Jordan: The World Bank Group Adapts its Strategy to Support COVID-19 Response, Inclusive and Resilient Recovery, and Continued Reforms

AMMAN: Approved today by the World Bank Group Board of Executive Directors, the Performance and Learning Review (PLR) summarizes the progress of the World Bank Group (WBG) Country Partnership Framework (CPF) for Jordan for the fiscal years 2017-2022, and adds a new CPF pillar focused on COVID-19 response and green, resilient and inclusive recovery. The PLR also extends the CPF period by an additional year (through fiscal year 2023) to support Jordanians through the crisis and to promote implementation of key reforms for investment-led growth and job creation.

While Jordan has maintained a fragile balancing act despite mounting regional and domestic pressures over the CPF period, its economy has been hit hard by the COVID-19 pandemic amid already low growth, high unemployment and growing debt. According to World Bank analysis, the Jordanian economy contracted by 1.6% in 2020; and unemployment rose to 24.7% in the fourth quarter of 2020, with youth unemployment rates reaching an unprecedented 50.0%.

The PLR updates the CPF in response to the crisis by adding a new pillar to the WBG strategy on ‘COVID-19 pandemic – supporting an effective response and resilient recovery’. Over US$1.1 billion has been mobilized in additional financing, and new and pipeline projects under preparation to support Jordanians weather the impacts of the COVID-19 crisis and to build back greener and better. This includes emergency health and vaccine support, cash transfer programs to support vulnerable households and workers, support to sustain businesses and preserve jobs and livelihoods, and support to promote public and private investments in a climate-resilient and inclusive recovery.

The new pillar added to the CPF also includes an action plan to expand women’s economic opportunities as part of the recovery efforts, a human capital review focused on the youth employment challenge, and a Country Climate and Development Report to inform a green recovery.

The PLR also supports a results-based focus on unlocking priority reform areas to address structural challenges in the economy, open markets, and spur investment as an engine of recovery and growth. During the PLR period, Jordan made progress on foundational reforms that aim to improve the environment for public and private investment and contribute to economic growth and job creation. These include: a revision of the bylaws for public procurement; adoption of a new PPP law, laws on insolvency and secured transactions, a climate bylaw and bylaws on monitoring and inspections; launching of a licensing reform; and reforms and the expansion of Jordan’s social protection system. The PLR recommends additional support to promote the implementation and impact of key reforms that can be felt by Jordanians and the private sector.

The Minister of Planning and International Cooperation of Jordan said, “we appreciate the long-standing partnership with the WBG in supporting the Government of Jordan in implementing its reform agenda with the aim of achieving economic growth and development through enhancing the business environment for attracting investment, as well as to unlocking the potential of private sector engagement to contribute to sustainable economic development and thus creating job opportunities for women and youth.”

Minister Shraideh also reiterated “the importance of the WBG role in supporting Jordan in responding to the COVID-19 crisis, especially in the social protection and health sectors, as well as through strengthening the resilience of the economy and supporting the Government of Jordan’s efforts toward economic recovery.”

“The WBG is committed to adapting its program to support Jordanians to weather the multiple layered impacts of the COVID-19 crisis, including impacts on their health, education and livelihoods,” said Saroj Kumar Jha, World Bank Mashreq Regional Director. “Our role as the WBG is also to support Jordan to build back better, with a mid- to longer-term view on how to promote reforms for investment-led recovery and growth that engages the private sector, promotes sustainable job creation particularly for women and youth, and takes advantage of the potential of green and climate-resilient recovery.”

Launched in 2016 in the context of the Syrian crisis, the Jordan CPF focuses on two pillars: (1) ‘stronger private-sector-led growth and better employment opportunities for all’, and (2) ‘improved equity and quality of service delivery’. The key issues of governance, gender and youth are embedded in the CPF as cross-cutting themes. The PLR finds that these pillars and themes remain highly relevant for continued WBG support alongside the new pillar on COVID-19 response and resilient recovery.

According to the PLR, the WBG program has expanded significantly over the CPF period and over 80% of CPF targets set at CPF design are either exceeded, achieved or on track. While the CPF had envisioned US$1.6 billion in IBRD financing for the first two years of the CPF, as of April 2021, the World Bank’s active portfolio in Jordan consisted of 14 projects valued at US$2.67 billion in loans, credits and grants. Over the CPF period, the WBG has been a key partner in Jordan’s reform agenda, and in supporting Jordan in pioneering a development-focused refugee response model.

The PLR lays out key areas of work and coordinated efforts by the World Bank Group’s member organizations, including the World Bank, the International Finance Corporation (IFC) which focuses on the private sector, and the Multilateral Investment Guarantee Agency (MIGA) which facilitates foreign direct investment through political risk insurance and credit enhancement guarantees.

“A vibrant private sector, underpinned by strong small and medium enterprises and forward-looking entrepreneurs, is vital for a successful economic recovery in Jordan,” said Abdullah Jefri, IFC’s country manager for the Levant. “IFC will continue to focus on increasing private sector participation to support jobs and inclusive, sustainable growth through direct investment, supporting PPPs, and key business climate reforms.”

“Despite the impacts of the pandemic, Jordan has demonstrated its commitment to maintaining an enabling environment for foreign direct investment, and will remain a key partner for MIGA over the CPF period and beyond”, said Merli Baroudi, Director of Economics and Sustainability at the Multilateral Investment Guarantee Agency (MIGA).

The PLR aligns the WBG program with the new Government Indicative Executive Program 2021-2024 and with the WBG’s COVID-19 Response Framework and Middle East and North Africa Region Enlarged Strategy. In developing the PLR, the World Bank Group held consultations, including with government, private sector, civil society, youth, and development partners.

To enable the WBG and Government of Jordan to focus on delivery of urgently needed support on COVID-19 response and recovery, the PLR includes a one-year extension of the current FY17 – FY22 CPF period as a bridge to preparation of the next WBG strategy in FY23.