Jordan has ‘made excellent progress' on reform path — WB Mashreq director

WASHINGTON, DC — Jordan has made “very good” progress on reforms required under a $1.45 billion financing package and is expected to receive the second tranche of the loan, amounting to $725 million, in November, said Saroj Kumar Jha, World Bank regional director for the Mashreq.

Some reforms have already been completed and 50 per cent of the total volume has already been disbursed under the programme, which the World Bank approved in June with a view to stimulate inclusive growth and create jobs. The other 50 per cent will be disbursed when the remaining reforms are completed by the Jordanian government, he said in an exclusive interview with The Jordan Times on the sidelines of the World Bank's annual meetings.

“As of today, our assessment is that the government has made excellent progress on implementing the reforms that were agreed on as part of this programme, and we expect all these reforms to be completed sometime in November,” Jha said.

“In November, we will conduct an assessment of the macro fiscal framework in the country, and if the assessment confirms the adequacy of the macro fiscal framework we will disburse the remaining 50 per cent of the programme,” he said.

To receive the second tranche, Jordan needs to complete seven reforms.

One of the reforms is to provide investors with a mechanism for submitting grievances and addressing their concerns. Jordan has already developed a mechanism for investors’ grievances, which is being adopted by the government, he added.

Another required reform is to create an institutional legal framework for public-private partnerships (PPPs).

“Jordan needs more investments for jobs to be created. These investments will come from the private sector and this is why you need a very well and functioning PPP system,” the regional director said.

The PPP law, which was drafted, is to be discussed soon by the Cabinet and submitted to Parliament. “We helped the government draft the new law and when the bill is enacted, it will be one of the good examples of a PPP framework in the Arab region. It is a state-of-the-art law,” he said.

The remaining five reforms are in the electricity sector, which represents a challenge for Jordan, as it is responsible for a very large percentage of public debt. This is due to the accumulation of debt over the years, as currently around 20 per cent of public debt is from the National Electric Power Company (NEPCO), according to the World Bank.

The series of reforms in the electricity sector in Jordan is meant to reduce the cost of doing business in the country and minimise the debt burden on the government in this sector as well as the overall public debt, according to the World Bank, which indicated that one of the reforms is to examine how efficiently the government is targetting its support in the electricity sector to the poor.

Some of the reforms in this sector also include coming up with a mechanism so that public bills owed to the power company are paid on time and do not build up. The reforms are also meant to ensure that NEPCO is not accumulating more debt and that its debt is on the decline, according to the bank. 

“We are very happy with the progress being done… We see November as a good time frame for the government to complete all the reforms,” Jha added.

Reform matrix

On the five-year “Reform and Growth Matrix”, combining short- and medium-term actions for a realistic economic transformation with key measures and outcomes, which Jordan outlined at the London Initiative in February, he said that Jordan's initiative to put together the matrix in consultation with partners and donors is a “good example, and people are taking about it. Jordan is emerging as a model in this regard.”

Jordan has done “well so far” in several aspects, but, he questioned: “Is it able to create adequate jobs for Jordanians?”

“We still have very high level of unemployment, especially among the youth,” he continued.

“This matrix needs to be looked at from that perspective.  The second challenge is the short- versus medium- to long-term. These structural reforms take time to enable the environment, create jobs and attract investment… In Jordan, you have huge backlog of unemployment and there is a need to do something immediate,” he said.

“There is a need for us to look with the government at what should be done in 2020 to reflect on this question. In the five-year matrix, can we reprioritise some of the actions and address the issue of unemployment and underemployment in the short term?” he asked.

“There is a need to prioritise now to address these issues and make sure that this matrix produces concrete results for the Jordanian people. If it is going to produce some results in a few years, we would also like to see some results now,” he added.

He stressed the need for discussion to create a “more immediate” impact.

“Jordan is on right track and making good progress, and in the short term, more will need to be done… There is a need for us to do more for Jordan in the short term in addition to making sure that we stay on the reform path to move into a more private-sector led economy,” the director added.

Continued support

“We have a strong partnership with Jordan and are very committed to working with the Jordanian government, the civil society and stakeholders… We fully understand the challenges Jordan is facing, and that is why our institution is trying to do more,” he said.

“The reason for this partnership is that Jordan is in need of assistance from all of us because of the situation it has faced over the years. The immediate context is the Syrian crisis and the Iraqi crisis and the borders closures, which accounted for a substantial amount of Jordan's exports. Before the Syrian crisis, there was the Arab Spring and the disruption of gas from Egypt, and Jordan faced multiple shocks. That’s why we want to provide all the support we can provide to Jordan,” he said.

Reforms are never easy because there is a change from one economic model to another, he added.

“Jordan is on right track and making progress, and want to make sure this momentum is maintained,” Jha said.

On the low level of women’s participation in the economy, he said: “It is very hard for an economy to grow sustainably when you have such a large part of your workforce not engaged in economic activities.”

“Some of this can be addressed through reforms and measures… in the first tranche, some reforms were meant to support women’s participation in the labour force,” the director said.

“It is also important that the media, civil society and the private sector make this a priority. It cannot be done alone.”