International Donors Pledge $1.8 Billion to Help Jordan's Economic Transition

Published March 3rd, 2019 - 08:26 GMT
Britain's Prime Minister Theresa May talks with greets King Abdullah II of Jordan inside 10 Downing Street in London on February 28, 2019, at the beginning of their meeting. (AFP)
Britain's Prime Minister Theresa May talks with greets King Abdullah II of Jordan inside 10 Downing Street in London on February 28, 2019, at the beginning of their meeting. (AFP)

Jordan will introduce a slew of economic reforms to help its subsidy-supported economy escape the crippling burden of taking in more than a million refugees.

But planners must ensure that well-meaning policies do not punish the people they aim to protect, warn analysts. 

International donors last week pledged over $1.8 billion as part of the London Initiative at the Jordan: Growth and Opportunity conference, hosted by the UK government. Britain also announced it was underwriting a $250 million World Bank loan to make it easier for Jordan to borrow at lower interest rates. 

“We at the UN would like to be part of this journey and partner with the private sector to generate even more investments for the Jordanian economy,” said Nikolaj Gilbert, director of Partnerships Practice Group at the UN Office for Project Services (UNOPS).

“Jordan is at a transition point and it’s economy has been growing steadily for the past couple of years but now there is a huge growth potential,” Gilbert said.

Gilbert said that the UN and UNOPS will help bring in investments into Jordan by introducing de-risking projects and help convince institutional investors that Jordan is the place to go because the workforce is extremely capable and qualified.

“Beyond that we are also doing ICT projects and empowering women through training programs for start-ups, where the women in Jordan can also help to create a positive change in the Jordanian economy,” he said.

UNOPS helps Jordan’s government and its international partners to respond to the impact of the Syrian crisis.

“Beyond that we are also doing ICT projects and empowering women through training programs for start-ups, where the women in Jordan can also help to create a positive change in the Jordanian economy,” he said.

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Jordan’s economy has been battered by the fallout from conflicts in neighboring Syria and Iraq. The country has taken in hundreds of thousands of Syrian refugees and has the second-highest share of refugees compared to population in the world.

At the same time, tax hikes introduced to meet International Monetary Fund (IMF) targets to reduce Jordan’s debt burden have triggered widespread protests.

Now the country is picking up the pace of reform, according to information minister Jumana Ghuneimat.

“We have a program with the World Bank for the next five years to implement many reforms and steps to remove the challenges that are facing investment in Jordan and provide a friendly investment environment to have growth in the future and to build a real opportunity for Jordan,” she said.

Over the past decade, Jordan has pursued a number of sometimes painful structural reforms in education and health, as well as privatization and liberalization. The kingdom has also introduced social protection systems and reformed subsidies, creating the conditions for public-private partnerships in infrastructure and making tax reforms. 

However, further progress is needed so that such reforms lead to concrete outcomes.

The Jordan-World Bank program aims to raise economic participation for women, reduce the cost of fuel and make the Jordanian economy more competitive in the region. 

“We want to tell the international community that Jordan has the capacity and skills to work in the civil sectors and especially in the services sector,” the information minister said.

The World Bank is optimistic about Jordan’s economic future and is committed to the five-year IMF-backed economic consolidation program that includes implementing tough reforms.

“Our engagement with Jordan is a far-reaching, long-haul type of commitment. It aims to frame a new set of reforms that would create jobs,” said Ferid BelHajj, vice president of the Middle East and North Africa at the World Bank.

However, economic analyst Mostafa Al-Bazerghan said Jordan’s economy suffers from many problems and faces challenges associated with the conditions set by the IMF.

“There is the problem of government subsidies for basic goods and fuel, there are also proposals for support from the IMF or loans, but the social situation cannot tolerate the implementation of the IMF’s conditions,” said Al-Bazerghan.

Jordan has youth unemployment of almost 40 percent, possesses few natural resources and is burdened with 1.3 million Syrian refugees on top of the longstanding Palestinian influx.

The World Bank’s BelHajj said that the Jordanian government, under the leadership of Prime Minister Omar Al-Razzaz, had been courageous in pushing reforms that are not popular, but will transform the Jordanian economy.

“This reform must be carried out because Jordan is an important part of the Middle East economy. It is necessary to reduce the economy’s dependence on government subsidies,” Al-Bazerghan said.

The analyst cited three main priorities, reduction of subsidies, supporting those who are vulnerable to the loss of subsidies and encouraging the private sector to invest.


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