H.E. Suhair Al-Ali. Minister of Planning & International Cooperation, Jordan

Transcription

1 H.E. Suhair Al-Ali Minister of Planning & International Cooperation, Jordan

2 Achieving Development Results in Middle Income Countries: A New Role for Multilateral Institutions Jordan s Case Ministry of Planning and International Cooperation Hashemite Kingdom of Jordan October 2007

3 Middle Income Countries: The Developmental Challenge: Despite the growing role of Middle income countries in the global economy, these countries still face key challenges in their endeavor to achieve sustainable growth. These challenges can be summarized in the following key areas: I. Managing Reforms : (Capacity of public institutions to manage reforms) II. Income Inequality and Poverty Alleviation III. Financing Development In this presentation, I will share with you the Jordanian experience in combating these challenges.

4 The Developmental Challenge: Jordan s Case: Over the past eight years, Jordan has embarked on a comprehensive political, economic and social reform agenda, with the aim of realizing a sustainable improvement in the welfare of its citizens, propelling export-led growth, and enabling the investment environment.

5 Kuluna Al- Urdun We Are All Jordan This initiative was developed by government officials, media and civil society representatives, political party leaders, as well as youth and private sector representatives in order to obtain national consensus on a comprehensive unified vision and policy actions for implementation in 6 major areas. Political Reforms Regional challenges Palestinian Issue Economic Reforms Social Services Internal Front

6 A- Managing reforms : (Capacity of the public institutions to manage reforms) Embarked on a rigorous reform process Autonomy of regulatory institutions Efficiency, transparency & accountability Proactive civil service Prudent budget & financial management E-Government & E-Procurement However, we have learnt from our own experience in Jordan that the effectiveness of public sector reform depends on the development of other key enablers in the social, political, and economic spheres..therefore, Jordan has adopted and is implementing a comprehensive reform process

7 A- Managing reforms : (Capacity of public institutions to manage reforms) Political Reforms Broadening Public Participation Strengthening Political Parties Further Promoting Judicial Independence. Improving Access to Pending Legislation and Regulations Accountability

8 A- Managing reforms : (Capacity of public institutions to manage reforms) Broadening Public Participation Municipal elections took place on 31 July 2007 according to a new Municipal Elections Law which stipulates the following: Fully elected members, quota of 20% for women, financial and administrative independency of Municipal Councils. The Government with the support of the donor community is implementing several programs at the municipal level that aim at increasing citizens participation in local governance, building municipal capacity to promote decentralization, and assisting local councils to develop partnerships with civil society and the private sector to improve performance.

9 A- Managing reforms : (Capacity of public institutions to manage reforms) Strengthen Political Parties A Political Parties Law was enacted by the Parliament. The law was developed through a comprehensive and all inclusive dialogue with Political Parties and other interlocutors. The new laws main principles are: Ensuring that political parties have clear economic, political and social platforms and establishing a representative multi party system.

10 A- Managing reforms : (Capacity of public institutions to manage reforms) Strengthen Parliament Parliamentary Capacity Building program includes the following components: Strengthen operating systems of committees; Promote the role of women in Parliament; Implement cooperation mechanisms between Members of Parliament, civic leaders, NGOs, and the media to enhance public articipation; Establish an automated voting and transcription system that can record members voting records. In order to increase citizens participation in the upcoming elections for the Parliament, a comprehensive Elections Support Program is currently being implemented. The program includes empowerment of civil society groups and private media institutions, awareness campaigns, and capacity building for women and youth groups.

11 A- Managing reforms : (Capacity of public institutions to manage reforms) Public Accountability and Transparency A new law for the financial disclosure public officials was enacted by parliament in the September 2006 Extraordinary Session. This law establishes a mechanism for full public review of government officials. A new Anti-Money Laundering Law was enacted. This law strengthens the ability of the government to detect, prosecute, and prevent money laundering. A new law has been enacted, establishing the Anti Corruption Commission, giving it both financial and administrative independence. The Commission may use all legal means to achieve its goals, including filing law suits.

12 A- Managing reforms : (Capacity of public institutions to manage reforms) Citizens Participation in Policy Making and Drafting Legislations The GoJ has recently launched a dedicated interactive website that includes draft laws and regulations and allows the public and civil society organizations to access and express views and comment on draft laws and regulations. The website represents a comprehensive database of all existing and operative legislations in the Kingdom. The GoJ is in the process of establishing the Social and Economic Council. The Council will play a consultative role in drafting legislations in various economic and social spheres. Both, the Government and the Parliament will benefit from the Council s services.

13 A- Managing reforms : (Capacity of public institutions to manage reforms) Economic Reforms Trade Liberalization Fiscal System Reforms Enhancing Business Environment.

14 A- Managing reforms : (Capacity of public institutions to manage reforms) Increased Openness and Integration into the Global Economy EUROPE EU Association Agreement QIZ-EU European Free Trade Agreement SINGAPORE Free Trade Agreement UNITED STATES Free Trade Agreement Qualifying Industrial Zones (QIZ) ARAB WORLD Arab Free Trade Agreement AGHADIR Agreement Bilateral FTAs WORLD Member of the World Trade Organization (WTO)

15 A- Managing reforms : (Capacity of public institutions to manage reforms) Fiscal Reforms In 2005 the GoJ adopted a three-year fiscal reform package including the following: Phasing out oil subsidies, Enhancing public revenues through raising the general sales tax, and developing a more efficient tax system, Controlling public expenditures. As of 2005 three increases in the prices of oil products have already been implemented. The remaining fuel subsidies will be eliminated early next year. A Fiscal Reform Project is currently implemented. The project provides technical assistance to the GoJ in the areas of tax administration, tax policy, and budgeting assistance.

16 A- Managing reforms : (Capacity of public institutions to manage reforms) Enhancing Business Environment New export platforms were developed such as the Aqaba Special Economic Zone, Qualifying Industrial Zones (QIZs), Industrial Estates, and Free Zones that offer: world class investment infrastructure, free access to major world markets, and lucrative investment incentive packages. The Government of Jordan has adopted a multi-track approach to privatization including divestitures of shares, sales to strategic investors, management contracts, as well as other methods such as BOO and BOT. The wide-scale privatization program has succeeded in enhancing the efficiency of privatized firms, creating a competitive market, and attracting investments. As a result of the continuous reforms that Jordan has been implementing with the assistance of the USAID, MCC, and the EU, our score for Trade Freedom on the Heritage Foundation s Index of Economic Freedom improved significantly from 2006 to Jordan received a score of 64.2% for Trade Freedom in 2007 based on the tradeweighted average tariff rate and the existence of non-tariff barriers.

17 A- Managing reforms : (Capacity of public institutions to manage reforms) Enhancing Business Environment The Government of Jordan is committed to further improving the environment for starting and operating businesses in Jordan, and reducing constraints on private sector competitiveness. To this end, with the support of the USAID and the World Bank, a national collective effort to enhance Jordan s performance in the areas of starting a business, business licensing, and property registration has been launched over the past two years including: Ministry of Planning and International Cooperation Ministry of Industry and Trade Ministry of Municipal Affairs Ministry of Justice Ministry of Information and Communications Technology Jordan Chamber of Industry Jordan Investment Board Jordanian Free Zones Corporation The Land and Survey Department

18 A- Managing reforms : (Capacity of public institutions to manage reforms) Inclusion of Women and Youth Gender equality and the empowerment of women to fully participate in social, economic and political life is recognized as an important development outcome, reflected in Jordan s various national development plans and our specific policies and action plans for the advancement of women. There has been affirmative action with women appointed to the senate, and seats allotted to women both in the lower house and in municipal councils this was reconfirmed during the High Level Policy Forum on Gender which took place in January 2007 under the Patronage of Her Majesty Queen Rania Al Abdullah. To ensure that all parts of Jordanian society understand and support the country s bold reform and moderation efforts the Youth Commission of Kuluna al Urdun was created that includes youth in the debate on reforms. We are currently heavily investing education through curriculum development, training of teachers, computerization of schools and introducing information technology in public education, upgrading vocational and technical training system, in addition to developing the overall physical environment for learning.

19 B- Income Inequality and Poverty Alleviation Poverty and Unemployment continue to be major challenges Poverty Ratio Poverty Ratio 13.5% Poverty Line US$ 781 per capita per year Unemployment Rate Unemployment Rate 14.3% The elimination of the remaining fuel subsidies that is expected early next year, will add more pressures on middle and lower income categories of the Jordanian society. To address these Challenges The GoJ has adopted many initiatives: Social Safety Net Enhanced Productivity Program National Vocational & Technical Training Program SMEs and Micro-finance Support Programs

20 B- Income Inequality and Poverty Alleviation The Enhanced Productivity Program (EPP) The EPP was designed with the objective of adopting a comprehensive developmental approach to improve the standard of living for all Jordanians, especially rural and disadvantaged individuals, by creating and increasing access to opportunities for productivity gains in each of the Governorates. EPP has four main components: The Rural Community Cluster Development Program (RCCDP) The Enhanced Productivity Centers Program (IRADA) Small Grants Program The Community Infrastructure Program

21 B- Income Inequality and Poverty Alleviation Poverty Pockets: We are implementing a Pockets of Poverty Program that targets high poverty level areas (over 25%). Phase One started in 2004 covering 10 poverty pockets, whereby an amount of US$700,000 is invested in each poverty pocket. Phase two will be launched early next year covering 16 poverty pockets with a total budget of US$ 11 million. The program which is implemented by NGO s includes the following components: 1.Training and capacity building for local community members. 2.Lending schemes: granting micro credit loans to enable the poor, especially women, to become economic agents of change. 3.Infrastructure Development: upgrading basic infrastructure services (social or physical) identified by local communities and seen as vital to improving their livelihoods. 4.Income Generating: Implementing productive projects owned progressively by local communities.

22 B- Income Inequality and Poverty Alleviation SMEs Support In recent years, the GoJ has worked closely with different donors to pave the way for the development of the SMEs sector in Jordan. These programs provide comprehensive solutions for profitable Bank & SME financing, by empowering SMEs with tools & training with which to develop, implement and measure financial and operational strategies. In addition these projects are providing banks with tools and training for better risk assessment and management, and introduce new lending methodologies appropriate for SMEs. We are currently in the process of conducting a social and Economic feasibility study for establishing Venture Capital Funds in Jordan. Micro-Finance Support Micro-finance initiatives in Jordan, championed by Her Majesty Queen Rania Al-Abdullah and implemented by NGOs, private sector, and local commercial banks, have made more than 120,000 loans worth more than US$50 million since In 2007, the number of outstanding loans reached 72,000 loans, of which 80% were loans made out to women. Loans of as little as US$200 have helped thousands of poor people to start businesses that support their families, with repayment rates exceeding 98%.

23 The reform process has resulted in several key achievements

24 Foreign Reserves ($ bn) Foreign Reserves ($ bn) Growth Growth Rate Rate of of Domestic Exports( %) %) Market Market Capitalization ($ ($ bn) bn) Inflation (%) Inflation (%) External Debt (% of GDP) External Debt (% of GDP) (August) 12.1 (July) 30.8 (August) 5.62 (August) 45.6 (July) Real GDP Growth (%) Real GDP Growth (%) (June) GDP Per Capita ($) GDP Per Capita ($) 1,734 2,130 2,325 2, Foreign Foreign Direct Direct Investment ($ ($ million) million) ,598 3,332 1,675 (July) Gulf Gulf Investments (% (% of of FDI) FDI) 6% 29.4% 77% 91% 11% (July)

25 C- Financing Development There has been much debate recently about the role of Multilateral Institutions in middle and lower middle income countries. Some have suggested that these countries have reached a stage in their economic development that calls for the less need of continued engagement in these countries. These countries continue to face significant development challenges. In spite of the encouraging macroeconomic achievements, Jordan like many countries in the middle income category continues to face a number of critical challenges most importantly, poverty and unemployment, vulnerability to external shocks, such as energy prices, or regional instability, and the debt burden. These challenges consume funds needed for infrastructure and development. Donors continued support to developing countries is vital. These additional investments will ensure protecting gains, advancing political, social and economic reforms, as well as improving the livelihood of all.

26 C- Financing Development: An Evolving Role for Multilaterals: Partners for Sustainable Growth: 1. The Multilateral Institutions have significantly contributed to the development and advancement of the livelihoods of people in MICs including Jordan. However, we are envisioning a new role for multilaterals, a role whereby they provide new forms of assistance to meet both the evolving trends in the World economy and the emerging financial needs of MIC s. Assistance should, at all times, be based upon performance and the international community should always reward recipient countries that are committed and on the path of development and reform in order to enable them sustain their growth momentum and achieve sustainable development. Multilateral institution should tailor their outstanding development experience to meet individual countries needs and demands. This accumulated knowledge and the global knowhow in all development disciplines will have a greater impact when applied to local needs.

27 C- Financing Development: An Evolving Role for Multilaterals: Partners for Sustainable Growth: To achieve the application of their global know-how to local needs, Multilaterals must introduce effective measures to harmonize operational policies, procedures and practices with those of partner countries system in order to ensure that development cooperation and assistance is delivered in accordance with recipient countries priorities and needs. Multilateral should introduce and expand new financial services that meet MICs current development challenges, such as credit enhancements, hedging, and debt management.

28 C- Financing Development: An Evolving Role for Multilaterals: Partners for Sustainable Growth: 2. Due to the fact the most multilateral institutions are serving a great number of countries with a limited number of staff, there are still several areas that could be empowered: Many MICs, continues to face difficult financial pressures resulted mostly by external factors such as political instability and increasing oil prices. Therefore, introducing new financial instruments to assist with emergency liquidity needs during financial shocks will add much value to their involvement in MIC s. The response to the evolving needs has been relatively slow, time consuming, and less responsive, particularly, to the requests of new products. Which in many cases make countries look for other sources of funding. Energy, and large infrastructure projects are currently key challenges to MICs,. Therefore, we recommend that Multilaterals should increase their through co-investing in public-private partnerships for large local and regional infrastructure projects especially in the energy, transportation, water, agricultural, and micro financing sectors.

29 C- Financing Development: An Evolving Role for Multilaterals: Partners for Sustainable Growth: In conclusion, we believe in Jordan that the successful partnership between multilateral institutions and MIC s is two fold; Countries must be active in establishing themselves as partners with the donor community to instigate change and achieve concrete results, multilateral institutions must also Channel and increase their assistance based upon performance

30 Thank You