JORDAN

	FY 1998 Actual	FY 1999 Estimate	FY 2000 Request
Economic Support Funds	$140,000,0001	$150,000,000	$150,000,000
P.L. 480 Title II	$ 1,174,000	---	---
1Includes $24,330,000 appropriated funds, plus recoveries, gifts and donations from Israel and transfer of carryover funds from Egypt.

Introduction

USAID’s economic assistance to Jordan is an important element in the United States’ efforts to promote peace and stability in the Middle East. Jordan’s desire for peaceful solutions to the region’s complex political problems continues despite significant, ongoing political and economic challenges at home and abroad. King Hussein was a stalwart proponent of the peace process, as evidenced by his crucial contribution to the Wye River Accord in October 1998 and Jordan continues to play an important and influential moderating role in the region. However, public disillusionment over two consecutive years of poor economic performance, while many Jordanians have slid into poverty, is increasingly evident. Such frustration is more striking given unfulfilled expectations of prosperity stemming from Jordan’s 1994 peace treaty with Israel, worries over the transition from the rule of the late King Hussein to his son, continued regional instability, and slow movement in the Middle East peace process. The need for a strong U.S. response to Jordan’s economic and political stability concerns has never been greater.

As described in the Embassy/Amman's Mission Performance Plan (MPP), USAID remains at the forefront of U.S. efforts to promote economic growth in Jordan. USAID-funded initiatives are an integral and visible contributor to U.S. foreign and economic policy objectives. USAID’s program in Jordan directly supports U.S. national security interests (regional peace, support for allies), economic prosperity goals (broad-based economic growth, implementation of economic reforms, expanded trade and market development) and global concerns (stabilized population, quality maternal healthcare, environmental concerns). USAID's current strategy runs through 2001; graduation will depend on future developmental and geopolitical factors, including the changes that may occur under King Abdullah II.

The Development Challenge

USAID’s strategy addresses three inter-related development constraints that are central to Jordan's prospects for lasting economic and social prosperity: too little water; too many people; and too few jobs. This formulation highlights the systemic nature of Jordan’s primary development impediments. It also underscores the necessity to address each of these factors concurrently. Jordan’s high population growth rate places enormous pressure on the Kingdom’s scarce natural resources, especially water. So too, rapid population growth makes it increasingly difficult to find productive employment for an increasing number of Jordanians entering the workforce each year. Failure to address the population growth rate, and access to water and jobs, would jeopardize development prospects and gains to date.

One of USAID's main objectives is to improve water resource management in Jordan. Annual water demand is expected to increase to 1.2 billion cubic meters by 2001, far above the 750 million cubic meters (mcm) now available. On a per capita basis, freshwater availability in Jordan ranks among the world’s lowest. In response, USAID is supporting the Government of Jordan’s (GOJ’s) 14-year, $5 billion priority water investment plan whose chief objective is to maximize efficient use and management of this crucial resource. USAID is also one of the lead donors in improving wastewater management which will help abate serious environmental degradation while augmenting water availability from a source that would otherwise be wasted. As a result of USAID's water initiatives, a serious Amman water treatment emergency was addressed this year; seven springs supplying 13 mcm of drinking water will have been rehabilitated by early 1999; the Wadi Mousa wastewater treatment plant construction began this year and will benefit 40,000 Jordanians by 2000.

Due to Jordan's high population growth rate, USAID is also focussing on improving access to and the quality of reproductive and primary health care in Jordan. Remarkable progress has been made as evidenced by demographic transitions which include increasing contraceptive use and decreasing fertility rates and family size. The modern contraceptive prevalence rate increased from 27% in 1990 to 38.7% in 1998, putting the country well within reach of the National Population Commission's 41.5% target by the year 2000. Similarly, fertility rates have declined from an estimated 5.6 children per woman in 1990 to 3.9 children per woman in 1998. With USAID’s assistance, the Ministry of Health and Health Care (MOHHC) is adopting new approaches in delivering comprehensive maternal and child health care services. USAID-supported Comprehensive Postpartum Centers (CPP) will have grown from 12 in 1997 to 21 in 1999 and will reach underserved outlying population centers. The percentage of women delivering in hospitals with CPP Centers who return for postpartum/family planning services will have increased from 30% in 1997 to 45% in 1999.

USAID's economic growth strategy will increase economic opportunities for Jordanian citizens, thus ensuring broader participation in future economic expansion. Declining economic growth rates have contributed to a greater number of Jordanians living in poverty. Unemployment rates may be as high as 27%. To create economic opportunities, USAID launched a major microfinance initiative that will make financial services available to economically disadvantaged Jordanians. USAID is also providing significant assistance to ensure Jordan’s accession to the World Trade Organization by 2000. Legal reform, privatization and liberalized trade, investment and financial sector regimes are also key USAID initiatives. A $50 million per year, reform-based balance of payments cash transfer program helps support and sustain Jordan's market-based, economic reform program. These interventions are already increasing economic opportunities: the number of micro-credit borrowers increased 210% within the past two years; partial privatization of one state-owned enterprise in 1998 generated more than $100 million; and the Investment Promotion Corporation facilitated investments totaling $675 million in 1998, which is a 26.5% increase since 1997.

Other Donors

Jordan received approximately $249 million in donor grant aid and $489 million in loans during 1998. The United States was the largest grant donor, providing $140 million. Other major grant donors included Japan ($83 million), Germany ($9 million), the United Kingdom ($8 million), the Netherlands ($2.4 million), the European Union ($2 million) and the Arab Fund ($2 million). With regard to loan assistance, the Arab Fund was Jordan's largest creditor, providing $218 million during 1998, followed by the European Investment Bank ($141 million), Germany ($59 million), the Islamic Development Bank ($44 million), France ($13 million), the Organization of Petroleum Exporting Countries Fund ($5 million), the World Bank ($5 million) and International Fund for Agricultural Development ($4 million).

FY 2000 Program

USAID programming will continue to pursue both MPP and USAID agency-level goals. The water strategic objective directly addresses global environmental issues as well as economic growth constraints. Similarly, the reproductive and primary health initiative is aligned directly with the Agency goal of promoting sustainable population growth rates. Finally, the economic opportunity strategic objective strengthens market forces, expands access to financial services for the poor and works to achieve broad-based economic growth. If additional resources are made available they can be applied to the existing program strategy to achieve increased impact on Jordan’s three key development constraints.

JORDAN

FY 2000 PROGRAM SUMMARY
(in thousands of dollars)

USAID Mission Director, Lewis W. Lucke

USAID Strategic & Special Objectives	Economic Growth & Agriculture	Population & Health	Environment	Democracy	Human Capacity Developmnt	Humanitarian Assistance	TOTALS
S.O. 2. Improved Water Resource Management - ESF	---	---	60,000	---	---	---	60,000
S.O. 3. Improved Access to and Quality of Reproductive and Primary Health Care - ESF	---	15,000	---	---	---	---	15,000
S.O. 5. Increased Economic Opportunities for Jordanians - ESF	75,000	---	---	---	---	---	75,000
Totals: - ESF	75,000	15,000	60,000	---	---	---	150,000

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ACTIVITY DATA SHEET

PROGRAM: JORDAN
TITLE and NUMBER:Improved Water Resources Management, 278-SO02
STATUS: Continuing
PROPOSED OBLIGATION AND FUNDING SOURCES: $60,000,000 ESF
INITIAL OBLIGATION: FY 1995 ESTIMATED COMPLETION DATE: FY 2002

Summary: USAID's Improved Water Resources Management Strategic Objective supports U.S. foreign policy objectives aimed at mitigating global environmental degradation and promoting economic prosperity. Because water scarcity may increasingly serve as a lightning rod for regional conflict in the Middle East, improving Jordan’s capability to better manage its limited water resources also helps support regional stability. USAID’s water sector initiatives are strengthening key public-sector water institutions, increasing water use efficiency and improving the quality of treated wastewater so that it can be used for agricultural and industrial purposes, thereby increasing the quantity available for human consumption.

All Jordanians benefit from improvements in the water sector. Emergency improvements to the Zai Water Treatment Plant continue to benefit approximately 600,000 residents of Amman. An estimated 40,000 residents and tourists will also directly benefit from the new wastewater treatment plant now under construction at Wadi Mousa near Petra. This will help protect Jordan's premier tourist attraction. Another 44,000 residents should directly benefit from similar wastewater improvements in the northern Jordan Valley.

Key Results: USAID supports three main sets of activities in pursuit of its water sector strategy, namely (1) building stronger public sector water institutions with the capacity to better manage the country’s water resources and finance capital investment in the sector; (2) increasing water use efficiency by reducing wastage caused by physical leaks, contamination and inefficient irrigation practices; and (3) improving the quality of wastewater to allow greater reuse in agriculture and industry.

Performance and Prospects: To date, strengthening water institutions has involved improving data collection and analysis and installing new information systems for the Ministry of Water and Irrigation (MWI), the Water Authority of Jordan (WAJ) and the Jordan Valley Authority (JVA). Such institutional capacity is essential for introducing improved management approaches and cost recovery policies. USAID will build upon these achievements by funding a new policy implementation activity that will assist the MWI to implement select water policies previously developed with USAID assistance. USAID will also provide technical support in water utility privatization, as the water authorities move toward increased commercialization, cost recovery and private sector management.

Cost recovery and management improvements in the irrigated agricultural sector, which uses 68% of the water consumed in Jordan, continue to lag. To help the JVA institute cost recovery mechanisms, USAID is funding the development of a new financial accounting system. Once complete, JVA will have the ability to increase cost recovery and introduce more efficient management practices.

Improving water use efficiency will help stretch scarce water resources further. With respect to municipal water supplies, this includes reducing physical losses as a result of leakage or contamination. In response to Amman’s unanticipated drinking water crisis in mid-1998, USAID provided emergency assistance at the Zai Water Treatment Plant, which provides drinking water for 40% of Amman’s population. USAID provided urgently needed chemicals, equipment and technical assistance that enabled the MWI to quickly restore water quality standards and water delivery to Amman households. Additional assistance, in coordination with Japan and Germany, will be provided to expand and upgrade the plant to reduce the likelihood of future crises. USAID is also funding the rehabilitation of 27 contaminated springs and wells located throughout the country and will fund the rehabilitation and restructuring of 16 zones (37%) of Amman’s water network.

Improving Jordan’s wastewater infrastructure is also a USAID priority. Three major projects are underway. Construction of a new wastewater treatment plant at Wadi Mousa has begun near Petra in southern Jordan. In addition to providing wastewater collection services to four neighboring communities, the plant will help reduce environmental degradation to this World Heritage site and generate approximately 1.3 million cubic meters (mcm) of wastewater for reuse in agriculture. USAID is also funding the expansion of Aqaba’s wastewater treatment plant as well as a new wastewater collection and treatment plant in the northern Jordan Valley. This facility will serve four communities in that region. The Aqaba and Jordan Valley projects will help Jordan meet its commitments under the 1994 Jordan-Israel peace treaty to reduce environmental pollution in the Jordan River and Gulf of Aqaba.

Possible Adjustments to Plans: To expedite the host country contracting process which has delayed progress on several large infrastructure projects, USAID will provide WAJ with long-term technical assistance in contracting.

Other Donor Programs: Water sector investments in Jordan are shaped in large part by a $5 billion, 14-year GOJ plan that covers all aspects of the Kingdom’s water supply and wastewater treatment facilities and services. Donor coordination is excellent, with the European Investment Bank ($80 million), Japan ($64 million), Germany ($59 million), and France ($13 million) all providing substantial resources for these initiatives in 1998. Both Japan and Germany support construction of new conveyance and treatment systems bringing "peace water" from the Jordan Valley to Amman. This work complements USAID’s upgrades at the Zai Water Treatment Plant. Similarly, both Germany and France are funding a new water supply system at Wadi Mousa while USAID finances the construction of a new wastewater collection and treatment system. The GOJ’s budget authority for water sector projects was $61 million in 1998.

Principal Contractors, Grantee or Agencies: Major U.S. contractors include Camp, Dresser and McKee Inc. and Morganti Group for design and construction work. ABT Associates and the International Resources Group, Inc. are providing technical services related to privatization and policy implementation, respectively. Major Jordanian counterparts include the MWI, the WAJ, the JVA and the Jordan Environment Society.

Selected Performance Measures:

	Baseline	Target
27 Springs rehabilitated (volume of freshwater saved) in million cubic meters	0 (1997)	29.4 mcm (2000)
Number of water policies enacted or implemented	1 (1996)	12 (1999)
Capacity to treat wastewater to Jordanian standards (volume in mcm)	0 (1998)	1.24 mcm (2001)
New financial management systems instituted in water authorities	0 (1997)	3 (2000)

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ACTIVITY DATA SHEET

PROGRAM: JORDAN
TITLE and NUMBER:Improved Access to and Quality of Reproductive and Primary Health Care, 278-S003
STATUS: Continuing
PROPOSED OBLIGATION AND FUNDING SOURCES: $15,000,000 ESF
INITIAL OBLIGATION: FY 1995 ESTIMATED COMPLETION DATE: FY 2004

Summary: USAID’s Improved Access to and Quality of Reproductive and Primary Health Care Strategic Objective supports U.S. foreign policy concerns affecting global issues such as world population growth and maternal and child health. Jordan’s 2.6% annual rate of natural increase is among the highest in the world. Given the pressures that rapid population growth places on a resource-scarce country, USAID’s health sector strategy also supports U.S. economic and environmental foreign policy objectives. The strategy is designed to improve maternal and child health by ensuring national availability of quality reproductive and maternal health care services and promoting rationalized national health care financing. Jordanian women between the ages of 15 and 49 will benefit from USAID’s initiatives. Moreover, children will also benefit from substantial maternal health improvements that birth spacing and an improved primary health care system can now provide.

Key Results: USAID supports four main sets of activities in pursuit of its health sector strategy, namely (1) improved knowledge of contraceptives; (2) increased availability of reproductive and primary health care (RH/PHC) services; (3) private sector family planning initiative; and (4) increased rationalization of health financing systems.

Performance and Prospects: USAID and the MOHHC have made significant progress in ensuring the availability of family planning services and products throughout the country. The majority of family planning-related services, supplies and information are provided by physicians, nurses, midwives and pharmacists who have received USAID-funded, supplemental training. These interventions have contributed to a marked increase in the contraceptive prevalence rate from 27% in 1990 to 38.7% in 1998 and to a significant decline in the total fertility rate from 5.6 children per woman in 1990 to 3.9 children per woman in 1998.

Information about contraceptives is regularly provided through the media. Current efforts focus on increasing male confidence in and acceptance of the pill (from 47.6% to 67.7%) and the IUD (from 60.4% to 80.4%). A television information campaign on contraceptive-specific and postpartum care "infomercials" continues to be a notable success. Policy based presentations concerning the broader implications of rapid population growth on Jordan's social and economic development are frequently presented to parliamentarians, religious leaders, and government officials in order to strengthen their knowledge of and support for the GOJ's national family planning efforts. According to a recent study, 80% of religious leaders surveyed now agree that family planning principles are in accordance with the teachings of Islam.

Increased availability and improved quality of family planning services rely in part on the close link between family planning and broader reproductive and primary health care concerns. Almost all births in Jordan occur in hospitals. USAID efforts have ensured that 43% of the women who deliver in hospitals with postpartum centers return for postpartum care and family planning services. The lessons learned in this activity support a new USAID initiative entitled Initiatives in Reproductive and Primary Healthcare ("Initiatives"). The "Initiatives" activity will expand the availability and improve the quality of reproductive health services at primary health care centers, a mother’s first recourse for maternal health care services. This new multi-year activity will also help ensure that management inefficiencies and resource inequalities in family planning service delivery do not erode the substantial progress achieved in reproductive health.

Rationalizing Jordan’s health care financing system is an important new area of USAID involvement. Rapid population growth, due to the increase in the number of women entering their peak childbearing years despite declining fertility rates, places enormous pressure on the health care system, especially in the area of reproductive and primary health care. USAID will assist the MOHHC to develop an epidemiological surveillance system that will enable the GOJ to plan and budget resources for the most prevalent health conditions; introduce a national health accounts system; increase private sector participation in health care service delivery; review national accreditation and licensing rules for health care providers; strengthen the ability of MOHHC to lead health-related policy dialogue and better manage its implementation; and to evaluate health insurance schemes in developing financing options and payment mechanisms.

Possible Adjustments to Plans: USAID has developed and sponsors 14 Comprehensive Post Partum (CPP) Centers which are delivering quality family planning and maternal and child health services. Though the MOHHC’s primary health care centers are intended to be the first recourse for health care services, the high caliber services provided through USAID-funded CPP Centers are attracting greater numbers of women. The quality of CPP services could be diminished if all service quality at the primary health care centers is not improved. This concern will be addressed in the new Initiatives that will improve access to and quality of reproductive health and primary health care services in more than 200 centers nationwide.

Other Donor Programs: USAID remains the largest donor in the population and family planning sector ($10 million in 1998). USAID programs are closely coordinated with other donors working in the population field, namely the United Nations Fund for Population Assistance ($4.5 million over five years) and Japan International Cooperation Agency, which has a very modest community outreach program. The MOHHC does not have a budget for family planning services and initiatives and therefore relies on donor support. However, the GOJ does provide the necessary personnel and facilities for all program activities. In 1998, the MOHHC contributed approximately $650,000 in commodities for hospitals where USAID-funded CPP Centers are co-located. Additionally, Jordan Television, in cooperation with the MOHHC, provided $457,000 in free, prime time advertising for USAID-funded family planning infomercials.

Principal Contractors, Grantees or Agencies: Current contractors and grantees include Johns Hopkins University, U.S. Bureau of Census, Abt Associates, Harvard University, Pathfinder, Futures Group, John Snow, the Academy for Educational Development and, the Centers for Disease Control. Major host country partners include the MOHHC, Jordan University Hospital, Royal Medical Services, Department of Statistics, NGOs and private sector entities such as pharmaceutical companies and pharmacies.

Selected Performance Measures:

	Baseline	Target	Target
Modern Contraceptive Prevalence Rate	27.0 (1990)	41.5 (2000)	43.7 (2004)
Percentage of women delivering in hospitals with CPP Centers who return for postpartum/ family planning services	6 (1990)	60 (2000 – final year)
Percentage of primary health care visits that are for reproductive health	6 (1998)	12 (2000)	40 (2004)
Percentage of primary health care centers that achieve criteria for the Quality Improvement Program under the "Initiatives" activity and sustain them for one year	0 (1998)	0 (2000)	70 (2004)

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ACTIVITY DATA SHEET

PROGRAM: JORDAN
TITLE and NUMBER: Increased Economic Opportunities for Jordanians, 278-SO05
STATUS: Continuing
PROPOSED OBLIGATION AND FUNDING SOURCES: $75,000,000 ESF
INITIAL OBLIGATION: FY 1997 ESTIMATED COMPLETION DATE: FY 2002

Summary: USAID's Increased Economic Opportunities Strategic Objective in Jordan directly supports U.S. foreign policy interests by promoting open markets and broad-based economic growth. It also indirectly promotes regional stability and economically strengthens a key U.S. ally whose economy has been adversely affected by the closure of traditional markets. The strategy is designed to create an enabling environment for increased trade and investment. These interventions will expand private enterprise and advance Jordan's market-based economic restructuring program. USAID is the largest bilateral donor supporting Jordan's economic reform and private sector development.

Key Results: USAID supports three main sets of activities in pursuit of its economic sector strategy, namely (1) increased access to business services; (2) more effective identification and implementation of policy reform; and (3) improved environment for sustained policy reform through a $50 million per year economic policy-linked cash transfer. These three initiatives address Jordan’s economic growth challenges, reinforce a market-based foundation for sustainable economic growth, and provide resources to micro, small and medium businesses, the heart of Jordan’s economy.

Performance and Prospects: USAID significantly expanded its microfinance program during the past year. Engaging commercial banks in micro lending and linking micro- and small entrepreneurs with the formal financial sector was a key result. A USAID-funded US NGO and three Jordanian banks launched a new microfinance-lending program in southern Jordan, where access to financial services is acute. The Access to Microfinance and Implementation of Policy Reform Program (AMIR) and partner organizations reached an estimated 6,000 microentrepreneur borrowers in 1998, 50% of whom were women. As part of USAID’s cash transfer program, the GOJ agreed to reduce policy and regulatory barriers to microfinance services.

USAID’s policy-based balance of payments cash transfer program disbursed $50 million during 1998. The disbursement hinged on policy reform actions on trade and investment, financial and legal regimes, and privatization. As a result, the GOJ established "action plans" and key reform milestones. Cash transfer-associated local currency also supports USAID and GOJ economic priorities. As part of this, USAID provided technical assistance to help Jordan meet a 2000 World Trade Organization (WTO) accession date. This assistance included a review of new intellectual property rights (IPR) and customs laws to ensure WTO compliance. WTO accession is crucial to Jordan’s long-term prospects for sustained economic growth. USAID’s program will provide incentives and a framework for the GOJ to strengthen IPR implementation, rationalize import tariffs, energize public sector reform and hasten privatization. The AMIR program will continue to provide technical assistance to develop a WTO-compliant IPR regime that includes the requisite laws and enforcement mechanisms.

USAID plans to launch two new initiatives this year. The first activity will support a unit within the Ministry of Planning that conducts industry-specific, competitive cluster analyses. This activity will work directly with private sector firms in Jordan to address industry-wide competitiveness constraints such as marketing and human resource development. The second activity will train Jordanian youth in entrepreneurship and will be based upon the highly successful American Junior Achievement Program. In FY 1999, USAID will disburse the third $50 million tranche of the cash transfer program. Disbursement conditions will require that significant progress toward WTO accession be made and further streamlining of trade and investment policies and procedures has been completed (e.g., reducing company registration time and licensing requirements). Implementation will be supported by technical assistance and training provided through the AMIR program. In addition, a major USAID-funded World Bank technical assistance and training program will focus on economic reform areas such as developing a modern and well-regulated capital market and the privatization of at least two major state-owned enterprises. USAID is collaborating with the World Bank’s Foreign Investment Advisory Service (FIAS) to identify and reduce regulatory and administrative barriers in conducting business in Jordan. This strategic objective will continue to target the micro- and small-business sectors, which make important contributions to economic activity and employment in Jordan. The Jordan-U.S. Business Partnership will complete its first year of program activities in early FY 2000 with an initial client base of 100 Jordanian firms. By 2002, cost-effective business development services (primarily in technology, marketing, production, and business management) will have been provided to 350 small and medium businesses to increase firms’ real exports by 20%, real domestic sales by 20% and employment by 10%.

Other Donor Programs: USAID was largest donor in the economic growth area by far in 1998 ($140 million). The Arab Fund provided soft loans ($21 million) to support the GOJ’s new Social Productivity Program. The GOJ’s economic growth-related program expenditures totaled $20.6 million. The United Kingdom provided grants ($5.5 million) to support rural development and modernization of Jordan’s capital market. IFAD provided soft loans ($4 million) for rangeland rehabilitation. Germany provided support for the National Information System project ($1.5 million). The European Union, UNDP, the World Bank, Greece, Switzerland, France and Canada each provided less than $1 million in grants to support various economic development activities.

Principal Contractors, Grantees or Agencies:Contractors and grantees include Chemonics, Save the Children, Cooperative Housing Foundation, International Executive Service Corps, UNDP, the World Bank and Peace Corps. USAID’s primary GOJ counterpart is the Ministry of Planning. However, USAID also works closely with the Ministries of Industry and Trade and Finance, the Central Bank, the Customs Department, the Executive Privatization Unit and the Investment Promotion Corporation. Local business associations and private-sector firms are also partners.

Selected Performance Measures:

	Baseline (1996)	Target (2000)	Target (2001)
Increase in number of companies registered	0%	2.5%	3.0%
Micro and small-entrepreneurs using commercial banks	2,908	12,400	15,000
Repeat microfinance borrowers (as a % of total borrowers)	17%	31%	35%
Foreign direct and domestic investments Facilitated by Investment Promotion Corporation incentives (millions of US$)	492	1,200	1,540
Jordan accedes to the World Trade Organization	N/A	Tariff and agriculture offers finalized	Accession

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