electrical energy production in 2001 was 7.4 demand for water in the coming years. Greater billion kilowatts, with some 94 percent of this efforts have to be made to provide for more produced by the state-owned National Electric efficient allocation of water resources. Accord- Power Company (NEPCO) and the remaining ing to official figures, about $5 billion will shares owned by private companies. Industry is need to be invested in Jordan's water infra- the largest electrical energy consumer sector in structure over the next 10 years to avoid an Jordan, accounting for 34 percent of total con- annual deficit in the supply of water. Gener- sumption, followed by domestic consumers, ous contributions by donors, including the with 31 percent. Some 98.5 percent of the Jor- IDB, are essential to meet this huge investment danian population has access to electricity sup- requirement. Additionally, the government is plies. Demand for electricity generation is considering ways of involving the private sec- growing by 10 percent annually. tor in the financing and operation of new The IDB has financed three projects in the water schemes in the form of build-own-oper- energy sector in Jordan for a total amount of ate/build-own-transfer projects. $63.29 million during the reporting period (1976­02). The details of these operations are Energy. Jordan has traditionally relied on provided in table 7.3. imported oil for the bulk of its energy genera- The three IDB-financed power plants (Al- tion, but has increasingly been exploring the Risha/Rehab, Aqaba, and Rehab) have made potential of both local gas and shale oil reserves. significant contributions to improving electricity P r o j e c t s A p p r o v e d b y t h e I D B T a b l e 7 . 3 f o r J o r d a n i n t h e E n e r g y S u b s e c t o r , 1 9 7 6 ­ 0 2 Amount SI Mode of approved Status of No. Project name financing (US$ million) implementation 1 Al-Risha and Rehab Power Expansion Leasing 15.550 Completed 2 Aqaba Thermal Power Extension Leasing 21.500 Completed 3 Rehab Power Station Leasing 26.240 Completed Total 63.290 Source: IDB data. 4 2 S E C T O R A N A LY S I S generation, distribution, and transmission systems Education. Jordan's education indicators are, on in Jordan. The Aqaba thermal power station, with average, among the highest in the region, as evi- five 130-MW steam-generating units, is to be con- denced by the high public expenditures on edu- verted from heavy fuel to gas in preparation for cation (6.8 percent of GDP). School enrollment the establishment of a pipeline bringing Egypt- stands at 95 percent at the primary level and 66 ian natural gas to Aqaba. percent at the secondary level. Jordan also has At the time of this CAE, the government was a significant tertiary education sector. The uni- looking for a private developer to construct a versity enrollments are equal to, or even surpass, 370-kilometer pipeline to bring gas from Aqaba those in the Middle East and the industrial world. to power stations in the Amman area. The gov- In the absence of adequate natural resources, Jor- ernment is also keen to attract private sector dan has emphasized the growth of human cap- investments to the energy sector. ital as the basis of its development strategy. Jordan accords high priority to universal edu- Social Services cation. The IDB has endeavored to be respon- Social services, which include education, health, sive to the educational needs of the country, as and other social projects, are the third-largest sec- demonstrated by the level of its involvement in tor that has benefited from IDB financing (21 per- this strategic subsector. cent of its portfolio). Continually keen to Since 1985, eight projects, including four contribute to the social service sectors in Jordan, technical assistance operations, have been the IDB has financed 18 projects (including 6 approved by the IDB in the education subsec- technical assistance operations) in these sectors tor, for a total amount of $33.06 million. Table for a total amount of $93.54 million during the 7.4 provides a detailed breakdown of these period 1976­02. approvals. P r o j e c t s A p p r o v e d b y t h e I D B T a b l e 7 . 4 f o r J o r d a n i n t h e E d u c a t i o n S u b s e c t o r , 1 9 7 6 ­ 0 2 Amount SI Mode of approved Status of No. Project name financing (US$ million) implementation 1 Eight secondary schools Leasing 9.700 Completed 2 Jordan University of Science and Technology Installment sale 9.000 Completed 3 New Central Library at Yarmouk University, Irbid Loan 4.780 Completed 4 Capacity Building for library expansion of Royal Scientific Society TA 0.209 Ongoing 5 Feasibility Study for new library building for Jordan University TA 0.240 Completed 6 Establishment of Vocational Training Centre for Muslim girls TA 0.070 Ongoing 7 Technological Literacy Centres TA 0.270 Ongoing 8 New central library building of University of Science and Technology Loan 8.790 Ongoing Total 33.059 Source: IDB data. 4 3 J O R D A N : S U P P O R T I N G S TA B L E D E V E L O P M E N T I N A C H A L L E N G I N G R E G I O N A number of officials interviewed during the industrial countries. By regional standards, Jor- CAE mission appreciated IDB assistance for con- dan has a well-developed health care system-- struction and expansion of educational institutions and some elements are world class. The total (mainly schools) over the years. Thanks to the amount financed by the IDB in the health sec- financial support provided by various financing tor since 1991 is $49.48 million for seven proj- institutions, including the IDB and the World ects; the details are shown in table 7.5. Bank, the school enrollment in basic and sec- The IDB's support for construction and expan- ondary education increased by 23 percent sion of health care facilities in Jordan, such as between 1990 and 2000. Jordan's adult literacy Queen Alia Heart Institute and Amal Cancer increased to 90 percent by 2000, surpassing aver- Centre, has certainly been appreciated. The King age literacy rates for East Asia and Latin Amer- Abdullah Hospital project, which was financed ica. There has also been a substantial decline in by the IDB, has been completed but still oper- the number of rented houses used as primary and ates at a low capacity rate. Conversely, it expe- secondary schools. However, there is still room rienced long implementation delays and appeared for enhancing the quality of education in the areas to have excess capacity. No sector or feasibility of technical knowledge, teacher training, and study had been carried out prior to appraisal. capacity building in educational institutions. Although Jordan's health care system per- The government invests about $100 million forms well compared with other member coun- annually in new school facilities as well as in tries at similar levels of development (such as upgrading the curriculum and teacher training Algeria, Egypt, Morocco, and Tunisia), the effec- standards. Further investments in school infra- tiveness of the health care system does not structure, such as classroom facilities, labs, and reflect the high expenditures allocated to it. The libraries, will be needed in the long run to meet health sector was confronted with many prob- the requirements of the growing number of lems before the IDB's intervention, such as over- students. capacity in hospitals, management inefficiency, high costs inherent in the public health facilities, Health. Public and private health expenditures, a weak referral system among health care which make up about 9 percent of GDP, are well providers, and inadequate monitoring of health above the regional levels and those of most service quality. Of particular importance is the P r o j e c t s A p p r o v e d b y t h e I D B T a b l e 7 . 5 f o r J o r d a n i n t h e H e a l t h S u b s e c t o r , 1 9 7 6 ­ 0 2 Amount SI Mode of approved Status of No. Project name financing (US$ million) implementation 1 Al-Amal Cancer Centre Loan 5.000 Completed 2 King Abdullah Hospital at Irbid Loan 2.400 Completed 3 King Abdullah Hospital at Irbid Leasing 9.200 Completed 4 National Centre for Diabetes, Endocrine, and Inherited Diseases TA 0.280 Ongoing 5 Medical Equipment for King Abdullah Hospital Leasing 20.000 Ongoing 6 Expansion of Queen Alia Heart Institute Loan 4.500 Ongoing 7 Expansion of Queen Alia Heart Institute Installment sale 8.100 Ongoing Total 49.480 Source: IDB data. 4 4 S E C T O R A N A LY S I S overcapacity in some hospitals and the contin- Aid Fund (NAF), which is involved in extending ued debate over the need for a universal health assistance to needy segments of the population. insurance scheme to include those who are not The financing approved in 1998--a total amount covered (nearly one-fifth of the population). of US$11 million--comprises three operations The government has announced plans for a (Istisna'a, loan, and technical assistance). This major reform of the sector in 2002, which will project is aimed at upgrading and constructing include (a) the expansion of health insurance to essential physical and social infrastructure in 14 100 percent of the population, from the current squatter settlements and 13 refugee camps spread 75 percent; (b) upgrading of primary health throughout the country as part of the Commu- care facilities; and (c) improved hospital admin- nity Infrastructure Project (CIP). The compo- istration to speed up admissions and reduce nents of the project include the construction of duplication of services. The government is also six schools, two health care centers, and four keen to build on Jordan's reputation for quality community centers. The IDB's technical assistance service to attract more patients from the Arab portion of the project is directed toward the world. capacity building of NAF through the procure- ment of computer hardware and software. The Other Social Services. The IDB has participated details of these operations are shown in table 7.6. along with the World Bank Group (International The implementation of the project is in Development Association [IDA] and IFC), Arab progress and is expected to be completed by Funds, and other donors in the financing of mid-2003. It is, therefore, too early to draw ongoing microfinance activities of the National meaningful lessons from this case. P r o j e c t s A p p r o v e d b y t h e I D B T a b l e 7 . 6 f o r J o r d a n i n t h e M i c r o f i n a n c e S u b s e c t o r , 1 9 7 6 ­ 0 2 Amount SI Mode of approved Status of No. Project name financing (US$ million) implementation 1 Social Safety Net Package Istisna'a 5.000 Ongoing 2 Social Safety Net Package Loan 5.000 Ongoing 3 Social Safety Net Package TA 1.000 Ongoing Total 11.000 Source: IDB data. 4 5 8 Conclusions, Recommendations, and Lessons World Bank Findings L ong-delayed and much-needed public sector reform. Despite considerable analyt- ical work identifying how government expenditures could be reduced and better directed, the Bank should have emphasized this issue more than it did. While some wasteful expenditures were curtailed, and a few large state-owned enterprises privatized, the government still plays too large a role in the economy. As the government cannot raise commensurate · Engagement with the Bank's counterparts to revenues, it is worrisome that it struggles to reach a common understanding on the inci- finance the budget deficit and the stock of pub- dence of poverty in Jordan and a broad con- lic debt, much of which is external. The country's sensus for future poverty reduction programs.1 vulnerability to external shocks remains high, · Given the high and persistent unemploy- and the potential for regional instability is also con- ment, a study of the labor market could pro- siderable. OED recommends the following: vide the basis for measures to reduce unemployment and alleviate poverty. · The Bank should support a reduction in gov- ernment expenditures and an improvement A comprehensive approach to water resources in the quality of expenditure, especially ration- management should be emphasized. While Bank alizing the social expenditures that public assistance contributed to significant progress (for expenditure reviews have identified as being example, agricultural liberalization, private man- poorly spent. The third Public Sector Reform agement of WAJ's operations in Amman, and an Loan offers an opportunity to tackle these urban water tariffs increase), the pace is not com- issues and to shift from input-related condi- mensurate with the rapidly dwindling water tionalities to outcome-based conditionalities. resources. The OED recommends the following: Jordan's poverty is still high and policies and · Future Bank strategy should support, in coor- strategies should be defined to reduce it. OED dination with other donors, a comprehensive recommends the following: approach to water resources management: 4 7 J O R D A N : S U P P O R T I N G S TA B L E D E V E L O P M E N T I N A C H A L L E N G I N G R E G I O N promoting incentives for more efficient use expected (for example, in the industry and of water, upgrading infrastructure to reduce health sectors), and the IDB was said to be costs and high levels of water losses, and facil- slower in processing and more demanding than itating efficient investments in the sector. other donors in its documentation requirements. Projects that experienced particular difficulties Islamic Development Bank Findings in timely disbursement included Jordan Bromine Company and the Queen Alia Heart Institute. Some of the IDB projects involving the indus- IDB-financed projects in Jordan ranked high try and mining sector were cofinanced by other in the government's priorities. These projects donors (mainly the World Bank and European were well designed and selected in accordance Investment Bank). Industry and mining in Jor- with the overall development goals of Jordan. dan has evolved into a strong and profitable sec- Moreover, the Bank's efforts in Jordan were tor with competent and forward-looking well coordinated with the government. The management because of both the sustained importance of evaluating the IDB's role in Jor- efforts exerted by the government and the financ- dan was positively perceived by all the devel- ing assistance provided by the international opment partners met in Jordan during the CAE development institutions, including the IDB. mission. An important feature of Jordan's economy is It is necessary to assess the expected impact the scarcity of sources of public utilities, mainly of the project on the economy as a whole at the water and energy. The IDB has been supportive identification stage, before its inclusion in the in contributing to the development of water project pipeline for the country. This assess- resources and power supplies in Jordan. In view ment refers to the project's rationale, including of the paucity of water resources, the government its primary and secondary objectives, such as the has placed greater emphasis on more efficient creation of employment, wealth generation, allocation of water resources and the operation human resource development, and mitigation of of water schemes. The improvement in electric- adverse environmental impacts. In addition, ity generation, distribution, and transmission sys- post-completion factors, such as tariffs and reg- tems is another priority of the government, which ulations, should be addressed in a comprehen- is also keen to attract private sector investments sive manner, as they determine the success and in the water and energy subsectors. sustainability of the project in the long run. Jordan's health care system is more advanced It is essential to ascertain the status of prepa- than those of other member countries at a sim- ration of individual projects and their readiness ilar level of development. The IDB has pro- (that is, concept stage, feasibility study and vided support for construction and expansion of detailed design). several health care facilities. The health sector The IDB should strengthen its efforts for pos- is still facing the problems of overcapacity in sible cofinancing of large projects with other fin- some hospitals, management inefficiency, and anciers, such as the Co-ordination Group of the high costs inherent in public health facilities. Arab Funds and multilateral development banks. The IDB's assistance to Jordan helped in the The Bank should also intensify its efforts to transfer of resources that contributed to the extend assistance for capacity building in the exe- growth of key sectors of the economy, includ- cuting agencies that have strong relationships ing (a) industry and mining (for increased phos- with the IDB, particularly government agencies phate and potash production); (b) public utilities and NGOs. (for increased availability of water and electri- It is necessary to assess the sectoral focus of cal energy); and (c) social services (for provision other multilateral development financing insti- for additional health services and education tutions in identifying and building a project infrastructure). pipeline for cofinancing proposals consistent It was also observed that processing of dis- with the country's priorities and the IDB's sec- bursement requests took a longer time than toral strategy. 4 8 C O N C L U S I O N S , R E C O M M E N D AT I O N S A N D L E S S O N S The exposure of the IDB's financing in the technology, and human resource development, mining sector (JPMC, APC, and their subsidiaries) as well as in the social sectors (health and edu- has been on the high side, whether globally for cation) and small business, aiming at poverty alle- the sector or for the individual beneficiaries. viation in accordance with the priorities outlined Such a high concentration of financing could lead in Jordan's new Economic and Social Transfor- to both project and credit risk. mation Programme. These contributions may In keeping with its policies and procedures, be made in addition to IDB's continued support the IDB cannot accept 100 percent exposure for to the industrial and infrastructure sectors. a project. For all the projects outlined in the As part of its future assistance agenda, the IDB CASS, no mention has been made of the financ- could consider investing in nonconventional ing already secured (committed or pledged). water resources projects (for example, waste- It is crucial to establish the level of prepara- water infrastructure and dam construction) as tion of the project before accepting it as a pro- well as water demand management projects (for posal, particularly in the case of the CASS. If the example, water loss reduction and rehabilitation government deems a project a priority at the con- and restructuring of existing water networks). cept stage, it is essential to make a provision for Greater emphasis should also be given to main- technical assistance for a feasibility study on tenance, training, and capacity building in water the project. Also, technical assistance should be sector institutions. increasingly targeted for design, preparation, Furthermore, the IDB could target its future and implementation of projects. assistance to projects that serve the agricultural The IDB should be more involved at the strategy in Jordan, especially in the areas of preparation stage of projects. The possibility of rainfed land and water harvesting. In this respect, extending technical assistance financing should the Bank could explore the possibility of cofi- be carefully explored to facilitate project spon- nancing agricultural development projects in sors in submitting viable and sustainable Jordan with other financing institutions. Finally, projects. lines of microfinance facilities could be extended The IDB may further contribute to financing to local banks for the development of small projects in the areas of transport, information farms in the country. 4 9 ANNEXES The World Bank 5 1 ANNEX A: JORDAN AT A GLANCE M. East Lower- POVERTY and SOCIAL & North middle- Jordan Africa income Development diamond* 2001 Population, mid-year (millions) 5.0 301 2,164 Life expectancy GNI per capita (Atlas method, US$) 1,750 2,000 1,240 GNI (Atlas method, US$ billions) 8.8 601 2,677 Average annual growth, 1995-01 Population (%) 3.0 2.0 1.0 GNI Labor force (%) 4.0 2.9 1.2 Gross per primary Most recent estimate (latest year available, 1995-01) capita enrollment Poverty (% of population below national poverty line) 12 .. .. Urban population (% of total population) 79 58 46 Life expectancy at birth (years) 70 68 69 Infant mortality (per 1,000 live births) 26 43 33 Child malnutrition (% of children under 5) 5 15 11 Access to improved water source Access to an improved water source (% of population) 96 89 80 Illiteracy (% of population age 15+) 10 34 15 Gross primary enrollment (% of school-age population) 104 97 107 Jordan Male 104 103 107 Lower-middle-income group Female 104 90 107 KEY ECONOMIC RATIOS and LONG-TERM TRENDS 1981 1991 2000 2001 Economic ratios* GDP (US$ billions) 4.4 4.2 8.5 8.8 Gross domestic investment/GDP 45.4 25.9 27.2 25.9 Trade Exports of goods and services/GDP 43.0 59.5 41.8 42.8 Gross domestic savings/GDP -8.7 2.6 0.5 0.4 Gross national savings/GDP 42.2 15.0 27.8 25.8 Current account balance/GDP -0.9 -10.1 0.7 -0.1 Domestic Interest payments/GDP 1.8 6.8 2.9 2.6 Investment savings Total debt/GDP 49.2 231.3 94.1 85.9 Total debt service/exports 9.7 24.3 12.3 12.5 Present value of debt/GDP .. .. 90.0 .. Present value of debt/exports .. .. 129.9 .. Indebtedness 1981-91 1991-01 2000 2001 2001-05 (average annual growth) GDP 1.5 4.5 4.2 4.2 5.7 Jordan GDP per capita -2.5 1.0 1.1 1.3 3.0 Lower-middle-income group Exports of goods and services 4.5 2.4 2.1 4.6 5.8 STRUCTURE of the ECONOMY 1981 1991 2000 2001 Growth of investment and GDP (%) (% of GDP) 30 Agriculture 6.1 8.5 2.3 2.1 20 Industry 29.8 26.2 25.3 25.2 10 Manufacturing 14.5 13.7 15.5 15.3 0 Services 64.1 65.3 72.4 72.7 -10 96 97 98 99 00 01 Private consumption 77.7 71.4 74.5 76.7 -20 General government consumption 31.1 26.0 25.0 23.0 GDI GDP Imports of goods and services 97.2 82.8 68.5 68.3 1981-91 1991-01 2000 2001 Growth of exports and imports (%) (average annual growth) Agriculture 8.5 -4.0 8.4 2.2 20 Industry -0.5 4.5 3.3 6.3 15 Manufacturing 0.7 5.4 5.5 5.8 10 Services 2.3 4.9 5.2 4.3 5 Private consumption -0.1 4.9 11.3 6.2 0 General government consumption 0.6 4.9 6.8 -4.6 96 97 98 99 00 01 -5 Gross domestic investment -2.5 1.7 10.7 -0.9 Exports Imports Imports of goods and services -0.3 2.4 14.5 2.2 Note: 2001 data are preliminary estimates. * The diamonds show four key indicators in the country (in bold) compared with its income-group average. If data are missing, the diamond will be incomplete. 5 3 J O R D A N : S U P P O R T I N G S TA B L E D E V E L O P M E N T I N A C H A L L E N G I N G R E G I O N PRICES and GOVERNMENT FINANCE 1981 1991 2000 2001 Inflation (%) Domestic prices 8 (% change) Consumer prices 7.7 8.2 0.7 1.8 6 Implicit GDP deflator 18.9 5.1 -0.1 0.0 4 2 Government finance (% of GDP, includes current grants) 0 Current revenue 49.1 44.8 30.0 30.8 96 97 98 99 00 01 -2 Current budget balance 22.5 13.1 1.0 2.2 GDP deflator CPI Overall surplus/deficit 7.2 8.3 -4.7 -3.8 TRADE 1981 1991 2000 2001 Export and import levels (US$ mill.) (US$ millions) Total exports (fob) 734 1,132 1,899 2,295 6,000 Food 100 126 164 191 5,000 Phosphates 166 181 128 130 4,000 Manufactures 215 403 933 1,269 3,000 Total imports (cif) 3,170 2,512 4,577 4,833 Food 508 613 747 733 2,000 Fuel and energy 533 355 718 702 1,000 Capital goods 1,256 369 1,313 1,311 0 95 96 97 98 99 00 01 Export price index (1995=100) 88 87 91 92 Import price index (1995=100) 124 97 106 108 Exports Imports Terms of trade (1995=100) 71 89 86 85 BALANCE of PAYMENTS 1981 1991 2000 2001 Current account balance to GDP (%) (US$ millions) Exports of goods and services 1,909 2,484 3,536 3,777 6 Imports of goods and services 4,215 3,429 5,796 6,027 5 4 Resource balance -2,306 -945 -2,260 -2,250 3 2 Net income 87 -362 -27 9 1 Net current transfers 2,178 884 2,345 2,236 0 -1 95 96 97 98 99 00 01 Current account balance -41 -423 58 -5 -2 -3 Financing items (net) -5 403 714 -180 -4 Changes in net reserves 47 20 -772 184 -5 Memo: Reserves including gold (US$ millions) 1,300 930 2,763 2,579 Conversion rate (DEC, local/US$) 0.3 0.7 0.7 0.7 EXTERNAL DEBT and RESOURCE FLOWS 1981 1991 2000 2001 (US$ millions) Composition of 2001 debt (US$ mill.) Total debt outstanding and disbursed 2,186 9,700 7,969 7,588 IBRD 45 511 798 886 G: 447 IDA 78 76 57 55 A: 886 F: 840 B: 55 Total debt service 303 740 723 779 C: 439 IBRD 3 97 106 105 IDA 1 2 3 3 Composition of net resource flows D: 981 Official grants 891 383 404 460 Official creditors 306 414 -63 338 Private creditors 29 -97 -155 -70 Foreign direct investment 141 -12 751 78 Portfolio equity 0 0 104 -113 E: 3,940 World Bank program Commitments 25 25 35 120 A - IBRD E - Bilateral Disbursements 22 40 38 161 B - IDA D - Other multilateral F - Private Principal repayments 0 56 56 57 C - IMF G - Short-term Net flows 22 -16 -17 104 Interest payments 3 43 53 51 Net transfers 19 -59 -71 53 Development Economics 1/23/03 5 4 ANNEX B: KEY BACKGROUND DATA Table B.1 Jordan: Key Economic Indicators, 1990­00 Table B.2 Poverty and Inequality in Jordan, Egypt, Morocco, and Tunisia Table B.3 Comparing National and International Poverty Lines for Selected Countries in the MNA Region Table B.4 Social Indicators for Jordan and Comparator Countries, 1975­80 Table B.5 Social Indicators for Jordan and Comparator Countries, 1996­01 Table B.6 List of Investment, Promotion, Customs, Privatization, and Company Laws Table B.7 List of Privatizations Table B.8 Matrix of Recommendations from the 1999 World Bank Review Table B.9 Public Sector Reform Priorities Identified in the 1994 Country Economic Memorandum: Consolidating Economic Adjustment and Establishing the Base for Sustainable Growth Table B.10 1991 Review of Public Expenditures Summary 5 5 J O R D A N : S U P P O R T I N G S TA B L E D E V E L O P M E N T I N A C H A L L E N G I N G R E G I O N .. .. .. .. 3.0 17 4.1 16.5 27.5 43.7 26.3 26.4 15.7 1,043 3,525 Lower/ middle income .. .. .. .. .. 3.7 1.7 31 4.1 MNA 13.5 12.9 46.2 31.9 32.4 14.3 1,867 4,547 .. .. .. .. .. .. .. .. .. 3.6 1.0 est 12.0 16.2 61.1 18.8 70.6 Gaza 1,688 W Bank & .. .. .. 4.8 0.4 32 2.1 13.6 17.8 57.5 42.9 47.0 1,813 4,853 ­4.1 19.4 62.5 1990­00 unisiaT .. .. .. 2.9 3.2 30 4.3 16.5 17.6 51.5 27.1 32.4 29.7 74.0 verage,A 1,148 3,151 ­1.4 Morocco .. .. .. 4.5 1.0 1.1 30 8.3 17.5 17.8 50.6 21.0 28.2 14.7 60.8 Egypt 1,067 2,986 .. .. .. 1.8 2.4 1.8 31 6.5 11.2 10.9 36.4 28.0 25.0 49.1 62.8 1,809 4,576 Algeria 1990­00 .. .. .. 4.3 4.9 38 4.5 1,523 3,595 ­0.2 14.5 68.6 50.1 74.4 ­4.0 16.5 145.6 Jordan .. .. .. .. 4.2 0.4 2.2 0.7 7.9 2000 15.6 73.0 41.8 67.7 11.4 97.6 1,720 3,960 .. 5 3.1 1.3 2.4 5.0 9.6 35 6.8 31 1999 15.7 72.0 43.4 61.3 1,630 3,840 111.7 3.0 0.0 3.0 0.3 37 6.4 1.0 30 1998 15.2 71.5 44.6 64.0 16.5 1,600 3,750 107.6 Indicators, 3.3 3.3 0.4 35 7.4 2.3 31 1997 1,590 3,790 ­0.2 13.8 71.6 48.8 70.8 16.4 114.0 2.1 3.8 37 5.7 3.4 34 1996 1,590 3,800 ­0.2 13.5 70.5 52.1 77.1 ­3.2 18.9 119.4 6.4 4.3 36 7.4 5.1 34 1995 1,580 3,800 ­1.4 14.9 67.2 51.1 72.0 ­3.8 12.5 123.4 5.0 3.0 5.2 35 8.0 32 Economic 1994 15.7 66.0 47.6 70.6 1,470 3,570 ­6.3 13.6 11.7 128.9 4.6 1.0 5.9 36 7.0 9.9 35 1993 13.1 67.0 50.0 80.3 15.2 1,390 3,480 ­11.4 142.3 . Key 0.0 7.8 36 3.7 5.9 38 1992 14.3 14.0 65.1 49.9 81.5 parity 19.6 1,330 3,420 ­15.6 155.8 1.6 8.5 44 5.1 1.5 35 power 1991 12.8 13.7 65.3 59.5 82.8 24.2 1,120 2,920 ­10.1 249.3 666767766 8.1 45 2.8 37 1990 ­0.3 1,390 3,130 ­8.9 14.9 63.8 61.9 92.7 20.3 2..6 ­10.2 214.9 purchasing = Jordan: ­2.7 1.0 PPP %) GDP) in of income; total 2002. prices (annual exports (% grants method added services services of B.1 (current added GNI) reserves expenditures data, added and and (% data data data national Atlas PPP $) growth value balance of services) savings constant value (% IMF including IMF IMF Bank value and expenditure, imports capital gross %) US$) goods goods service of = orld capita, capita, capita GDP) GDP) etc., GDP) of GDP) of GDP) account GDP) debt GDP) GDP) GDP) able W international domestic GNI T growth, of of of per per per of of of of of of debt goods revenue, (annual (current international (% (% (% (% (% (% of (% months (% (% Indicator GDP GNI GNI GDP Agriculture, Manufacturing, Services Exports Imports Current otalT External Government Gross Gross otalT Government Note: Source: 5 6 A N N E X B P o v e r t y a n d I n e q u a l i t y i n J o r d a n , T a b l e B . 2 E g y p t , M o r o c c o , a n d T u n i s i a Urban Rural Overall Country and Headcount Poverty Headcount Poverty Headcount Poverty Gini survey year index (%) gap (%) index (%) gap (%) index (%) gap (%) coefficient Jordana 1986/87 2.6 n.a. 4.4 n.a. 3.0 0.3 0.36 1992 12.4 3.1 21.1 5.1 14.4 3.6 0.40 1997 10.0 2.1 18.2 4.0 11.7 2.5 0.36 1999b 12.0 3.03 0.36 2001b 11.6 3.01 0.36 Egypt 1981/82 18.2 3.5 16.1 3.1 17.2 n.a. 0.394 1990/91 20.3 4.3 28.6 4.5 25.0 n.a. n.a. 1995/96 22.5 4.9 23.3 4.3 22.9 n.a. 0.320 1997 22.5 5.6 24.3 6.4 23.5 6.7 0.320 Morocco 1984/85 17.3 n.a. 32.6 n.a. 26.0 n.a. 0.446 1990/91 7.6 1.5 18.0 3.8 13.1 2.7 n.a. 1998/99 12.0 2.5 27.2 6.7 19.0 4.4 0.395 Tunisia 1985 4.6 n.a. 19.1 n.a. 11.2 n.a. 0.406 1990 3.5 0.7 13.1 3.2 7.4 1.7 n.a. 1995 3.6 0.7 13.9 3.1 7.6 1.6 0.400 n.a. Not available. a. Jordan's headcount index is based on updating the official poverty line (per capita consumption expenditure per year) originally derived by the Ministry of Social Development for the year 1987. For example, the 1992 update of the 1987 official poverty line generated a per capita poverty line of JD 261 per year, which would equal an annual per capita poverty line of JD 313.5 (equivalent to US$442) in 1997 prices. b. Assuming that inequality did not change from its 1997 level, a per capita income­poverty elasticity of ­2, and given the per capita GDP growth rates of ­0.1 in 1998, 0.0 in 1999, 0.83 in 2000, and 1.0 in 2001 (World Bank 2002, p. 11). Source: Adams and Page 2001, tables 3 and 5, pp. 32­34. 5 7 J O R D A N : S U P P O R T I N G S TA B L E D E V E L O P M E N T I N A C H A L L E N G I N G R E G I O N C o m p a r i n g N a t i o n a l a n d I n t e r n a t i o n a l P o v e r t y L i n e s T a b l e B . 3 f o r S e l e c t e d C o u n t r i e s i n t h e M N A R e g i o n National poverty lines International poverty lines Survey Population below the Survey Population below Population below Country year poverty line (%) year US$1/person/day (%) US$2/person/day (%) Algeria 1995 14.1 1995 < 2 15.1 Egypt 1997 23.5 1995 3.1 52.7 Jordan 1997 11.7 1997 < 2 7.4 Morocco 1998/99 19.0 1990/91 < 2 7.5 Tunisia 1995 7.6 1995 < 2 10.0 West Bank & Gaza 1998 23.2 n.a. n.a. n.a. Yemen 1991/92 19.1 1998 15.7 45.2 n.a. Not available. Sources: Adams 2001; World Bank 2001a,b, table 2. 5 8 A N N E X B .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. 46 6.6 39 5.5 1980 47.6 49.4 115 46.8 17.5 61.7 72.2 50.6 42.3 170.3 .. .. .. .. 0 0 .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. 1979 62.8 73.3 5.4 51.7 42.3 165.7 .. .. .. .. 0 0 .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. MNA 1978 63.8 74.4 5.4 52.8 42.3 161.4 .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. 46 6.6 29 5.3 1975 47.8 44.4 125 47.6 18.9 66.9 77.3 56.1 42.3 149.5 9 .. .. .. .. .. .. 5.2 36 65 27 1980 62.4 63.5 61.4 69.2 34.8 55.1 68.8 2.2 41.7 82.2 71.8 92.1 22.9 17.3 28.2 38.5 20.5 28.9 .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. 1979 56.8 70.5 2.1 43.3 21.9 28.4 Countries, .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. unisiaT 45 22 1978 58.6 72.3 2.0 27.9 .. .. .. .. .. .. .. .. .. .. .. 5.9 40 1975 58.6 59.3 57.8 94.4 36.7 10.9 63.8 77.1 1.8 50.6 16.3 12.2 20.3 21.1 22.1 26.3 .. .. .. .. .. .. .. .. 58 12 5.4 58 26 1980 59.8 56.3 99.2 38.1 71.5 84.6 7.0 61.6 47.4 75.1 20.3 15.7 24.8 38.2 16.9 33.5 .. .. .. .. .. .. .. .. .. .. .. .. .. 72 85 .. .. .. .. .. .. .. .. .. .. 59 17 6.8 33 1979 .. .. .. .. .. .. .. .. .. .. .. .. .. 73 86 .. .. .. .. .. .. .. .. .. .. 60 17 6.6 33 Morocco 1978 Comparator .. .. .. .. .. .. .. .. 55 56 53 42 14 115 6.3 76 88 62 47 35 58 14 10 17 17 42 16 6.0 33 1975 .. .. .. .. .. .. .. .. .. .. .. .. .. 56 57 54 39 13 120 5.1 84 78 61 75 47 51 2.3 27 and 1980 14.3 .. .. .. .. .. .. .. .. .. .. .. 82 62 62 76 .. .. .. .. .. .. .. .. .. .. 47 2.3 26 1979 13.9 .. .. .. .. .. .. .. .. .. .. .. .. .. Egypt 62 77 .. .. .. .. .. .. .. .. .. .. 48 2.4 26 1978 13.6 .. .. .. .. .. .. .. .. .. .. .. .. .. .. 53 55 52 39 15 139 5.4 65 79 50 40 35 2.7 26 Jordan 1975 12.7 .. .. .. .. .. .. 59 60 58 98 42 12 6.7 61 76 .. .. 46 81 71 91 31 24 37 33 35 2.9 4.9 21 1980 for .. .. .. .. .. .. .. .. .. .. .. .. .. 63 78 .. .. .. .. .. .. .. .. .. .. 47 2.9 4.7 21 1979 .. .. .. .. .. .. .. .. .. .. .. .. .. 65 79 .. .. .. .. .. .. .. .. .. .. 49 Algeria 2.9 4.5 21 1978 .. .. .. .. .. .. .. .. .. .. .. 7.3 20 2.9 4.1 1975 56.3 57.3 55.3 120 46.2 14.2 69.2 83.2 53.9 76.6 63.9 88.9 40.9 20.9 .. .. .. .. .. .. .. .. .. .. .. 6.8 30 29 73 1980 40.8 31.6 46.1 3.4 0.5 17.9 72.6 73.4 52.8 50.8 54.6 59.1 31.8 14.7 .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. Indicators 1979 33.9 49.4 3.3 0.5 19.3 14.6 .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. Jordan 1978 35.7 51.9 3.3 0.5 20.3 14.5 .. .. .. .. .. .. .. .. .. .. .. .. .. 7.5 1975 48.8 38.6 56.2 3.3 0.5 22.1 78.6 73.4 83.6 44.2 37.2 50.9 47.5 34.7 14.1 issues.. various Social 1975­80 under net) net) inoculation. births) urban net) rural (% (% force) of Indicators, (years) live of under access) females (% net) gross) people males area) tetanus (years) (years) net) labor people) woman) population (% (% children of (% with of of population (% female, male, and population land 1,000 people) of of (% (% total female male per children (% (% female, male, total B.4 (% urban rural of urban Development (per 1,000 (% of of rural 1,000 total male of of (% (% pertussis, orld birth, birth, birth, (per (births access) access) female primary primary primary secondary secondary secondary secondary primary (% (millions) W at at at infant (per source source, source, population land DPT(% measles above) above) (% above) total with with of adult adult adult ratio, Bank, crude total female Diphtheria, able rate, crude water water water (% and and and rural urban rate, rate, rate, arable = orld T rate, W rate, access) 15 15 15 access) access) enrollment, enrollment, enrollment, enrollment, enrollment, enrollment, enrollment, DPT months) months) net) expectancy expectancy expectancy use, force, force, with population population 12 12 ages ages ages with with (% Note: Source: Indicator Life Life Life Mortality Birthrate, Death Fertility Improved Improved Improved Immunization, Immunization, Sanitation Illiteracy Illiteracy Illiteracy Sanitation, Sanitation, School School School School School School School Pupil-teacher Land Labor Labor 5 9 J O R D A N : S U P P O R T I N G S TA B L E D E V E L O P M E N T I N A C H A L L E N G I N G R E G I O N 34 24 28 2001 290 .. .. .. .. .. .. .. .. .. 89 82 41 55 .. .. .. .. .. .. .. .. .. 38 46 30 41 81 28 2000 289 3 .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. 68 48 46 43 40 16 59 57 39 47 31 27 1999 282 .. .. .. .. 0 .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. MNA 0.1 48 50 41 49 32 6.5 27 1998 275 49 50 47 93 14 61 .. .. .. .. .. .. .. .. .. .. .. .. .. .. 5.5 53 58 42 50 33 6.5 27 1997 268 .. .. .. .. 0 0 .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. 53 54 43 52 34 6.5 26 1996 260 01 28 18 3.9 32 20 .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. 29 39 19 3.8 32 2000 .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. Countries, 73 74 71 24 17 5.6 2.2 93 30 41 20 31 1999 100 3.7 .. .. .. .. .. .. unisiaT 72 74 71 25 18 5.6 2.2 96 94 31 42 21 98 96 99 .. .. .. 73 25 19 3.6 31 1998 .. .. .. .. .. .. .. .. .. .. .. .. 72 74 70 28 19 5.6 2.4 96 92 33 44 22 64 24 19 3.5 31 1997 .. .. .. .. .. .. .. .. .. 30 20 5.5 2.5 91 86 34 45 23 98 96 99 .. .. .. 65 25 19 3.4 31 1996 50 37 12 35 2001 .. .. .. .. .. .. .. .. .. 82 58 57 .. .. .. .. .. .. .. .. .. 51 64 38 42 12 35 2000 100 100 .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. 67 69 65 48 25 6.6 2.9 94 93 52 65 39 11 35 1999 Comparator .. .. .. .. .. .. .. .. .. .. .. .. .. .. 93 91 53 66 40 79 58 .. .. .. 40 28 20 11 35 Morocco 1998 .. .. .. .. .. .. .. .. .. .. .. .. .. 67 69 65 51 26 6.8 3.1 95 92 54 67 41 28 20 11 35 1997 .. .. .. .. .. .. .. .. .. .. .. .. 3.3 95 93 55 68 41 74 65 38 .. .. .. 39 28 20 10 35 and 1996 44 33 25 31 2001 .. .. .. .. .. .. .. .. .. 95 96 94 49 .. .. .. .. .. .. .. .. .. 45 56 33 91 98 24 30 2000 .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. 67 68 65 47 26 6.9 3.3 95 96 45 57 34 24 30 1999 .. .. .. .. .. .. .. .. .. .. .. .. .. Egypt 96 98 46 58 35 92 89 59 .. .. .. 81 24 2.8 23 30 1998 Jordan 7 .. .. .. .. .. .. .. .. .. .. .. .. 66 68 65 51 26 3.4 94 92 47 59 35 78 23 2.8 22 29 1997 .. .. .. .. .. .. .. .. .. .. .. .. .. 91 92 48 60 36 93 88 89 68 64 71 75 27 2.8 22 29 1996 for 32 23 11 28 2001 .. .. .. .. .. .. .. .. .. 94 98 88 37 .. .. .. .. .. .. .. .. .. 32 43 22 47 90 10 28 2000 .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. 71 73 69 34 25 5.6 3.4 83 78 33 44 23 9.9 27 1999 .. .. .. .. .. .. .. .. .. .. .. .. .. 80 75 35 46 24 94 92 69 .. 58 59 58 66 Algeria 3.2 9.6 26 1998 .. .. .. .. .. .. .. .. .. .. .. .. .. 70 72 69 35 27 6.1 3.6 79 74 36 47 25 27 3.2 9.3 26 1997 .. .. .. .. 6 .. .. .. .. .. .. .. 37 77 75 37 49 26 94 91 79 9 56 55 58 63 27 3.2 25 1996 Indicators 9.8 4.6 1.5 25 2001 .. .. .. .. .. .. .. .. .. 96 84 99 .. .. .. .. .. .. .. .. .. 10 16 98 25 2000 100 5.2 100 1.5 .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. 71 73 70 26 30 4.2 3.7 85 83 11 17 5.5 1.4 24 1999 .. .. .. .. .. .. .. .. .. .. .. .. 91 86 11 17 83 83 28 72 75 70 80 25 23 Jordan 3.8 5.8 2.9 1.3 issues. 1998 Social 1996­01 .. .. .. .. .. .. .. .. .. .. .. .. 71 73 69 28 31 4.4 3.9 93 95 12 18 6.2