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Economic reform is Jordan’s priority

20 June 2023

MEED's July 2023 report on Jordan also includes:

> ECONOMY: Jordan economy holds a steady course
> OIL & GAS: Jordan's oil and gas sector battles sluggish phase
> POWER & WATER: Jordan sustains utility infrastructure progress
> CONSTRUCTION: Hospital boost for Jordan construction

 

Commentary
John Bambridge
Analysis editor

Amman has recently won praise from the Washington-based IMF for its economic management and reform effort, but Jordan’s domestic audience remains a much harder sell on the merits of the government’s efforts.

Amid stagnant wages and high unemployment, recent reform efforts such as fuel subsidy cuts have proven deeply unpopular and caused sporadic protests. While consumer price inflation appears to be slowly on the wane, Jordan’s political class remains on a knife edge with respect to public opinion.

Amman’s flagship vehicle for its reform proposition is the Economic Modernisation Vision, which plans to increase average real income, create jobs and double GDP over 10 years through private sector-led investments. This includes plans to boost public-private partnership (PPP) activity in the utilities, transport and social infrastructure sectors. 

In December, the European Bank for Reconstruction & Development (EBRD), EU and Green Climate Fund also launched the Green Economy Financing Facility, a $40m funding scheme to support renewable energy and water infrastructure schemes in Jordan.

That latter development, fresh financing, is what the country needs most. Jordan’s embryonic oil shale sector, for instance, is almost single-handedly being held back by a lack of project finance options and low attractiveness to foreign investors. The $3bn expansion of the Zarqa refinery, while assigned to a winning bidder, also awaits its financial close.

There is more optimism in Jordan’s utilities sector, where the country is nearing completion on a grid interconnection project with Iraq and is in the process of tendering another link with Saudi Arabia. Such schemes will boost energy resilience. 

Jordan also continues to build up its renewable energy base, with plans for 2GW of additional capacity. Various water schemes are also moving ahead, several backed by the EBRD. Among the larger projects are a 200MW hydropower plant and a water desalination conveyance system in Hisban.

Jordan’s construction sector is meanwhile set to see a step change in activity with the development of a $400m hospital that will become the country’s largest project. Being developed by the Saudi Jordanian Fund for Medical & Educational Investments Company, the build-operate-transfer scheme is the vanguard of the country’s plans for more PPP-backed development.

The government also remains focused on curbing its deficit and plans to broaden the country’s tax base, but this will need to be handled sensitively given the still-fragile state of the economy and growth.

MEED's July 2023 report on the Levant region also includes:

LEBANON: 
> Power politics return to the fore in Lebanon
> Political deadlock in Lebanon blocks reforms
> No end in sight for Lebanon’s economic woes

SYRIA: 
> Syria comes in from the cold
> Al-Assad edges closer to the mainstream
> Damascus counts the cost of reconstruction

 

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John Bambridge

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    Saudi Arabia

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