Reform & Development Strategy
Constitutional Evolution
Political Reform & Democratization
Jordanian Elections 2003
Parliamentary Affairs
Jordan's Vision for the Future: The Reform Agenda
Jordan’s reform and development strategy
Jordan has developed and pursued a comprehensive model for development, encompassing three distinct yet interlinked components. The first component is a political reform program, which enhances public participation in decision making at all levels and one that consolidates democratic practices. The second component aims at developing an external environment, which is more conducive to domestic development, replacing belligerence with coexistence, and apathy with cooperation. The third is an economic reform program which aims at liberalizing and modernizing the economy, making it more competitive at the regional and international levels and integrating it into the world economy.
Political and Public Reform
Public administration reform is part of the framework of the social and economic reform plan. Public reform is based on a road map endorsed last year by the Economic Consultative Council, a public/private sector body chaired by King Abdullah to monitor implementation of reform policies. It seeks to modernize the country’s bureaucracy and improve the quality and standards of public services offered to Jordanians. The reform plan also aims at making the judiciary more independent and transparent, restructuring government departments and implementing the national e-government project. The government is working on pension reforms under which public employees will be removed from a state-sponsored program to the Social Security Corporation that is handling pensions for the private sector. Without significant pension reform, the government is expected to spend almost one billion dollars by the year 2010 on pensions, up from more than $400 million in 2002. Therefore, pension reform is vital for future fiscal stability and to avoid burdening the budget with costly pension allocations and foreign debt servicing at the expense of vital developmental needs.
The public sector reforms program focuses on four areas of reforms: civil service and administrative reforms, budgetary and financial management reforms, judicial reforms, and implementing e-government initiatives.
Under the first component of the program, civil service and administrative reforms, the government plans to fully implement the new civil service bylaw, which was approved by the Cabinet in June 2002, and considered as a main step on the path of targeted reforms. The bylaw provides for a more merit-based (meritocratic) selection of senior management, regular and more transparent evaluation and promotion of government personnel.
Under the same component, the government plans to set up within its 2003 budget the Innovation Fund in order to encourage “line agencies” to design and implement administrative reforms, train staff, and build needed institutional capacities. Other reforms include extending the use of e-government, including e-mail and Internet, to government institutions. A new entity, to be called the Interministerial Coordinating Committee for Public Sector Reform will be established.
On the budgetary and financial management reforms front, the government is committed to several concrete actions over the next one to two years. These include strengthening the framework of budget preparation by issuing the budget circular for 2003 before the end of July 2002, including medium-term projections of aggregate government expenditures, together with initial ministerial expenditure ceilings for 2003.
In addition, the government intends to increase the focus on performance and results in public spending by implementing a pilot results-oriented budgeting in the immunization program of the Ministry of Health in 2003, and extending this pilot approach to more programs during 2004. These will be concluded along with improving the technical basis for the budget preparation process.
Realizing the role of the appropriate legal framework in attracting domestic and foreign private investments, the government said it will develop a strategic plan for the legal and judicial system. The plan aims, over the next two years, to widen and ease access to legal and judicial information, pursue efforts to build capacity and increase efficiency in the court system.
Under the Jordanian e-Government Initiative component, over ten government agencies are being connected via a secure private network, with e-mail functionality introduced across the participating agencies. A portal for e-government is also under development. Legislative reforms (the introduction of the electronic transactions law), public access channels (the establishment of over 20 IT community centers), and training programs for government employees are also being conducted in parallel.
Developing a Domestic Growth-Conducive External Environment
Significant progress has been made during the past decade in reducing Jordan’s high level of external public debt. Total public and publicly guaranteed external debt in nominal terms fell from 138% of GDP in 1992, to an estimated 81% of GDP as of end-2001. This reduction was achieved through fiscal consolidation and prudent debt management entailing debt buyback operations, debt for development swaps, and the use of privatization receipts to retire more expensive debt. Nevertheless, Jordan’s external debt remains large in net present value (NPV) terms in relation to gross national income (109% at end-2001) and in relation to exports of goods and non-factor services (183%). These ratios are high by comparison with other lower and middle-income countries, and the debt burden remains a significant drag on economic growth.
In order to curb the Kingdom’s twin ills of poverty and unemployment, and to reinvigorate the economy, the government has embarked on a major social and economic reform program that aims to insure sustainability of previous achievements and maintain growth and overcome remaining impediments. Previous successes and achievements need to be sustained and consolidated to offset the effects of regional volatility. The present difficult circumstances and future challenges necessitate that efforts in this regard are implemented immediately. This is a self-imposed program for reform tailored by the government to address Jordan’s developmental needs for the future and has been granted full World Bank and IMF support.
Jordan’s exports to the United States – even before the Free Trade Agreement comes into effect – have risen from $16million in 1998 to $72million in 2000, and are projected to rise to $200million or more in 2002. No major U.S. trading partner has a higher rate of export growth over this period. Furthermore, virtually all of this growth is in labor-intensive fields, notably apparel, jewelry, luggage, and processed food.
Economic Reform towards Competitive Markets
Serious reforms have already been undertaken by King Abdullah. These include full market liberalization, an aggressive process of privatization and public reform. Today, Jordan has the best property rights law in the region and enjoys a Free Trade Agreement with the US, a partnership Agreement with the EU and is a member of the WTO. Moreover, the Qualified Industrial Zones (QIZ), which have been established as a joint US-Israeli-Jordanian venture, have made the United States Jordan’s number one export destination after exports from these zones increased by almost tenfold in the past four years, replacing Iraq and Saudi Arabia on the top of the export list for the first time in Jordan’s history.
In order to strengthen economic growth, the government launched the Social and Economic Transformation Program (SETP) in November 2001. The SETP aims to stimulate private investment and create employment over the next five years by: (a) improving the business climate through structural, legal, and administrative reforms; (b) increasing health services and human resource development; (c) alleviating poverty through direct assistance and through rural development programs; and (d) privatizing virtually all remaining public enterprises. The SETP has been formulated in consultation with various bilateral donors, and safeguards are being put in place in collaboration with the World Bank by prioritizing the projects and ensuring effective implementation. Execution of the SETP will require additional public spending in the order of 4% of GDP a year over the next five years, for which the government is seeking support from the international community.
Jordan has reversed the policy patterns common throughout the region: It has lowered trade and investment barriers, worked toward economic integration with its neighbors, and participated actively in the world trading system.
Economic Facts and Figures
- Jordan’s economy has been able to achieve a growth rate of more than 4% during the first quarter of 2002. Exports and industrial production have also grown during the first quarter of 2002 despite the regional crisis that has affected all the economies in the area. However, unemployment levels in the Kingdom remain alarmingly high at more than 15%. More than 30% of Jordan’s population is living in poverty. Despite some good performance, per capita income has increased only marginally in the last three years, and remains at about the same level as in the late 1980s, as population growth (although declining) remains close to 3% per year. Real growth will need to accelerate further to 6% or more per year over the next 5-10 years in order to achieve a meaningful reduction in poverty and to absorb the large demographic wave entering the labor force.
- Jordan’s external debt burden has been reduced to almost 80% of GDP and its foreign currency reserves now exceed $2.8billion. Jordan has also achieved fiscal discipline with its budget deficit gradually being reduced to 6.5% of GDP in 2002.
- Foreign investment flows to Jordan have grown twenty-fold over the past five years, from an average of $14million a year between 1985 and 1995, to over $300million a year since 1997.
- Jordan’s national exports increased by 19% from JD362.6million in the first trimester of 2001, to JD431.4million a year later in 2002.
- Jordan has experienced an increase of 52.1% in national exports to the United States between May 2001, when exports to the U.S. were valued at JD49.1million, and May 2002 when exports were valued at JD74.6million.
- Official statistics indicate that income from the tourist industry during the first trimester of 2002, estimated at JD135.3million, has declined by 10% since the first trimester of 2001, when tourist industry income was estimated at JD150.4million.
Reform & Development Strategy II Constitutional Evolution II
Political Reform & Democratization II
Jordanian Elections 2003 II
Parliamentary Affairs
