EBRD - Jordan Country Assessment


 Full Report - PDF File  النسخة العربية
 

Executive Summary

· Jordan is committed to the principles of multiparty democracy, pluralism, and market economics and has undertaken a number of related reforms in recent years

· Although the Kingdom has also undertaken a number of economic reforms, these have not always been fully matched with reforms in corporate governance and transparency

· The labor market poses a key challenge with high and rising unemployment

· Reforms for EBRD to support include energy efficiency and improvement of the legal and institutional environment for SME development

Key Findings

Jordan has requested to become an EBRD country of operations thus requiring a political and economic assessment. This report provides information on whether Jordan meets the economic and political requirements to become a recipient country of the EBRD. Highlights of this assessment are included hereafter.

 

Political Assessment

· A number of political reforms have been undertaken in Jordan over the last years such as:

o Amending the Constitution to strengthen political and human rights

o Establishing an independent Election Commission

o Issuing a law for the new Constitutional Court and advancing a new elections law

o Freedom to form political parties and the existence of organized opposition

· Jordan has a varied and active civil society with the government undertaking a number of civil society, media and participation reforms including:

o Improvement of government interference of civil societies and social bodies

o Change in laws governing freedom of expression

o New anti-corruption law

o Multiple channels of civic and political participation

· Jordan has experienced an improvement in its overall political culture

o Political demands are now routinely expressed in all forms of media

o The notion of political participation has strengthened

o There is bottom-up momentum for securing political rights

o New political parties and activists groups are being formed

· Jordan has a low ranking according to several indicators of gender equality although the legal framework enforcing equal rights for women is improving in the country:

o Adoption of a new Personal Status Law that strengthens women’s rights in divorces and introduces measures to combat violence against women, especially domestic abuse

o Initiatives to economically empower women entrepreneurs in rural areas

Macroeconomic Assessment

· Sustained growth in the 2000’s allowed Jordan to come through the global financial crises although growth was not sufficient to generate enough quality jobs

· GDP growth was subdued as a result of the ongoing regional political turmoil and continued high oil prices which resulted in:

o Depressed tourist receipts and FDI

o Declining inflows of capital

o Rising unemployment

o Widened current account deficit

o Increase in the country’s energy bill, mostly due to frequent disruptions to the gas pipeline from Egypt

· Jordan accumulated substantial domestic and foreign debt in recent years, with total gross public debt reaching 65 % of GDP, surpassing the self-imposed governmental limit set at 60%

· Jordan has made concerted efforts to open new markets and reduce tariffs and has signed a series of bilateral and regional trade agreements.In addition, Jordan is making progress in privatization and reducing existing government ownership across most economic sectors. Key reforms undertaken include:

o Introduction of law easing the hiring/firing of employees

o Passing of a new Secured Lending Law

o Introduction of a new Insolvency and Bankruptcy Law

· Jordan’s business environment faces a number of difficulties, mainly access to credit. Jordan has also made significant progress in financial sector reforms including the development of an appropriate regulatory framework

· The labor market poses a key challenge for the country:

o Skill mismatches

o Brain drain

o High structural unemployment

o Inequality between rural and urban Jordan in terms of employment opportunities

o High gender gap

· Over the past few years, the government has acknowledged the need to encourage the role of the private sector in infrastructure projects which required improving the legal framework for PPPs where the following occurred:

o New PPP law drafted

o PPP advisory unit operating alongside the Executive Privatization Commission and Privatization Council

· Jordan faces climate change and environmental challenges particularly related to energy and water security.There is increased interest in renewable energy with the government setting a target of acquiring 7% of energy needs from renewable energy by 2015 in addition to introducing special legislation concerning renewable energy projects

· Jordan is facing transition challenges in the sustainable energy, agriculture, manufacturing and services, transport and municipal infrastructure sectors:

o Large transition gaps in sustainable energy despite considerable structural reform

o Large transition gaps in agribusiness sector energy along the whole food value chain

o Productivity challenges in the manufacturing and services sectors in addition to the need for technological upgrading and modernization

o Inefficient water distribution and tariff system

o Limited availability of private equity and finance for medium sized enterprises in the financial sector

Recommended Opportunities

An overview of key opportunities identified for support is provided hereafter.

 

Supporting Sustainable Energy

· Policy dialogue to support Jordan’s legislative framework with regard to energy efficiency, climate change, and sustainable energy initiatives

· Investments in electricity distribution companies

· Help the country diversify its fossil fuel supply

· Provide funding through private equity funds or as a direct investor to private energy companies

Direct and Indirect Financing of Private Enterprises

· Direct financing of large and mid-caps enterprises across sectors

· Investments throughout the agribusiness sector value chain

· Indirect financing of MSMEs through financial intermediaries, accompanied by transfer of specialist lending technology

· Facilitating development of capital markets and other financial intermediaries

Facilitating non-Sovereign Financing for Municipal Infrastructure and Transport Projects

· Promote institutional and regulatory reform in the municipal sector

· Support commercialization and modernization of municipal infrastructure

· Support the development of private sector participation

  

Report Name

Date

Timeline

EBRD-Jordan Country Assessment

September 2012

Not Relevant

Author

Supporting Donor

European Bank for Reconstruction and Development (EBRD)

Not Relevant

Sector

Lead Ministry

General

None

Key Topics

Anti-corruption – Debt – Economic reforms – Energy Efficiency – Infrastructure – Labor force – Legal Reforms – Political reforms – PPP – SMEs – Technology – Transport – Water

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