Jordan’s Ministry of Planning and International Cooperation (MOP) has released its Executive Development Programme (EDP) for 2011-13, with JD6bn ($8.4bn) to be distributed among 24 different economic sectors.
Approximately half of the money for the programme will come from state budget allocations, with the remainder being funded by government agencies and international sources. Funds from the latter are expected to amount to JD1.3bn ($1.8bn).
Around 55% of the spending will be allocated to infrastructure, water, housing and transportation projects; about 20% to social welfare; 14% to education; 6% to improving business practices; 3% to modernising technical training; 2% to financial and administration reforms; and 1% to legislation.
Some of the EDP’s planned projects will rely on public-private partnerships for funding, particularly for large projects such as the National Railway Network, the tender for which was recently delayed until 2011.
“The programme is also expected to provide donors with a concrete medium-term action plan from the government with specific projects, priorities and development goals, in addition to the targets outlined at the macro-economic level and those related to fiscal policies,” Jafar Hassan, the minister of planning and international cooperation, told The Jordan Times in November.
This is good news for investors, and indeed for the government, which said in November that it expected the amount of foreign grants and loans to the country in 2010 to be 31% higher than those in 2009. Foreign grants totalled JD288.7m ($404.6m) in the first 10 months of the year, almost doubling the amount for 2009, the Ministry of Finance announced on its website. Much of the foreign assistance has been directed to water, sewage, energy, health and education projects, the MOP said.
However, the World Economic Forum’s “2010-11 Global Competitiveness Report”, released in September 2010, highlighted several obstacles to investing in the country. It pointed to declines in a number of areas, including institutions, infrastructure, macroeconomic stability, education and financial markets. As a result, Jordan placed 65th out of 139 countries, down from 50th out of 133 the year before.
The report indicated that the main issues that need to be addressed were with tax regulations and rates, bureaucracy, labour rules, access to financing and an inadequately educated workforce.
Jordan also slipped a few notches in the “2011 Doing Business Report”, from 107 in 2010’s report to 111 (out of 183 economies) in the current version. It improved in areas relating to starting a business and dealing with construction permits, but declined in others, such as access to credit and investor protection.
“There are a lot of complaints by investors because investment promotion services are in decline and the problem is that this issue is not being addressed,” Jawad Anani, a former Royal Court chief who has also held several ministerial posts, told The Jordan Times last month. “Our focus should be on improving our economic ranking, which requires upgrading administrative and government efficiency.”
In the meantime though, the banking sector is looking outside the country’s borders, specifically to the Gulf, to help boost the economy. Bankers have told the media that Jordan’s prospects for 2011 depend on the economic recovery of the Gulf countries, which traditionally have been the main source of remittances and foreign direct investment, particularly for the real estate sector.
“The speed of recovery in the sector will depend on the Gulf economies recovering fully by reviving inflows, remittances and improving business climate,” Marwan Awad, the CEO of Ahli Bank and chairman of Jordan’s banking association, told Reuters recently.
In an effort to jumpstart this process, Jordan hosted the first of several events funded by the US Agency for International Development that have been designed to boost business links between firms in Iraq, Jordan and the Palestinian Territories on December 14-16. This event is the first in a series that has been organised as part of the Regional Business Initiative project.
Debt remains an issue going forward, however. According to the International Monetary Fund, government debt was forecast to reach 67.1% of GDP by the end of 2010, while the fiscal deficit came down during the course of the year, falling by around 35% to JD568.5m ($808.91m), compared with JD865.2m ($1.23bn) during the same period in 2009.
If Jordan can address its debt burden while steering a prudent course into 2011, the outlook for its economy should be promising, particularly if, as expected, it is helped along by growth in key regional markets in the Gulf.