Document of
The World Bank

Report No:ICR00004058

IMPLEMENTATION COMPLETION AND RESULTS REPORT
(IBRD-81270)
ON A
SERIES OF TWO LOANS
IN THE AMOUNT OF US$ 500 MILLION
TO THE
THE HASHEMITE KINGDOM OF JORDAN
FOR
DEVELOPMENT POLICY LOANS I-II
April 28, 2017
Macroeconomics and Fiscal Management Global Practice
Mashreq Department – MNC02
Middle East and North Africa Region

CURRENCY EQUIVALENTS

Exchange Rate Effective as of 28 April, 2017

Currency Unit =

JD 1.00 = US$ 1.412

US$ 1.00 = JD0.708

FISCAL YEAR

January 1st – December 31st

ABBREVIATIONS AND ACRONYMS

AB / Audit Bureau
CoM / Council of Ministers
CPF / Country Partnership Framework
CPS / Country Partnership Strategy
DPL / Development Policy Loan
EDP
EU / Executive Development Program
European Union
GDP / Gross Domestic Product
GIC / Global Integrity Country (report)
GoJ / Government of Jordan
GWP / Government Work Program
KPI / Key Performance Indicator
IACC / Integrity and Anti-Corruption Commission
ICR / Implementation Completion and Results Report
JICA / Japan International Cooperation Agency
LOB / Legislative and Opinion Bureau
MoF / Ministry of Finance
MoPIC / Ministry of Planning and International Cooperation
MoPSD / Ministry of Public Sector Development
OSS / One Stop Shop
PA / Prior Action
PDO / Program Development Objective
PPP / Public Private Partnership
SME
TA / Small and Medium Enterprise
Technical Assistance

Senior Global Practice Director:

/

Carlos Felipe Jaramillo

Country Director

/

Ferid Belhaj

Practice Manager:

/

Pablo Saavedra

Task Team Leader:

/

Eric Le Borgne

ICR Team Leader:

/

Léa Hakim

ICR Primary Author:

/

Robert Keyfitz

JORDAN

First and Second Programmatic Development Policy Loans

CONTENTS

Data Sheet

A. Basic Information

B. Key Dates

C. Ratings Summary

D. Sector and Theme Codes

E. Bank Staff

F. Results Framework Analysis

G. Ratings of Program Performance in ISRs

H. Restructuring (if any)

1. Program Context, Development Objectives and Design

2. Key Factors Affecting Implementation and Outcomes

3. Assessment of Outcomes

4. Assessment of Risk to Development Outcome

5. Assessment of Bank and Borrower Performance

6. Lessons Learned

7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners

Annex 1 Bank Lending and Implementation Support/Supervision Processes

Annex 3. Stakeholder Workshop Report and Results

Annex 4. Summary of Borrower's ICR and/or Comments on Draft ICR

Annex 5. Comments of Cofinanciers and Other Partners/Stakeholders

Annex 6. List of Supporting Data

Annex 7. List of Supporting Documents

A. Basic Information

Program 1
Country / Jordan / Program Name / Jordan First Programmatic DPL
Program ID / P124441 / L/C/TF Number(s) / IBRD-81270
ICR Date / 11/30/2016 / ICR Type / Core ICR
Lending Instrument / DPL / Borrower / JORDAN
Original Total Commitment / USD 250.00M / Disbursed Amount / USD 250.00M
Implementing Agency: Ministry of Planning and International Cooperation (coordinator)
Cofinanciers and Other External Partners: Japan International Cooperation Agency
Program 2
Country / Jordan / Program Name / Jordan Second Programmatic DPL
Program ID / P125483 / L/C/TF Number(s) / IBRD-83500
ICR Date / 11/30/2016 / ICR Type / Core ICR
Lending Instrument / DPL / Borrower / JORDAN
Original Total Commitment / USD 250.00M / Disbursed Amount / USD 250.00M
Implementing Agency: Ministry of Planning and International Cooperation (coordinator)
Cofinanciers and Other External Partners: Japan International Cooperation Agency

B. Key Dates

Jordan First Programmatic DPL - P124441
Process / Date / Process / Original Date / Revised / Actual Date(s)
Concept Review: / 12/09/2010 / Effectiveness: / 02/02/2012
Appraisal: / 12/20/2011 / Restructuring(s): / N/A / N/A
Approval: / 01/24/2012 / Mid-term Review: / 12/02/2012 / 12/02/2012
Closing: / 12/31/2013 / 12/31/2013
Jordan Second Programmatic DPL - P125483
Process / Date / Process / Original Date / Revised / Actual Date(s)
Concept Review: / 11/18/2013 / Effectiveness: / 05/08/2014
Appraisal: / 12/09/2013 / Restructuring(s): / N/A / N/A
Approval: / 03/13/2014 / Mid-term Review: / N/A / N/A
Closing: / 09/30/2015 / 09/30/2015

C. Ratings Summary

C.1 Performance Rating by ICR
Overall Program Rating
Outcomes / Moderately Satisfactory
Risk to Development Outcome / Substantial
Bank Performance / Moderately Satisfactory
Borrower Performance / Moderately Satisfactory
C.2 Detailed Ratings of Bank and Borrower Performance (by ICR)
Overall Program Rating
Bank / Ratings / Borrower / Ratings
Quality at Entry / Moderately Satisfactory / Government: / Moderately Satisfactory
Quality of Supervision: / Satisfactory / Implementing Agency/Agencies:
Overall Bank Performance / Moderately Satisfactory / Overall Borrower Performance
C.3 Quality at Entry and Implementation Performance Indicators
Jordan Programmatic Series: First and Second Programmatic Policy Loans (P124441 and P125483).
Implementation Performance / Indicators / QAG Assessments (if any) / Rating:
Potential Problem Program at any time (Yes/No): / No / Quality at Entry (QEA) / None
Problem Program at any time (Yes/No): / No / Quality of Supervision (QSA) / None
DO rating before Closing/Inactive status

D. Sector and Theme Codes

Jordan First Programmatic DPL - P124441
Original / Actual
Sector Code (as % of total Bank financing)
Central Government (Central Agencies) / 57 / 57
Health / 15 / 15
Other Industry, Trade and Services / 14 / 14
Other Non-bank Financial Institutions / 7 / 7
Services / 7 / 7
Theme Code (as % of total Bank financing)
Debt management and fiscal sustainability / 14 / 14
Health system performance / 14 / 14
Micro, Small and Medium Enterprise support / 14 / 14
Other accountability/anti-corruption / 43 / 43
Regulation and competition policy / 15 / 15
Jordan Second Programmatic DPL - P125483
Original / Actual
Sector Code (as % of total Bank financing)
Capital Markets / 6 / 6
Central Government (Central Agencies) / 56 / 56
Other Industry, Trade and Services / 25 / 25
Public Administration - Health / 13 / 13
Theme Code (as % of total Bank financing)
Debt management and fiscal sustainability / 13 / 13
Other Private Sector Development / 12 / 12
Other accountability/anti-corruption / 25 / 25
Public expenditure, financial management and procurement / 38 / 38
Regulation and competition policy / 12 / 12

E. Bank Staff

Jordan First Programmatic DPL - P124441
Positions / At ICR / At Approval
Vice President: / Hafez M. H. Ghanem / Inger Andersen
Country Director: / Ferid Belhaj / Hedi Larbi
Practice Manager/Manager: / Pablo Saavedra / Bernard Funck
Task Team Leader: / Eric Le Borgne / Ndiamé Diop
ICR Team Leader: / Léa Hakim
ICR Primary Author: / Robert Keyfitz
Jordan Second Programmatic DPL - P125483
Positions / At ICR / At Approval
Vice President: / Hafez M. H. Ghanem / Inger Andersen
Country Director: / Ferid Belhaj / Ferid Belhaj
Practice Manager/Manager: / Pablo Saavedra / Bernard Funck
Task Team Leader: / Eric Le Borgne / Eric Le Borgne
ICR Team Leader: / Léa Hakim
ICR Primary Author: / Robert Keyfitz

F. Results Framework Analysis

Indicator(s)
Jordan Programmatic Series: First and Second Programmatic Policy Loans (P124441 and P125483).
Indicator / Baseline Value / Original Target Values (from approval documents) / Formally Revised Target Values / Actual Value Achieved at Completion or Target Years
Indicator 1 : / Transparency and accountability: Strengthened effectiveness of the Anti-Corruption Commission measured through question 75 “Is the corruption agency effective?” of Jordan’s Global Integrity Country Score).
Value
(quantitative or
Qualitative) / 61.1 out of 100 / 75 out of 100 / 83.3 out of 100
Date achieved / 2011 / 2015 / 2015
Comments
(incl. %
achievement) / Achieved (and exceeded).The target was exceeded by an estimated 8.3 percentage points. The effectiveness of the Anti-Corruption Commission (now Integrity and Anti-Corruption Commission)is expected to improve with technical assistance and the implementation of the new National Integrity Charter.
Indicator 2 : / Transparency and accountability: Improved access to information measured by indicator 1.3 “Public access to government information” of Jordan’s Global Integrity Country Score
Value
(quantitative or
Qualitative) / 64.6 out of 100 / 75 out of 100 / 77.1 out of 100
Date achieved / 2011 / 2015 / 2015
Comments
(incl. %
achievement) / Achieved (and exceeded).The indicator improved by 12.5 percentage points from the baseline, exceeding the target by 2.1 percentage points.
Indicator 3 : / Transparency and accountability: Strengthened effectiveness of the Audit Bureau through question 59 “Is the supreme audit institution effective?” of Jordan’s Global Integrity Country Score).
Value
(quantitative or
Qualitative) / 63 out of 100 / 75 out of 100 / 71.9 out of 100
Date achieved / 2009 / 2015 / 2015
Comments
(incl. %
achievement) / Partially achieved.The indicator was almost achieved improving 8.9 percentage points. The effectiveness of the audit bureau is expected to be further strengthenedonce it withdraws from 100 percent of ex-ante audits with current progress on track for end-2017.
Indicator 4 : / Government spending efficiency: Effective application of the new PPP law and effective use of the PPP Unit for all PPP transactions.
Value
(quantitative or
Qualitative) / 1 PPP project achieved financial close in 2010 - 2011. This is down from 2 in 2009. / The new PPP law applies to all new PPP transactions, the PPP Unit has identified an initial pipeline of 5 potential PPP projects, subject to validations. / New PPP law and by-laws approved. PPP Unit has identified an initial pipeline of 5 potential PPP projects.
Date achieved / 2009 / 30/9/2015 / 30/9/2015
Comments
(incl. %
achievement) / Achieved. By January 2017 there were 13 projects in the PPP Unit’s pipeline. The Ministries of Energy and Water obtained 2-year temporary waivers from applying the new PPP Law provisions to avoid slowing current projects in their respective pipelines.
Indicator 5 : / Debt management: Availability of new debt tools that improve risk and exposure profile.
Value
(quantitative or
Qualitative) / No Sukuk can be issued / GoJ issues a Sukuk security / A new Sukuk law was in place (Law 30, ratified 2012)
Date achieved / 2010 / 30/9/2015 / 30/9/2015
Comments
(incl. %
achievement) / Achieved(with delay). NEPCO Sukuk issued in May 2016; Government Sukuk issued in October 2016. A second NEPCO Sukukwas issued in March 2017.
Indicator 6 : / Government spending efficiency: Share of generic medicines in total medicines purchased by the Ministry of Health.
Value
(quantitative or
Qualitative) / 50 percent / Increase share by 30 percent to 65 percent. / 44.2 percent
Date achieved / 2010 / 2015 / 2015
Comments
(incl. %
achievement) / Not achieved.The Ministry of Health cites a number of factors for the declining share of generics including the higher need for original drugs that do not have a generic version given the increased population due to the Syrian refugee crisis.
Indicator 7 : / Access to finance: Existence of a private sector credit bureau
Value
(quantitative or
Qualitative) / None / One credit bureau established. / The Central Bank of Jordan approved a preliminary license for a credit bureau in December 2015.
Date achieved / 2011 / 30/9/2015 / 30/9/2015
Comments
(incl. %
achievement) / Achieved. The first license for a Credit Bureau operation was issued in December 2015. Work is ongoing to (1) increase the share of transactions between debtors and commercial banks entered in the system and (2) integrate non-bank institutions (utilities, insurance and leasing companies, microfinance institutions and others) into the system.
Indicator 8 : / Access to finance: Existence of a functional Moveable Asset Registry.
Value
(quantitative or
Qualitative) / None / One moveable asset registry established. / A good quality draft secured lending law has been submitted to Parliament but has not yet been approved.
Date achieved / 2011 / 30/9/2015 / 30/9/2015
Comments
(incl. %
achievement) / Not achieved. The ratification of the 2014 draft law is a prerequisite to establish a moveable asset registry. Awaiting ratification, the Ministry of Industry and Trade has undertaken the technical work, while IFC in collaboration with USAID has set up the registry platform to prepare for the law being passed.
Indicator 9 : / Private-sector led growth: Increase in the average growth rate of Greenfield FDI in core services (where core services exclude real estate and tourism).
Value
(quantitative or
Qualitative) / 2009-2011 average: US$ 345.9 million / 2012-2014 average: a 20 percent increase compared to baseline / -40.2 percent (based on updated data and methodology)
Date achieved / 2009-2011 / 2012-2014 / 2015
Comments
(incl. %
achievement) / Given updated methodology and revised data from fDi Markets used to calculate Greenfield FDI in core services, the 2009-2011 comparable baseline grew to an average of US$ 400.8 million with 2012-2014 average at US$ 239.6 million, a 40.2 percent decrease, with an improvementto US$ 251.8 million in 2016 (the highest since 2013).
Indicator 10: / Private sector-led growth: Median and dispersion in the number of days to obtain all required licenses to effectively start a business (spread 80-20 percentile). Reduce the administrative time needed to effectively start a business.
Value
(quantitative or
Qualitative) / 10a. Median: 26 days
10b. Dispersion: 22.6 days / 10a. Median: 12 days
10b. Dispersion: 10 days / Median: 18.0 days Dispersion: 19.4 days
Date achieved / 2011 / 30/9/2015 / 30/9/2015
Comments
(incl. %
achievement) / Partially achieved for the median.By end-2016: median 16 days, dispersion 27.4 days.
Program Development Objectives (from Program Document Loan and Program
Summaries)

The series was built around three pillars, which are also the operation’s PDOs:

(i) improve transparency and accountability; (ii) improve debt management and theefficiency of government spending; and (iii) promote private sector-driven growth.

G. Ratings of Program Performance in ISRs

Jordan Programmatic Series: First and Second Programmatic Policy Loans (P124441 and P125483).
No. / Date ISR
Archived / DO / IP / Actual Disbursements
(USD millions)
1 / 03/13/2012 / Satisfactory / Satisfactory / 249.38
2 / 03/19/2013 / Moderately Unsatisfactory / Moderately Unsatisfactory
3 / 06/29/2015 / Moderately Satisfactory / Moderately Satisfactory / 249.38

H. Restructuring (if any)

N/A

1. Program Context, Development Objectives and Design

This Implementation Completion and Results Report (ICRR) assesses the results of the programmatic series of Development Policy Loans (DPL) to the Hashemite Kingdom of Jordan. The DPL series aimed to (i) improve transparency and accountability; (ii) improve debt management and the efficiency of government spending; and (iii) promote private sector-driven growth. The first operation (DPL1) of $250 million was approved by the World Bank’s Board of Directors on January 24, 2012. The second operation (DPL2) of US$250 million was approved on March 13, 2014.

1.1 Context at Appraisal

  1. Jordan is an upper middle income country, with a stable political system and comparatively good socio-economic indicators.The UNDP’s Human Development Index ranks Jordan as a High Human Development country, above the average for Arab states. Structural reforms and a favorable external environment contributed to sustained rapid growth for much of the decade preceding the DPL.
  2. In 2010-11 Jordan confronted mounting challengeson a number of fronts. These included: (i) sharply slower growth and deteriorating external and fiscal balances in the wake of the 2007-08 global financial crisis(see Table 1); (ii) constraints on fiscal space with public debt rising above 60 percent of GDP; (iii) repeated sabotage of the Arab Gas Pipeline,disrupting Egyptian gas supplies and causing large quasi-fiscal losses by NEPCO, the electric utility;and(iv) aspirations for more open and accountable government, fanned by the Arab Spring.
  1. The Government responded to these developments withfiscal stimulus,including price subsidies and increased public investment.[1]However, growth remained stubbornly tamed in the 2.5-3 percent range, lower than the 6.5 percent average prior to the global financial crisis while the fiscal deficit widenedprogressively from an average of 3.5 percent of GDP in 2000-09 to 5.6 percent in 2010 and 6.8 percent in 2011 (Table 1).Withgrowth and fiscal policy becoming a concern,the Government approached the Bank in late 2010 for budget supportin the form of a US$500 million programmatic DPL series focused on fiscal consolidation, governance and private sector development.The first US$250 million loan disbursed in early 2012.
  1. As economic and political stresses continued to build, the Government sought help from the International Monetary Fund. A three-year, US$2.1 billion Stand-By Arrangement (SBA) in August 2012 marked a turning point. The program concentrated on fiscal adjustment, through reductions in energy subsidies and other expenditure restraint in the short term and revenue enhancement in the medium term.[2]With the Syria crisis becoming more protracted, Jordan was affected by spillovers affecting economic growth and the fiscal burden of hosting a more than 600,000 Syrian refugees.[3] NEPCO’s losses were now as high as 6 percent of GDP.
  1. By the time the second DPL was appraisedin early 2014,Jordan had resumed progress on fiscal consolidation and economic conditions were beginning to look more favorable.[4]This enabled attention to shift to longer-term structural reforms. The Fund’s program recognized the need to stimulate longer term private sector growth.Jordan’s small and medium enterprises (SMEs) that generate the largest number of jobs, faced major access to finance constraints. As such, the IMFadded “licensing of a credit bureau” (a DPL indicator) as a structural benchmark on inclusive growth whichprovided further impetus for its achievement.[5]The program also echoed the DPL and other WB work related to Public Investment Management. Bank staffparticipated in IMF supervision missions and the operation benefited from the Fund’s oversight of Jordan’s short term macroeconomic performance. Throughout the period, the Fund took the view that the economy was facing temporary external shocks and broadly agreed with the Government’s policy stance. The Bank assessed the macroeconomic policy framework as adequate.

Table 1. Macroeconomic Indicators

2000-09 / 2010 / 2011 / 2012 / 2013 / 2014 / 2015
GDP growth (%) / 6.5 / 2.3 / 2.6 / 2.7 / 2.8 / 3.1 / 2.4
Overall fiscal balance (% of GDP, incl. grants) / -3.5 / -5.6 / -6.8 / -9.0 / -11.5 / -9.3 / -3.6
Primary balance (% of GDP, incl. grants) / -0.9 / -3.5 / -4.7 / -6.4 / -8.4 / -5.7 / -0.1
Gov’t Gross Debt (% GDP) / 85.9 / 67.1 / 70.7 / 80.2 / 86.7 / 89.0 / 93.4
Current account balance (% GDP) / -6.2 / -7.1 / -10.2 / -15.2 / -10.4 / -7.3 / -9.1
Net Private Investments (FDI and Portfolio, % of GDP) / 11.1 / 9.2 / 5.9 / 6.4 / 10.7 / 9.1 / 7.7
Unemployment rate (%, nsa) / 13.9 / 12.5 / 12.9 / 12.2 / 12.6 / 11.9 / 13.0

Source: World Bank, Jordanian authorities.Note: Figures are actual outturns.

  1. The DPL represented a continuation of the WBG’s long standing partnership with Jordan in such areas as budget management, economic competitiveness, investment climate reforms, and public-private partnerships.Over the years, the Bank has provided both Analytical and Advisory services and lending, including a US$300 million, standalone “Recovery under Global Uncertainty DPL” in 2009. A new Country Partnership Strategy (CPS) for FY12-FY15 was being prepared concurrentlywith the DPL which became a central vehicle for its policy dialogue.
  1. The implementation of the DPL series occurred at time of large and unexpected shocks that generated severe regional instability and strain on Jordan; the country nonetheless was able to implement significant and sustainable reforms. During the course of the operation, Jordan faced a number of large exogenous shocks including repercussions from the Global Financial Crisis, the Arab Spring, and severe disruption of gas supply from Egypt, which at the time was the almost exclusive source of input for electricity generation in Jordan. Security spillovers from neighboring conflicts in Iraq and Syria started to mount. Growth faltered; the influx of Syrian refugees--with those registered with the UNHCR alone accounting for about 9 percent of Jordan's population--put unexpected and weighty pressure on public finances and the provision of public services. These developments affected many of the outcome indicators for example related to investment, the investment climate and share of generic medicines. Many of the missed result indicators are related to some extent to the unexpected and large nature of these shocks. Despite these, the DPL series resulted in concrete, meaningful results that are expected to have significant sustainability over time.

1.2 Original Program Development Objectives (PDO) and Key Indicators (as approved)