2002年-世界发展银行全球_Jordan_-_Development_Policy_Review___A_Reforming_State_in_a_Volatile_Region_92页_5mb

Summary of Jordan Development Policy Review (Report No. 24425-JO)

Core Content

This report, Jordan Development Policy Review: A Reforming State in a Volatile Region, provides an analysis of Jordan's economic and social development challenges and opportunities in the early 2000s. It outlines the country's reform efforts since the early 1990s, its economic performance, and the key priorities for future development.

Main Points

1. Reform Efforts and Economic Stability

Jordan has implemented significant stabilization and structural reforms since the early 1990s, leading to notable improvements in macroeconomic stability:

• Inflation dropped from 25% in 1989 to 1.8% in 2001.
• Current account deficit was reduced from 16% of GDP in 1992 to a small surplus of 0.4% in 2001.
• Budget deficit (before grants) decreased from 15% in the mid-1980s to 7.9% in 2001.
• Reforms included:
  • Taxation and subsidy policies
  • Trade liberalization
  • Monetary and financial sector reforms
  • Exchange rate policies
  • Privatization of public utilities

These reforms have positioned Jordan as a leader in the Middle East and North Africa (MENA) region.

2. Growth and Poverty Challenges

Despite macroeconomic stability and structural reforms, Jordan has struggled to achieve strong and sustainable growth:

• Real GDP growth averaged around 4% in the early 2000s, but this has not translated into significant poverty reduction due to high population and labor force growth.
• Unemployment remained around 15% in the second half of the 1990s, and poverty levels stagnated at about 12%.
• Key factors affecting growth:
  • External volatility and regional instability
  • Slow private investment response (especially non-residential)
  • Weak export competitiveness

3. Private Sector Response

• Private investment has been sluggish, with a decline from 26% to 11% of GDP between 1993-98.
• Private investment remains low, at around 7% of GDP by the end of the 1990s, and needs to be doubled to match growth rates of fast-growing countries.
• FDI inflows have been limited to non-traded sectors and protected services (e.g., telecommunications, railways), with only limited inflows in traded sectors.
• QIZs have shown some success in boosting exports, but they are a temporary solution.

4. Public Services and Quality

• Improving the quality and efficiency of public services is a critical challenge.
• Key sectors:
  • Education: Needs to produce a more skilled workforce aligned with market demands.
  • Health: Requires better access and quality.
  • Water: Jordan is one of the most water-stressed countries, so water management is crucial for sustainable development.
• Public sector reforms are needed to modernize governance and improve service delivery, including:
  • Civil service and public administration reforms
  • Judicial reforms
  • Enhanced public-private partnerships in water projects

5. Government Plan for Social and Economic Transformation (PSET)

• The PSET was launched in late 2001 in response to poverty reduction and growth performance issues.
• The plan aims to:
  • Raise living standards
  • Develop human resources
  • Ensure proper healthcare
  • Alleviate poverty
  • Create employment opportunities
  • Improve government services
  • Attract domestic and foreign investment
  • Reduce debt and fiscal burden
  • Strengthen the partnership with the private sector
• The PSET will be funded through non-debt creating flows, including privatization revenues and grants.
• However, recurrent expenditures could pose long-term risks.

6. Fiscal and Debt Management

• Jordan faces a high public debt burden and large fiscal deficits.
• Debt reduction is critical for sustainable growth and private investment.
• The government aims to reduce the fiscal deficit by 30 percentage points to around 64% of GDP by 2006.
• Pension reform is essential to address rising public pension expenditures, which have reached 4% of GDP.
• Reforms include:
  • Phasing out the military pension scheme
  • Enrolling new recruits in the Social Security Corporation
  • Reducing disability awards
  • Extending vesting periods and setting a minimum retirement age
  • Introducing an automatic indexation mechanism for pensions
  • Rationalizing benefit formulas

7. Structural Reforms for Competitiveness

• Further structural reforms are needed to improve competitiveness and productivity.
• Trade liberalization should continue in line with WTO commitments.
• Regulatory reforms are necessary to make economic decisions more transparent and predictable.
• Bureaucratic procedures and corruption are major obstacles to investment.
• Exchange rate policy should be more flexible to allow for private sector credit expansion and interest rate reduction.
• The Central Bank acknowledges the need for a flexible exchange rate but has opted for a nominal peg to the US dollar.

8. Regional Integration and Globalization

• Jordan is in a volatile region and faces challenges from regional instability and external shocks.
• The country has made efforts to integrate into the global economy, including:
  • Association Agreement with the EU (1999)
  • WTO membership (2000)
  • Free Trade Agreement with the US (2001)
• Regional integration is important but comes with risks (security, political, economic).
• Closer ties with Israel could be a strategic move, though it is politically challenging.
• Diversification is crucial, both regionally and globally, to reduce dependency on traditional markets.

9. Conclusion and Priorities

• Jordan's main development challenges are:
  • Enhancing growth and reducing unemployment through improved private investment and export performance.
  • Improving public services in education, health, and water, with broader reforms in governance.
• The report emphasizes the need for policy consistency and reform continuity to ensure long-term economic stability and development.
• Future policy choices will focus on:
  • Exchange rate flexibility
  • Monetary policy support
  • Structural reforms
  • Regional and global integration

Key Information

• Currency: Jordanian Dinar (JD), with 1 JD = 0.71 USD.
• Fiscal Year: January 1 to December 31.
• GDP Growth: Around 4% in the early 2000s, but needs to increase to 6% or more for meaningful poverty reduction.
• Unemployment: Stagnated at ~15% in the 1990s, needs to be reduced to ~6% by 2010.
• Poverty: Stagnated at ~12%, despite reforms.
• Private Investment: Remains low at ~7% of GDP, and needs to be doubled.
• Public Debt: Must be reduced to ~64% of GDP by 2006.
• Pension System: Needs reform to ensure financial viability and equity.
• Exchange Rate: Currently pegged to the USD, but flexibility is seen as beneficial for long-term growth.

Conclusion

Jordan has made significant progress in economic reforms and stability, but faces persistent challenges in growth, unemployment, and poverty reduction. The Plan for Social and Economic Transformation (PSET) represents a major step forward, but its success depends on private sector responsiveness and fiscal discipline. Structural reforms in governance, trade, and the public sector are essential for long-term development and economic competitiveness. The country must continue to diversify its economic base and modernize its institutions to fully realize the benefits of its reform agenda.