Jordan First Equitable Growth & Job Creation Programmatic Development Policy Financing

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The proposed First Equitable Growth and Job Creation Development Policy Financing is designed to help Jordan lay the foundations for a higher and more sustainable economic growth path, while creating more jobs for Jordanians and non‐Jordanians. The post‐2011 refugee influx has deepened Jordan’s labor abundance, but it did not alter the structural pattern of job creation Currently, job growth is concentrated in low productivity sectors with localized markets and limited attractiveness to efficiency‐seeking investment. Going forward, Jordan is seeking to build resilience into its economy by raising productivity, expanding domestic markets through improved access to finance and stronger institutions for managing risk, and opening new external markets. Jordan's previously successful formula for coping with geopolitical challenges has run into new trends of lower grants, remittances, and investment flows. While the new government will have the benefit of a fresh start on building consensus for reforms, it faces heightened uncertainty over the summer, necessitating accelerated international support. Although Jordan’s adaptability in hosting refugees is intrinsic to its history, the economic context for the latest influx has posed particular challenges. Recent poverty data are not available, but earlier declines in poverty are likely to have halted or even reversed for Jordanians. Jordan's response to the country’s productivity, jobs, and conflict spillover challenges is to seek international support for the fiscal costs of the spillovers, while using that support to catalyze reforms capable of generating productive jobs in a labor‐abundant economy. The Government of Jordan (GoJ) is putting together a five‐year priority reform program for equitable growth and job creation whose objective is to set the foundations for higher growth. The program responds to the challenges of prioritizing and implementing reforms that Jordan has included in its strategic documents in the past. Jordan's Vision 2025 was developed in 2014 and has been under implementation since then. The Vision promotes a balanced approach to development and sets out goals for improving social outcomes, the business environment and the functions of government. The Vision incudes about 400 initiatives, with specific actions for each area defined. In 2017, Jordan developed the Jordan Economic Growth Plan (JEGP) 2018‐2022.The first pillar of the programmatic DPF series will support a better operating environment for the private sector in terms of costs, regulatory complexity, and predictability. The second pillar will support increased economic opportunities and flexibility in the labor market and expansion of the safety net. The third pillar of the programmatic DPF series will support the Government’s fiscal consolidation efforts by focusing on efficiency in public investment, ensuring maximum opportunities for private investment in traditional public investment areas through the adoption of a Maximizing Finance for Development approach, and updating the approach to managing debt and contingent liabilities. The pillars supported by this DPF series reinforce each other as part of a comprehensive approach to tackle the nexus of a complex legal and regulatory framework, discretionary implementation, lack of access to formal sector markets, and a narrow tax base due to widespread informality.