Document of The World Bank FOR OFFICIAL USE ONLY IMPLEMENTATION COMPLETION REPORT (SCL-44820; TF-28227)

Transcription

1 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Document of The World Bank FOR OFFICIAL USE ONLY IMPLEMENTATION COMPLETION REPORT (SCL-44820; TF-28227) Report No: ON THE THIRD ECONOMIC REFORM AND DEVELOPMENT LOAN (ERDL III) IN THE AMOUNT OF US$120 MILLION TO THE HASHEMITE KINGDOM OF JORDAN FOR ECONOMIC REFORM AND DEVELOPMENT June 19, 2001 Social and Economic Development Group (MNSED) Middle East and North Africa Region This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.

2 CURRENCY EQUIVALENTS (Exchange Rate Effective end-december 2000) Cutrrency Unit = Jordanian Dinar (JD) JD 1.00 = USS 1.42 US$ 1.00 = JD FISCAL YEAR January 1 - December 31 ABBREVIATIONS AND ACRONYMS ASE = Amman Stock Exchange CAS = Country Assistance Strategy CBJ = Central Bank of Jordan CG = Consultative Group EFF - Extended Fund Facility EPC = Executive Privatization Commission ERDL = Economic Reforrn and Development Loan ESW = Country economic and sector work EU = European Union FJCC = Federation of Jordanian Chambers of Commerce GDP = Gross Domestic Product IMF = Intemational Monetary Fund IRC h Insurance Regulatory Commission JBA = Jordanian Businessmen Association JIB = Jordanian Investment Board JSC = Jordanian Securities Commission JTC = Jordan Teleconmmunications Company MOF = Ministry of Finance MOP = Ministry of Plarning MTEF = Medium-term Expenditure Framework NEPCO = National Electric Power Corporation OED = Bank's Operations Evaluation Department RJ = Royal Jordanian Airlines SDC = Securities Depository Center USAID = United States Agency for International Development WTO = World Trade Organization Vice President: Jean-Louis Sarbib Country Manager/Director: Joseph P. Saba Sector Director: Mustapha K. Nabli Sector Manager: Dipak Dasgupta Task Team Leader/Task Manager: Thirumalai G. Srinivasan X

3 FOR OFFICIAL USE ONLY CONTENTS Page No. 1. Project Data 1 2. Principal Performance Ratings 1 3. Assessment of Development Objective and Design, and of Quality at Entry 2 4. Achievement of Objective and Outputs 4-5. Major Factors Affecting Implementation and Outcome 7 6. Sustainability 7 7. Bank and Borrower Performance 8 8. Lessons Leamed 9 9. Partner Comments Additional Information 10 Annex 1. Key Performance Indicators/Log Frame Matrix 11 Annex 2. Project Costs and Financing 12 Annex 3. Economic Costs and Benefits 13 Annex 4. Bank Inputs 14 Annex 5. Ratings for Achievement of Objectives/Outputs of Components 15 Annex 6. Ratings of Bank and Borrower Performnance 16 Annex 7. List of Supporting Documents 17 This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not be otherwise disclosed without World Bank authorization.

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5 Project ID: P Project Name: ERDL III Team Leader: Thirumalai G. Srinivasan TL Unit: MNSED ICR Tye: Core ICR Report Date: June 19, Project Data Name: ERDL III L/C/TF Number: SCL-44820; TF Country/Department: JORDAN Region: Middle East and North Africa Region Sector/subsector: KN - Macro/Non-Trade KEY DATES Original Revised/Actual PCD: 12/02/1997 Effective: 07/01/99 07/01/99 Appraisal: 00/00/0000 MTR: Approval: 06/01/1999 Closing: 06/01/ /01/2000 Borrower/lmplementing Agency: Other Partners: GOVERNMENT OF JORDAN/MINISTRY OF PLANNING USAID, Government of Italy, EU STAFF Current At Appraisal Vice President: Jean-Louis Sarbib Kemal Dervis Country Manager: Inder K. Sud Inder K. Sud Sector Manager: Dipak Dasgupta Daniela Gressani Team Leader at ICR: Francois Lacasse Christian Petersen ICR Primary Author: Sulaiman Wasty 2. Principal Performance Ratings (HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HL=Highly Likely, L=Likely, UN=Unlikely, HUN=Highly Unlikely, HU=Highly Unsatisfactory, H=High, SU=Substantial, M=Modest, N=Negligible) Outcome: S Sustainability: HL Institutional Development Impact: H Bank Performance: S Borrower Performance: HS QAG (if available) Quality at Entry: Project at Risk at Any Time: No ICR S Introduction Since the balance of payments crisis of the late 1 980s and the disturbances associated with the Gulf war, Jordan has made resolute stabilization and adjustment efforts, supported by the IMF, the Bank, the European Union (EU), USAID, and other bilateral donors. But, in recent years the pace of economic activity had lost its momentum as the construction boom that followed the Gulf war ran its course and Jordan continued to face impediments to trade with neighboring countries.

6 In 1998, Jordan was also affected by the sharp drop in international oil prices--which led to the weakening of the regional economy and increased domestic uncertainlity, and a marked decline in remittances from expatriate workers--and by regional tensions over Iraq. These developments had put pressure on the budget and limited improvement in the balance of payments. With this background, the centerpiece of the Bank's assistance under the country assistance strategy (CAS), approved in 1995, was to encourage private sector-led growth through Jordan's integration with global markets and the establishment of an investment-friendly and efficient business environment. In the event, Bank support was extended through a program of three adjustment operations for the rapid introduction of structural reforms and broad economic developments as well as for the strengthening of international reserves. The first Economic Reform and Development Loan (ERDL-I) was approved in the amount of US$80 million in October 1995 with co-financing of US$80 million from Japan and US$12 million from Italy. The second adjustment operation, ERDL-II, in the amount of US$120 million was approved in December 1996 with US$8 million equivalent co-financing from the Netherlands. The latest in the series of these loans--erdl-iii--was approved in June 1999 in the amount of US$120 million; and aimed at continuing the Bank's important involvement with the Government's medium-term structural reform program. Concurrently, a new Extended Fund Facility (EFF) of the IMF was approved for The reforms are also being supported by the United States through the Middle East and Stability Fund, co-financing by the Government of Italy, and parallel financing by the European Union. 3. Assessment of Development Objective and Design, and of Quality at Entry 3.1 Original Objective: The successive series of Economic Reform and Development Loans (ERDLs), starting in October 1995, were aimed principally at supporting Jordan in addressing constraints to rapid and sustained growth imposed by the limitations of a relatively small domestic market. The main objective was to assist the GOJ in pursuing its cross-cutting reforms for strengthening integration with the global markets and establishing an investment-friendly and efficient business environment. ERDL-III specifically focused on: (a) further trade facilitation and export development, leading to a sustained growth of exports; (b) a comprehensive program of privatization, leading to a an efficient production and incentive structure; (c) an all-encompassing financial sector reform, leading to efficient resource mobilization and allocation; and (d) streamlining the regulatory framework, leading to a stable and transparent environment attractive to private business and enabling these businesses to compete aggressively in the world markets. In sum, the policy package supported by the Loan was expected to lead to higher GDP growth supported by a robust export performance and a much greater role for the private sector competing in an enabling legal framework. 3.2 Revised Objective: Not applicable. -2-

7 Evaluation of Objectives The objectives were highly relevant, straightforward, and consistent with the Bank's goals as stated in the CAS (private sector-led growth) as well as in conformity with Jordan's long-term development strategy. Simultaneously, the assurance of sound macroeconomic policies had been strengthened by GOJ's adoption of the Fund's Extended Fund Facility. However, with hindsight, the main identified risks--(a) reversals in the regional peace process; and (b) changes in external demand for Jordanian goods and services--should have cautioned against overplaying the expectations of a rapid private sector response to changes in the incentive regime and the concomitant attainment of growth targets. For example, both the public and the private sectors were "new" to the rules of the game and the institutional change warranted by the broad-based reform program; and, in this setting, changes in the policy, regulatory, and legal environment are necessary but not sufficient conditions for efficient and rapid economic growth. 3.3 Original Components: ERDL-III, like the preceding operations in the series, consisted of a set of trade, privatization, financial sector, and accompanying regulatory reforms. Trade reforms focused on facilitating trade, fostering integration with world markets, reducing administrative obstacles that raise the cost of trading activity through streamlined customs procedures for exports, and converting the entire Aqaba area into a freeport with a First World environment. Privatization measures were aimed at improving opportunities for private sector firms, increasing competition, and allowing the government to concentrate on its core functions. And, the broad program offinancial sector reform initiatives were designed to: (a) enhance the soundness and efficiency of the banking system, and promote the development of the capital market and long-term savings institutions; (b) improve banking competition and supervision, and increase the efficiency of financial intermediation through modernization of the institutional and legislative setup; (c) encourage long-term savings, and promote development of new financial instruments and markets; and (d) facilitate entry, and improve incentives for domestic and foreign investors. 3.4 Revised Components: Not applicable. 3.5 Quality at Entry: Quality at entry was satisfactory. The reform program had been initiated and "owned" by the Government itself (as enunciated in the "Economic and Social Development Plan, ), and thus served as the basis of a continuing partnership and teamwork with the Bank counterparts. The design of the broad-based ERDL program followed a "programmatic approach" to adjustment lending. The program was thus built upon the success of the predecessor operations, providing yardsticks and benchmarks for follow-up. The earlier ERDLs (I and II) had achieved overall good implementation, both receiving OED ratings of satisfactory outcomes and likely sustainability of benefits. -3 -

8 Further, a set of reforms (not objectives), to be pursued under ERDL-III, was split into a series of simpler steps; hence, proper sequencing became one of the strengths of the operation. Additionally, the single-tranche disbursement nature of the ERDL operations (exemplifying programmatic approach to adjustment lending) served as a good mechanism for attaining a clear understanding with the GOJ on the nature of loan conditionality and the prior actions to be taken in the context of the implementation of the program. 4. Achievement of Objective and Outputs 4.1 Outcome/achievement of objective: Overall outcome was satisfactory. With the timely and successful implementation of ERDL-III, the reform program becomes a foundation and the first step, albeit a crucial one, for the GOJ's long-term economic development strategy. So far, the odds have played heavily against high expectations of an early recovery of the Jordanian economy. Especially, in the course of 2000, repercussions of the reversals in the regional peace process (badly affecting the promising tourism sector and the flow of Jordanian exports to the Palestinian territories), rise in international oil prices, and agricultural output affected by drought--all dampened hopes of an upward economic trend. Although the anticipated GDP growth has failed to materialize and the private sector has not responded fully to changes in the incentive regime, the measures adopted to date will go a long way toward transforming Jordan into a growing market economy. With the strengthening of the financial sector, an "investment culture" is now emerging; and, according to JIB, there are some encouraging signs of foreign investment applications and sanctions. Overall foreign investment rose to JD800 million in 2000, up JD70 million from Additionally, the latest MOP/MOF figures show a slight improvement in the revised GDP estimates for FY00 (3.9 percent); and a 4 percent growth rate is being projected for FY01. In termns of poverty reduction (though not an explicit target of the ERDL program), ERDL I had begun to make some positive contribution. Analysis (cf: Poverty Alleviation in Jordan in the 1990s: Lessons for the Future (Report No JO) of trends of consumption poverty in Jordan and the impact of government programs (including food subsidies and cash transfers) on poverty alleviation indicated that: (a) the percentage of Jordan's population below the poverty line was less in 1997 than it was in 1992; (b) there was a clear reduction in inequality, which led to a lower poverty rate in the latter year; and (c) there is now a much better targeting of government programs and assistance to the poor. Given the weak economic growth, the impact of ERDL III on unemployment and poverty remains uncertain. Especially with little rise in per capita incomes, the improvement in the living conditions of the poor would need to be commensurately addressed. 4.2 Outputs by components: All the prior conditions attached to the ERDL-II1 loan package of trade policy, privatization, financial sector, and the regulatory reforns have been met--receiving a highly-satisfactory rating - 4 -

9 for borrower performance. The Government was able to accomplish all the requisite legislative and incentive changes as stipulated in the ERDL prograrn. However, shortcomings still remain in the full implementation of the above policies and the realization of their intended results. Further institutional changes leading to better implementation of the regulations will need to be addressed by pursuing measures such as public sector reform. Substantial progress has been made in the trade liberalization program. Maximum import tariffs continue to be reduced for the purposes of stimulating efficiency and competition. Earlier, in July 1999, tariff rates on 700 intermediate goods and industrial inputs had already been reduced to 35 percent from 40 percent. More recently, a full exemption from tariffs was granted to 494 industrial inputs and maximum tariff was reduced to 30 percent. The Customs Department calculates that these steps have reduced the weighted average tariff rate from 16.6 percent at the end of 1998 to 13.5 percent by mid Progress in trade policy reform has thus enabled Jordan's accession to the WTO (in April 2000). The Law on the General Sales Tax was amended to harmonize GST rates on domestic and imported goods. Through changes in the Customs Law, customs administration procedures have been adopted for valuation of goods and rules of origin consistent with WTO principles. "Green channel" facilities have been extended to a vast number of exporters including all IS-9000 certified companies. Amendments to the laws for trademarks, patents, and copyrights, among others, were made to ensure that all provisions of TRIPS (trade-related intellectual property rights) are implemented from the date of accession. Jordan has also embarked upon several regional and bilateral initiatives to reduce trade barriers. Examples are the Euro-Mediterranean partnership agreement with the EU, which is to lead toward a free trade zone in 2010; and bilateral agreements with several countries including a free trade agreement with the United States. Aqaba has been designated as a Special Economic Zone (SEZ) in February The SEZ is expected to bring in $6 billion in direct and indirect investments and create 70,000 jobs over the next two decades. The privatization program, which was previously coordinated by a special unit in the Prime Minister's office, had been targeted at straightforward privatizations, such as the sale of govenunent minority stockholdings in companies operating on commercial principles. Following the approval of a comprehensive privatization strategy, the pace has picked up through a full-fledged Executive Privatization Commission (cf: July 2000 Privatization Law) with enhanced responsibilities for identifying and evaluating the targets for privatization. Already, good overall progress has been made in the duration of ERDL-III in selling government shares in enterprises, contracting private management, and permritting new private entry into several sectors--including cement, tourism, airlines, railways, public transport, electricity, telecommunications, and other commercial enterprises. During ERDL-III, an agreement with a foreign-led consortium to operate, upgrade, and extend the Aqaba railway, involving expected involvement of $110 million, has been finalized. Four concessions have been awarded to operate public transport routes in Amman, allowing the Public Transportation Corporation to be phased out and replaced by a Public Transportation Authority

10 A significant proportion (40 percent) of the Jordan Telecommunications Company (JTC) has been sold to a foreign consortium, which has become an operating partner. The Royal Jordanian (RJ) has been split into an operating unit carrying out core airline operations and a holding company managing subsidiaries offering support services; and plans are underway for sales of businesses in areas such as flight training operations, and engine maintenance. The National Electric Power Corporation (NEPCO) has also been split into three companies covering separately generation, transmission, and distribution. Lastly, thefinancial sector in Jordan is now relatively more developed, in termns of both the services provided and the degree of monetarization. Considerable progress has been made toward facilitating and strengthening financial internediation by the Jordanian financial system--banks, non-bank financial institutions, contractual institutions, and the securities market. Of particular note is the new Banking Law in conformity with international practice including Basle agreements on banking supervision. Measures for prudential regulation and supervision of banks have been introduced. Restrictions on capital mobility have been eliminated by the adoption of a full convertibility of the JD for all current and capital account transactions. As already noted, an investment culture is being nourished since the enactment of new Securities Law, establishment of the Jordan Securities Commission (JSC), and the functioning of the Amman Stock Exchange. In other areas of regulatory reforms, the Investment Law of 1995 and its amendment in 1997 had already rationalized incentives for investment and removed bottlenecks in encouraging foreign investment levelling the playing field for domestic and foreign investors except in three sectors (construction contracting, trading, and mining). Since then, procedural guidelines to implement the Law have been completed. Further, additional and accompanying legislation (Companies, Competition, etc.) are being taken to remove anomalies and inconsistencies to encourage domestic and foreign investment while ensuring adequate competition. 4.3 Net Present Value/Economic rate of return: Not applicable. 4.4 Financial rate of return: Not applicable. 4.5 Institutional development impact: The institutional development impact has been high. Enormous progress has been made toward enacting the regulatory framework, creation of the attendant autonomous public entities (e.g., JSC, IRC, and EPC, staffed by professionals in the field) and the building of institutional infrastructure and implemention capacity for sustaining the reform. These new organizations are now operating successfully. International standards are now the norm in virtually all regulatory functions--be it in banking supervision, reforming the capital market, or the regulation of the ASE, or the monitoring of the Securities Depository Center. Members of the Jordanian business community (FJCC/JBA) interviewed welcomed the country's accession to the WTO, and expressed confidence with the direction of policy changes. Nonetheless, the "new rules of the game"--both for the private and the public sectors--will take -6 -

11 some time to be fully entrenched in the economy. 5. Major Factors Affecting Implementation and Outcome 5.1 Factors outside the control of government or implementing agency: Much of the country's poor growth performance in the second half of the 1990s results from exogenous factors, such as weak demand in the region and impediments to trade with the neighboring countries. Specifically, Jordan's failure to attain the expected private sector response to changes in the incentive regime and in not attaining the anticipated growth rate can be largely attributed to: (a) the uncertain security situation in the region; (b) the exaggerated windfalls from the "peace process"; and (c) the vulnerability of the Jordanian goods and services to the economic conditions in the Gulf markets. 5.2 Factors generally subject to government control: As already indicated, the GOJ was able to implement virtually all the components of the ERDL package. However, excessive concerns with maintaining macroeconomic stability may have led the Central Bank of Jordan (CBJ) to follow initially an overly-cautious monetary policy. High interest rates have been an impedimento private investment. Simultaneously, the tight fiscal stance of the MOF may have had adverse short-term effects on aggregate demand. All these factors may have put brakes in the attainment of the growth targets. 5.3 Factors generally subject to implementing agency control: Given the broad-based nature of the ERDL program, several new agencies had to be created and new regulations devised. Accordingly, inter-agency consultation and coordination has not always been the norm, leading to lack of widespread consensus on the timing of reform and, thereby, some implementation delays. 5.4 Costs andfinancing: Not applicable. 6. Sustainability 6.1 Rationale for sustainability rating: The sustainability of the reforms is highly likely. Government commit.ment (at all levels) to the ERDL program remains strong throughout, and will further strengthen with the realization of the aims of the adjustment effort. Concurrently, there is an emerging consensus amongst the broader segments of the society on the benefits of reform, as evidenced from frequent government-business consultations. Privatization plans are well underway; and financial sector reforms are entrenched. And, as Jordan has joined the WTO, trade and investment policy reforms are likely to be emphasized. However, without accelerated implementation, i.e., developing needed regulations to support the - 7-

12 new business legislation and capacity building of new institutions set up under the ERDL program, the impact of the reforms will continue to remain limited. 6.2 Transition arrangement to regular operations: Structural impediments to the growth of the Jordanian economy are to be addressed with enhanced diagnostic ESW (e.g., Sources of Growth study). A follow-up operation is contemplated to address issues of public sector management, with particular attention to: productivity of public investments, formulation of a medium-term expenditure framework (MTEF), civil service reform, financial management, efficiency and delivery of public services, and transparency and accountability. 7. Bank and Borrower Performance Bank 7.1 Lending: Satisfactory. ERDL-III represented a continuum of vital Bank support to the GOJ reform efforts. Under the auspices of Consultative Group (CG) meetings, and in addition to resource generation, donors have been able to coordinate their lending programs. For example, the USAID program of $300 million over a five-year period--while focusing mostly on microfinance for economic opportunities--overlapped considerably with the Bank's emphasis on customs administration reform, privatization, and financial sector strengthening. Simultaneously, the IMF approved a new EFF in 1999 in support of the Government's medium-term adjustment and structural reform program. Nevertheless, supporting provision of technical assistance funds could have greatly benefited the operation in terms of strengthening the capability of the executing agencies, especially in area of customs administration. 7.2 Supervision: Satisfactory. The single-tranche disbursement had already incorporated all the conditions prior to loan approval. Some mechanism could have been set in place for overseeing the implementation of the policies and regulations. 7.3 Overall Bank performance: Satisfactory. ERDL-III was marked by excellent preparatory work, and continuity of a highly competent Bank team. Still, the operation could have been accompanied by concurrent economic and sector work (ESW) on the structural constraints that were facing the anticipated growth of the Jordanian economy. Borrower 7.4 Preparation: Highly satisfactory; largely attributable to a frank and informal dialogue between the Bank staff - 8 -

13 and highly-professional government counterparts. 7.5 Government implementation performance: Highly satisfactory. All the important sub-components of ERDL-III related to trade policy and administration, privatization, investment regulation, andbanking reforms were implemented in accordance with the loan conditions. The next step is an accelerated implementation of the enacted policy changes. 7.6 Implementing Agency: Highly satisfactory. Drawing from the lessons of ERDL experience, the MOP has now enhanced its research and coordination capabilities. 7.7 Overall Borrower performance: Highly satisfactory, especially while maintaining macroeconomic stability and contending with the recent security situation in the region. 8. Lessons Learned To reiterate, the successful implementation of ERDL-III owes to several factors: (a) facilitation by the building blocks and the necessary impetus provided by the preceding ERDL operations, particularly their broad coverage and programmatic structure; (b) the single-tranche disbursement serving as a useful mechanism because of a clear understanding on the prior actions to be taken by the Government; (c) a frank and informal dialogue between the counterparts at all stages of the program; and (d) last but not least, a throughout strong government commitment in sustaining the pace of reforms. Yet, in terms of outcome, the stagnant (recent signs of improvement notwithstanding) growth rate of the economy and its concomitant threat to poverty alleviation effort remains a persistent concern. While the Government continues to successfully meet the challenges of maintaining macroeconomic stability, the volatility of the economy increases commensurately with the security situation of the region, translating into less-than-anticipated domestic and foreign investment. Recommendations - conducting an in-depth study of the constraints and obstacles to the growth of the Jordanian economy, with a direct involvement of Jordanian officials and academics (a "Sources of Growth study" is already underway); - undertaking the Bank's Business Environment Survey (WBES) in Jordan to get the views of the business on the enabling environment for the private sector; and - pursuing wide public sector reforms--with a focus on formulating a MTEF, adequacy of public investment programs, institutional arrangements for budgetary decision making (e.g., introducing an automated government financial management information system), civil service performance, efficient delivery of public services, and increasing productivity of investments--public and private. -9-

14 9. Partner Comments (a) Borrower/implementing agency: On the ICRs for ERDLs I and II, the GOJ has already conveyed its comments and agreement on the successful implementation of the respective loans (cf: Appendixes to Report Nos and 17919). During a mission in late November 2000, the ERDL-III ICR findings were discussed with the GOJ. There is a broad concurrence on the outcome, institutional development, and sustainability ratings--as well as on the assessment of Bank and borrower performance. Formal comments from the Borrower on this report are attached: Partner_Comments.p (b) Cofinanciers: Not applicable. (c) Other partners (NGOs/private sector): Not applicable. 10. Additional Information The findings of this ICR corroborate and reinforce the conclusions of the ICRs for ERDLs I and II. An OED Performance Audit Report (PAR) for ERDLs I-III and Energy Sector Adjustment Loan (ESAL, Loan 3651) is under preparation

15 Annex 1. Key Performance Indicators/Log Frame Matrix Not applicable in the case of adjustment operations

16 Annex 2. Project Costs and Financing US$120 million, in a single-tranche disbursement of the adjustment operation

17 Annex 3: Economic Costs and Benefits Economic/financial rates of return cannot be calculated for adjustmnent operations

18 Annex 4. Bank Inputs (a) Missions: Stage of Project Cycle No. of Persons and, Specialty Performa Rafing (e.g. 2 Eooists, I1 FMS, etc.) Imnplementation Development Month/Year Count Specialty Progress Objective Identification/Preparation 10/16/97 4 Economists 2 FMS 3 Consultants I Co-financing Officer Appraisal/Negotiation 12/10/97 3 Economists S S 4/13/99 2 LEG S S Supervision 6/13/99 3 Economists S S I Country Officer S S ICR 11/26/00 to I Consultant 11/30/00 (b) StaJf: Stage of Project Cycle Actual/L -Estimat tst : :: No. Staff weeks US$ ('000)3 Identification/Preparation Appraisal/Negotiation Supervision ICR Total

19 Annex 5. Ratings for Achievement of Objectives/Outputs of Components (H=High, SU=Substantial, M=Modest, N=Negligible, NA=Not Applicable) Rating Macro policies * H OSUOM O N O NA OSector Policies O H * SU O M O N O NA D Physical OH OSUOM ON *NA F Financial *H OSUOM ON ONA F Institutional Development 0 H O SU O M 0 N 0 NA OI Environmental O H OSUOM O N * NA Social O Poverty Reduction O H OSUOM O N O NA OII Gender O H OSUOM O N * NA O Other (Please specify) O H OSUOM O N * NIA O Private sector development 0 H 0 SU OM 0 N 0 NA Z Public sector management 0 H O SU O M 0 N 0 NA El Other (Please specify) OH OSUOM O N * NA

20 Annex 6. Ratings of Bank and Borrower Performance (HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HU=Highly Unsatisfactory) 6.1 Bank performance Rating N Lending 0OHS*S OU OHU Z Supervision OHS OS OU OHU X Overall OHS OS O U O HU 6.2 Borrower performance Rating Preparation * HS O S O U O HU X Government implementation performance 0 HS 0 S 0 U 0 HU 1 Implementation agency performance O HS O S 0 U O HU Z Overall OHS OS O U O HU

21 Annex 7. List of Supporting Documents - President's Report and Recommendation for the Third Economic Reform and Development Loan (Report No. P 7306-JO), April 30, Complete project documentation/reports on file. - List of officials from the Government and agencies interviewed during mission in November