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IMF Country Report No. 21/224

JORDAN

TECHNICAL REPORT—FISCAL TRANSPARENCY EVALUATION

October 2021

This Technical Assistance Paper on Jordan was prepared by a staff team of the International Monetary Fund. It is based on the information available at the time it was completed in April 2021.

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Title page

FISCAL AFFAIRS DEPARTMENT

Jordan

Fiscal Transparency Evaluation

Richard Allen, Nabila Akhazzan, Yugo Koshima, Julien Dubertret, and Bryn Welham

September 2021

Contents

  • GLOSSARY

  • PREFACE

  • EXECUTIVE SUMMARY

  • I. FISCAL REPORTING

  • 1.1. Coverage of Fiscal Reports

  • 1.2. Frequency and Timeliness of Fiscal Reporting

  • 1.3. Quality of Fiscal Reports

  • 1.4. Integrity of Fiscal Reports

  • 1.5. Recommendations

  • II. FISCAL FORECASTING AND BUDGETING

  • 2.1. Comprehensiveness

  • 2.2. Orderliness

  • 2.3. Policy Orientation

  • 2.4. Credibility

  • 2.5. Recommendations

  • III. FISCAL RISKS

  • 3.1. Disclosure and analysis

  • 3.2. Fiscal Risk Management

  • 3.3. Fiscal Coordination

  • 3.4. Recommendations

  • BOX

  • 1.1. A Roadmap for Improving the Reporting of General Government Fiscal Data

  • FIGURES

  • 1.1. Public Sector Expenditure and Coverage in Fiscal Reports, 2019

  • 1.2. Coverage of Public Sector Balance Sheet in Fiscal Reports, 2019

  • 1.3. Public Sector Gross Liabilities in Selected Countries

  • 1.4. Public Sector Gross Debt in Selected Countries

  • 1.5. Public Sector Net Worth in Selected Countries

  • 1.6. Tax Expenditures in Jordan 2014–2018

  • 1.7. Tax Expenditures in Selected Countries

  • 1.8. Discrepancy Between Budget Balance and Net Financing

  • 1.9. Stock-Flow Adjustments of General Government

  • 1.10. Government Debt Including and Excluding SSIF Holdings

  • 1.11. Jordan: Reconciliation of General Government Net Borrowing, 2019

  • 2.0. Forecasting Errors for Real GDP Growth, 2007–2019

  • 2.1. Budget Balance Outturn vs. Forecast, 2013–2023

  • 2.2. Aggregate Revenue Outturn vs. Forecast, 2013–2023

  • 2.3. Aggregate Expenditure Outturn vs. Forecast, 2013–2023

  • 2.4. Public Investment in Jordan vs. Comparator Countries, 2005–2017

  • 2.5. Capital Expenditure in MTBFS vs. Outturns

  • 2.6. In-Year Reallocations in Civilian Current Expenditure, 2016–2020

  • 3.0. Standard Deviation, Nominal GDP Growth Rate (2010–2019)

  • 3.1. Standard Deviation, General Government Revenue Growth Rate (2010–2019)

  • 3.2. Change in Old-Age Dependency Ratio, 2020–2050

  • 3.3. NPV of Projected Increase in Pensions and Healthcare Spending, 2020–2050

  • 3.4. Contingency Allocation

  • 3.5. Use of Contingency Allocation

  • 3.6. General Government Debt and Share of Foreign Currency Debt

  • 3.7. Lending by General Government, 2020

  • 3.8. General Government Guarantee Stock

  • 3.9. General Government Guarantee Stock, 2019–20

  • 3.10. Capital Stock Created by PPP Flows Per Capita,

  • 3.11. Bank Financial Assets, 2019

  • 3.12. Jordan Capital Adequacy Ratio 2014–2020

  • 3.13. Non-Performing Loans, 2019

  • 3.14. Return on Assets, 2019

  • 3.15. Fiscal Revenue and Sales of APOT and JPMC, 2015–2020

  • 3.16. Natural Resource Rents, 2018

  • 3.17. Cumulative Economic Loss from Natural Disasters, 1981–2011

  • 3.18. “Natural Disaster INFORM Index,” 2018

  • 3.19. Local Government Expenditure and Debt, 2019

  • 3.20. Debt of GAM and Category A Municipalities, 2019

  • 3.21. Liabilities of NFPCs, 2019

  • 3.22. Return on Assets and Debt/Equity Ratios of 10 NFPCs, 2019

  • 3.23. Financial Support to Water and Energy PCs

  • 3.24. RJAs Net Assets and Profits

  • TABLES

  • 0.1. Summary Assessment Against the Fiscal Transparency Code

  • 0.2. Potential Improvements to Jordan FTC Ratings Following Reforms

  • 0.3. Public Sector Financial Overview – 2019

  • 1.1. List of Fiscal Reports

  • 1.2. Estimate of Public Sector Balance Sheet, 2019

  • 1.3. Reconciliation of Financing Operations for 2020

  • 1.4. Summary Evaluation: Fiscal Reporting

  • 2.1. Key Dates in the Approval and Publication of the Budget, 2017–2021

  • 2.2. Summary Evaluation: Fiscal Forecasting and Budgeting

  • 3.1. Existing Reports Related to Fiscal Risks

  • 3.2. Selected Specific Fiscal Risks in Jordan

  • 3.3. Estimation of Fiscal Costs and Risks from PPPs and PPAs, 2020

  • 3.4. Summary Evaluation: Fiscal Risks

Glossary

AB

Audit Bureau

BCG

Budgetary Central Government

CBJ

Central Bank of Jordan

COFOG

Classification of Functions of Government (UN)

CVDB

Cities and Villages Development Bank

EBU

Extrabudgetary Unit

FCU

Fiscal Commitments Unit

FTC

Fiscal Transparency Code

FTE

Fiscal Transparency Evaluation

GAM

Greater Amman Municipality

GDP

Gross Domestic Product

GBD

General Budget Directorate (MoF)

GFSM

Government Finance Statistics Manual (IMF)

GG

General Government

GGFB

General Government Finance Bulletin

INTOSAI

International Association of Supreme Audit Institutions

IPSAS

International Public Sector Accounting Standards

MFD

Macro-Fiscal Directorate

MoF

Ministry of Finance

MoPIC

Ministry of Planning and International Cooperation

MTDMS

Medium-Term Debt Management Strategy

MTFF

Medium-Term Fiscal Framework

MTBF

Medium-Term Budget Framework

NEPCO

National Electric Power Company

OBL

Organic Budget Law

PC

Public Corporation

PFM

Public Financial Management

PIMA

Public Investment Management Assessment (IMF)

PPP

Public-Private Partnership

SEPD

Studies and Economic Policies Directorate (MoF)

SSC

Social Security Corporation

SSIF

Social Security Insurance Fund

WAJ

Water Authority of Jordan

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Preface

At the request of the Minister of Finance, H.E. Mohammad Al Ississ, an IMF mission undertook a remote Fiscal Transparency Evaluation (FTE) of Jordan between March 31 and April 26, 2021. The evaluation is based on the IMF’s Fiscal Transparency Code (FTC). The mission comprised Mr. Richard Allen (head), Mr. Yugo Koshima (IMF Fiscal Affairs Department), Ms. Nabila Akhazzan (IMF Statistics Department), and Mr. Julien Dubertret, and Mr. Bryn Welham (short-term experts).

At the Ministry of Finance, the team met with H.E the Minister of Finance and Mr. Abdel Hakim Shibli, Secretary General; Mr. MajdiAl Shuriqi, Director General, General Budget Department; Ms. Hanadi Refaee, Director of Studies and Economic Policies; Mr. Ahmad Hmaidat, Director of Public Debt; Mr. Ahmad Annuz, Head of Statistics, Public Debt Department; Mr. Sulieman Al Zyoud, Director of the Treasury; Mr. Haytham Haliaqa, Director of Accounting; Mr. Osama Sulieman, Head of the FCU; Mr. Omar Asfour, Head of the Public Management Reform Unit; Mr. WissamAI Rabadi, Advisor to the Minister; Mr. Kheiry Amr, CEO of the Government Investment Management Corporation; and other senior officials.

Outside the Ministry of Finance, the team met with Mr. Nedal Al Azzam, Head of the Research Department, Central Bank of Jordan (CBJ), and with the Bank’s Banking Supervision and Financial Stability Departments; the Public Investment Management Unit at the Ministry of Planning and International Cooperation (MoPIC); the Head of the PPP Unit at the Prime Minister’s Office; the Ministry of Water and the Water Authority of Jordan (WAJ); the Social Security Investment Fund (SSIF); the Audit Bureau (AB) of Jordan; the Jordan Deposit Insurance Fund; the Greater Amman Municipality (GAM), Amman Vision for Transport, and Amman Vision for Investment; the Cities and Villages Development Bank (CVDB); the Ministry of Municipal Affairs, the Ministry of Environment and the Jordan Environment Fund; and the Chair of the Parliament’s Economy and Investment Committee. In addition, the mission met with representatives of the United States Agency for International Development (USAID) and other development partners.

The evaluation is based on information available at the time of the mission in April 2021. The findings and recommendations of the report represent the views and advice of the IMF mission team and do not necessarily reflect those of the authorities.

The team would like to thank the Jordanian authorities for their excellent collaboration and for the frank and open exchanges of views on all matters discussed. Special thanks are due to Dr. Hanadi and Fadwa Al Draini in the Ministry of Finance, and to Kareem Ismail and Sana Almunizel of the IMF’s Resident Representative’s Office in Jordan for their huge support in arranging meetings and responding to numerous requests for documents, and to our two excellent interpreters, Basma Al Far and Issa Zayed. Patrick Ryan (IMF Fiscal Affairs Department) provided valuable support in compiling data and cross-country comparisons.

Jordan: Technical Assistance Report-Fiscal Transparency Evaluation
Author: International Monetary Fund. Fiscal Affairs Dept.