RESTRICTED Report No. AS-98b Public Disclosure Authorized This report was prepared for use within the Bank and its offiliated organizations. They do not accept responsibility for its accuracy or completeness. The report may not be published nor may it be quoted as representing their views.

INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT INTERNATIONAL DEVELOPMENT ASSOCIATION Public Disclosure Authorized

RECENT DEVELOPMENTS

OF THE ECONOMY

OF Public Disclosure Authorized

October 23, 1963 Public Disclosure Authorized

,Jepartment of Operations South Asia and Middle East CURRENCY EQUIVALENTS

I Jordan Dinar = 1 Pound Sterling = 2. 80 U. S. Dollars 1 U. S. Dollar = 0. 357 Jordan Dinars 1 Million JD = $2, 800, 000

1 Dunum = 1, 000 square meters (0. 1 hectare) or 0. 247 acres To Damascus and Beirut

L ake Tiberlos S Y R l A

rbid

e n n

Tulkar AunMafraq

Jarash o9 Nablus Zra H

S Salt Suweileh Zerqa Ruseifa ýamallah eAMMAN Jericho

Jerusalem. Kallio Madaba Bethlehem

Hebron *

-S A U D I

Karak AR A B I A

-J Taf il a /* El Hasa

JORDAN

RAILWAYS Pera ' i i Existing ++++++ Disused

Ma'an > To be constructed X-ASPHALT ROADS EAST GHOR CANAL

Naqb Ashtar

0 0 20 30 40 50 60

MILES

o Medina MARCH 1963 BRD-799R CONTENTS Page

BASIC STATMSTICS i

SU12VIARY AND CONCLUSIONS

I. THE ECONOIf1

II, RECENT ECONONIC TRENDS AND GROWTH 4

Agriculture 4 Mining and Industry

III. INTERNAL AND EXTERNAL FINANCE 6

Public Finance 6 External Receipts and Payments 8 Growth of Foreign Reserves 9 Money and Banking 9

IV, DEVELOPMENT FROBLEM AND NEEDS W FUTURE IROSPECTS 13

Progress of Economic Development 13 Development Plans 14 Administrative and Institutional Improvement 18 Financing Development and Aid Requirements 19 Balance of Payments Prospects 20 1

BASIC STATISTICS

Area: 96,000 kilometers(37,500 sq. miles) Of which cultivated 5,000 to 6,000 square kilometers Irrigated lands 604 square kilometers Dry land farming 4,600 to 5,600 square kilometers

Population:

Total population (1962 estimated) 1,800,000 Of which refugees (estimate) 550,000 Rate of natural increase 2.5% to 3% per year

Foreign Trade 1962 (Customs Statistics):

Imports JD 45.6 mil11ion Of which: Agricultural products 14.2 6.0 Capital Goods 6.8 Raw materials and semi-finished goods 9.5 Others 9.1

Domestic Exports: JD 4.9 Of which: Agricultural products 2.9 1.5

Balance of Payments (JD Million) 1955 1959 1961 1962

Imports 25.3 39.4 40.9 3,5 Exports 3.6 3.4 55.3 3

Trade Deficit 21.7 36.0 35.6 37.6

Invisibles (net) 3.9 3.1 4.8 8.2

17.8 32.9 30.8 29.4

Private Donations 1.7 5.8 7.0 ,9

16.1 27.1 23.8 21.5

Official Grants and Loans 16.7 25.6 25.0 2

+ 0.6 - 1.5 + 1.2 2.2 Other capital inflow and errors and omissions 1.8 1.0 1.7 h*5

Increase (+) or decrease (-) + 2.4 - 0.5 + 2.9 +6.0 in gross foreign exchange reser-ves i1

Foreign Exchange Reserves (JD Million)

End of End of End of June 1963 1957 1960 1962 _

With Currency Board 15.6 16.4 20.2 22.4 With Commercial Banks 1.2 14.3 20.3 l44 With Government 1.0 3.2

Total gross 26.8 31.7 40.5 40.0 Foreign liabilities 3.5 5.5 7.5 11.4

Total net 23.3 26.2 33.0 28.6

Public Finance (JD Million) 1955/56 1959/60 1961/62 1962/63 Budget 1963/64 (preliminary actuals)

Domestic Revenue 8.0 12.3 14.7 20.8 17.2 Foreign grants and loans to Government 10.9 18.4 18.9 17.9 20.4

Total Revenues 18.9 30.7 33.6 38.7 37.6 Expenditures on defense and security 10.3 17.9 18.5 19.2 21.1 Other ordinary expenditures 4.6 8.1 9.6 11.7 13.0 Extraordinary expenditures (mainly for development) 2.8 4.7 4.9 7.8 9.5

Total expenditures 17.7 30.7 33.0 38.7 43.5

Currency and Banking (JD Million) End of Endof End of June 1963 1957 1960 1962

Currency in circulation 14.7 15.6 19.1 21.4 Private demand deposits 1/ 7.5 10.5 14.4 15.9

Total money supply 22.2 26.1 33.5 37.3

Public deposits with Banks 9.2 14.7 19.4 13.0 Private deposits with Banks 9.8 12.8 19.8 21.6

Total deposits 19.0 27.5 39.2 34.6

Bank credit to private sector 10.0 15.8 20.3 23.3

1/ Including public entities. 111

Summary

i. No basic changes have occurred in Jordan's economic situation since the last IDA mission visited the country early in 1961. While the whole economy has remained geared to foreign assistance, a fairly satis- factory rate of growth has been maintained without giving rise to any serious inflationary pressures. The industrial sector is still very small. In agriculture, production of cereals, which is largely dependent on erratic weather, has not improved, but production of fruits and vegetables has nearly doubled over the last few years. Irrigated lands have been further ex- tended by the completion of two sections of the East Ghor Canal. Foreign exchange earnings, derived mainly from tourism, agricultural produce and phosphates, have nearly doubled over the past three or four years, but still cover only about one quarter of the import bill. ii, Jordan has an annual per capita product varying between 4150 and $19. With the addition of foreign aid and private remittances, which to- gether are equal to about one quarter of the national income, total re- sources of the economy amounted in 1961, a good crop year, to $245 per capita. Almost 90 per cent of the available resources are consumed, nearly 70 per cent by the private sector and over 20 per cent by the public sector. Most of the additional resources over the past few years have gone into public and private consumption, and the ratio of gross investment to national product has declined somewhat. Public investment absorbs only about 4-5 per cant of total resources. A serious attempt is now being made, however, to step up the rate of investment. iii. Early in 1962 the Government prepared a Five-Year Program now in the process of being revised into an Eight-Year Program, running until 1970/71. The tentative level of public investment proposed, but not finally decided, amounts to JD 116.5 million, or an average of JD 14-15 million per year. Although the Government has recently introduced a series of reforms designed to improve standards of public administration, Jordan's administrative capacity might still constitute a bottleneck in the execution of so large a program. However, even if the program is reduced so as to concentrate on the major projects in agriculture and mining, a large effort will be needed to mobilize greater domestic resources. The Government is accordingly aiming to cover an increasing share of current public expenditures out of its own revenues, thereby releasing foreign aid for financing development. Foreign assistance has levelled off at about JD 18-19 million a year. The aid-giving countries intend to reduce gradually the budget support to the Government, entirely absorbed by defense expenditures, and to concentrate more on de- velopment assistance. iv. Rising public expenditures on both current and capital account have been reflected in a decline in the Government's deposits with the banking system, which have decreased from JD 16.4 million in the middle of 1962 to JD 8.5 million at the end of June 1963. Commercial liabilities abroad appear to have increased simultaneously. Net foreign exchange re- * serves rose substantially in 1961 and 1962, but fell by over JD 4 million during the first half of 1963. On June 30 of this year they amounted to JD 28.6 million, sufficient to cover about eight months' imports. iv v. The inherent weaknesses of the Jordanian economy, the acute unemployment problem and the high level of defense expenditures make it essential that the country should continue to receive large amounts of external assistance if it is to make progress with economic development, so that in time it can reduce its dependence on external support. Though Jordan's public foreign debt is only about JD 10.5 million, (excluding the obligation towards the UK) and involves an insignificant service burden, the country cannot afford at present to finance its investment program with loans on conventional terms. I. THE ECONONY

1. The Hashemite Kingdom of Jordan has a population of 1,800,000 including about 550,000 Palestinian refugees. The population is believed to be growing at an estimated 2.5 per cent to 3 per cent a year. The country consists of the former Kingdom of Transjordan and what was until 1950 the eastern part of Palestine. Transjordan had been largely a pastoral country shared by Bedouin tribes and subsistence farmers. The part of Palestine which is now West Jordan incurred a severe blow when its ties with the rest of Palestine were cut, involving the need for a complete and radical over- haul of its transport system, the loss of traditional markets, drastic re- duction of employment opportunities and disruption, in certain areas, of public utility services. The influx of the Palestinian refugees, though bringing into the new Kingdom some skill and even a little capital, accen- tuated its problems. Jordan as a whole emerged as an over-populated country endowed with very limited natural resources, precariously balanced politically and by no means viable on its own.

2. At present out of an estimated labor force of some 450,000 (ex- clusive of female labor in agriculture) possibly more than 100,000 are wholly or largely unemployed, and the economy is unable to absorb the increase in population of working age, now roughly estimated at over 10,000 per year. The possibilities for the expansion of manufacturing industries are limited, and a solution to Jordan's chronic unemployment problems is not in sight. Little prospect exists at present for settling on the land a substantially larger number of farmers.

3. Agriculture from which about 60 per cent of the population draw their livelihood contributes only 15 to 20 per cent of GNP. Despite its low and erratic contribution to national production, agriculture must be con- sidered as Jordan's main economic potential. Its over-riding problems stem from the low yields per acre on rainfed land and the instability of farm out- put, due to irregular rainfall. Though only 10 per cent of the country's total area of 96,000 square kilometers (37,500 square miles) is cultivated, the area of cultivated land per inhabitant is slightly more than 1 acre, com- paring relatively well with other Middle East countries.1/ However, only 10 per cent of the cultivated land is irrigated, while dryland farming depends on uncertain rain during the winter months. Over the long run, drought has occurred in two out of five years, but during the past five years four were drought years. Annual rainfall over the past decade ranged between 193 and 405 mm. (roughly 8 to 16 inches).

4. The second potential source for development lies in the exploitation of Jordan's few mineral resources, which are now being explored. At present only phosphates are commercially exploited,accounting for over a third of Jordan's exports. The establishment of a plant, based on Dead Sea

1/ 1.47 acres 0.69 n 0.28 n 0.21 " 0,14 Source: G.S. Soussou: Priorities in Jordan Agriculture (U.S. A.I.D. Mission, 1961) -: 2 brine is envisaged and a feasibility study of copper mining will soon be undertaken.i/

5. The lack of raw materials, the scarcity of managerial and technical skill and above all the limited internal market, provide little prospects for establishing or developing any sizeable manufacturing industries. Industry in Jordan is mainly confined to small units in or around , engaged in the processing of local products or manufacturq.of consumer goods. Industry and mining account for only about 10 per cent of GNP.

6. According to the Industrial Census of 1959 only nine manufacturing establishments employed more than 100 people. The only large-scale in- dustries consist of a refinery, with a throughput capa;,ity of 330,000 tons of crude oil per year, a cement mill, with a capacity recently expanded to 330,000 tons per annum and a tannery with a capacity of 2 millir, square feet of leather per annum. These three main industries largely cover the needs of the local market for their products.

7. Other industries include pressing of vegetable oil, flour milling manufacturing of soap, tomato juice, cigarettes, shoes, batteries, matches and beer. More recently small plants making pharmaceutical products, tooth- paste and shaving cream, shoe polish, paints, aluminum utensils, animal food and blankets, have been established.

8. 6,113 J/ establishments employed less than 5 persons each, including working proprietors and family workers. Of the total of 23,000 7 people employed in manufacturing industry, 9,600 werf working prop- rietors and family workers, while only 13,400 were salaried. This employment pattern has not undergone any basic change since the industrial census was held.

9. Many of the presently existing enterprises have not been very successful. Exceptions are cigarette manufacturing, shoe industries, a small battery factory, the cement plant and the petroleum refinery, the latter two having the benefit of a legal monopoly. All industries, except cement, rely heavily on imports of raw materials and have to cope with competitive imports.

10. Tourism is another important activity in Jordan, and given reasonable political stability in the area, should increase its contribution to the country's foreign exchange income.

11. The weakness of Jordan's economic structure is shown in the origin of the national product (See Appendix Table 1). Services account for 52 per cent to 58 per cent of GNP, trade and public administration contri- buting each about 20 per cent. Economic activity is closely dependent on th.i

1/ Geological mapping and exploration is being undertaken by a German team with a German technical assistance grant.

2/ Including bakeries, tailor shops, etc. flow of foreign aid, which largely determines the level of government ex-. penditures and of imports. As a result of steadily growing foreign assistance Jordan has been able to enjoy a rising lewvel of income and consumption.

12. Per capita GNP in 1961, a good crop year, is estimated at $195. This is high for the Middle East. Even in recent drought years, such as 1959 and 1960, GNP was well over $150 per head. Adding the import surplus to GNP total available resources for consumption and capital formation amounted to $248 per head in 1961. From 1959 to 1961 the total resources of the economy increased from JD 118.1 million to JD 145.6 million. However, these figures are not very meaningful in view of the heavy defense and trade com- ponent. Without these elements GNP per capita was only $108 per head in 1961. Furthermore, per capita GNP and exterior signs of relative affluence, particularly apparent in Amman, mask the very unequal distribution of income between the rural and urban population and also among different urban centres, where many refugees are still unemployed.

13. National accounts data indicate that from 1959 to 1961 between 10 per cent and 13 per cent of the total resources of the economy were used for gross fixed capital formation. Including changes in stocks, gross capital formation varied from 9 per cent to 12 per cent of such resources. Private consumption absorbed over these years about 68 per cent, while the share of public consumption decreased from 23 per cent to 20 per cent, defense and security expenditures alone absorbing from 13 per cent to 15 per cent of the total resources. (See Appendix Tables 2 and 3). The share of the public sector in the country's gross capital formation amounts only to about 25 per cent and does not exceed 5 per cent of Jordan GNP.

Gross Capital Formation (in JD million)

1959 % 1960 % 1961 % Public Sector 3.9 39 3.5 25 4.6 27

Private Sector 6.0 61 10.4 75 12.4 73

9.9 100 13.9 100 17.0 100 4:-

II. RECENT ECONOMIC TRENDS AND GROWTH

14. According to national accounting data Jordan's GNP amounted to JD 118 million in 1961 and was growing in recent years at a rate of about 9 per cent in terms of current prices. Though no adequate price index is available which would allow the deflation of these figures, the trend of wholesale prices in Amman does not indicate the existence of substantial inflationary pressures, and therefore it can be assumed that the real growth rate of GNP was not below 7 per cent per annum.

Agriculture

15. On the whole Jordan's agricultural production did not show any sustained growth over the past eight years. The total cultivated area varied considerably from year to year. However, an analysis of Jordan's agricultural production must distinguish between dry land farming and irrigated cultivation. The total cultivated area of dry land, which is greatly determined by rain- fall, fluctuated between 560,000 hectares in 1956 and 411,000 hectares in 1960 and amounted in 1961 to 460,000 hectares. Production on these lands, consisting mainly of cereals and tobacco, declined even more sharply from 534,000 tons in 1956 to 152,000 tons in 1960, after which it increased again to 448,000 tons in 1961. Yields in tons per hectare fell from 0.95 in 1956 to 0.37 in 1960 and reached a high of 0.97 in 1961 (see Appendix Tables 4 and 5). Apart from rainfall the improvement in the yields since 1960 is due primarily to the increasing output of drought resistant products like olives, grapes and figs.

16. The irrigated area under cultivation expanded slowly from 27,500 hectares in 1955 to 48,000 hectares in 1961 after the completion of the first section of tae East Ghor Canal. The improvement in the yields on irrigated lands, priducing mainly vegetables, citrus fruits and bananas is striking; yields increased steadily from 5 tons/hectare to over 10 tons/hectare.

17. In 1961, a good rain year, dry land farming made up 90 per cent of Jordan's total cultivated area, but contributed only 03 per cent of agicultx3l production, while irrigated land, occupying only 10 per cent of the total area, provided 57 per cent of the total production. Irrigated agriculture, presents not only a far brighter record than rain fed crops in terms of yild per hectare but also in terms of cash receipts.

18. In 1961 the contribution of agriculture to GNP, excluding live- stock, more than doubled as compared with the previous year. Apart from the steady increase in the production of veletables, especially tomatoes and cucumbers, the good rainfall resulted in a wheat crop of 138,000 tons, as compared with only 44,000 tons in 1960. It is also estimated that about one third of the increase in the contribution of the agricultural pro- duction to GNP was due to an exceptional olive crop, amounting to 114,000 tons against only 17,000 tons in 1960. This resulted not only from the regularly expanding olive plantations within Jordan's program of hill reclamation and terracing, but also from the fact that the olive production follows a certain cycle characterized by wide fluctuations in annual crops.

Mining and Industry

19. On the whole mining and industry expanded substantially over the past three years,mainly as a result of the successful operation of a few larger scale enterprises and the recent establishment of a number of new small industries. From 1959 to 1961 the contribution of mining and industry to GNP grew from JD 7.4 million to JD 10.7 million or by more than 40%.

20. After a period of stagnation from 1956 to 1959 the production of phosphates increased sharply from 338,000 tons in 1959 to 557,000 tons in 1962, but exports (358,000 tons in 1962) are lagging behind production. The production of Jordan's only cement plant doubled from 1959 to 1962, reaching now 235,000 tons per annum and meeting the country's needs. The petroleum refinery,with a capacity of 330,000 tons of crude per annum, now covers most of the needs of the country. However its present product mix is unbalanced with an excess of gasoline and a shortage of gas oil. The supply of electric power has kept in pace with the general growth of the economy. For 1962 total production is estimated at 7.8 million KWHas compared with 29 million in 1959. 21. Among the smaller industries tobacco expanded reasonably well. Production of cigarettes rose from 860 tons in 1959 to over 1000 tons in 1962. Three shoe factories increased their production from 500,000 pairs in 1960 to an estimated 600,000 pairs in 1961. However,further expansion of the shoe industry will probably depend on higher protection against imports.

22. Other industries were less fortunate. A match factory established in 1938 works at present at less than 10 per cent of its capacity, and productdn declined sharply from 36,000 gross in 1959 to less than 9,000 gross in 1962. Also Jordan's soap production, which grew rapidly from W#6 tons in 195 to 2918 tons in 1960,underwent a set-back in 1961, but production in 1962 increased to over 3,000 tons. Competition from imports dn Jordan's re- latively open economy has hampered the growth of these industries. Tourism

23. The development of has been most encouraging in recent years. Tourist arrivals increased. from 104,000 in 1959 to an estimated 200,000 in 1962. The hotel capacity of the country is rapidly expanding. In addition to the presently existing 46 hotels with 2,750 beds, 12 new hotels are under construction with an additional capacity of 1,375 beds. -: 6

III. INTERNAL AND EXTERNAL FINANCE

24. Jordan's whole economy is geared to foreign aid. Total grants to the economy from the aid-giving countries and UNRWA ranged in recent years from 21 per cent to 26 per cent of GNP, while direct grants and interest- free loans to the Government covered 60 per cent of the total public ex-'. penditures. Foreign aid constitutes also the main source of foreign exchange. In addition, Jordan has been granted since 1960 loans on easy terms by , IDA and , amounting to about JD 10.5 million, of which only a small portion has yet been disbursed.

Table I: Total Foreign Aid to Jordan

In JD Million at end of Calendar Year

1955 1956 1957 1958 1959 1960 1961 1962

U.K. grants and interest-free loans 9.3 9.9 1.3 1.7 2.9 2.5 2.9 2.2 U.S.A. grants 2.7 0.5 6.1 16.3 17.3 18.2 17.1 15.5 UNRWA relief aid 4.7 5.6 4.9 4.8 5.4 5.3 5.2 5.2 Saudi Arabia grants - 0.9 3.5 1.5 - - - -

16.7 16.9 15.8 24.3 25.6 26.0 25.2 22.9

Source: Balance of Payments and 1962/63 Budget.

Public Finance

25. Since 1955/56 Jordan has hardly succeeded in maintaining the domestic contribution to the total public expenditures at about 40 per cent. Domestic revenue increased only at an annual rate of about 7.5 per cent, which is less than the growth rate of the economy. Up to 1961 domestic revenues were less than 12 per cent of GNP. Efforts to collect more public revenue and to reduce the country's dependence on foreign aid have not been started until recently. -: 7

Table 2: Public Revenue & Expendituresi/ In JD Million

1955/6 1956/ 7 1957/98 1918/59 1959/60 oZ60/61 /62 1962/63 Ord. Expend. 14.9 18.3 19.6 23.5 26.0 26.9 28.1 30.9 Of which defense and security (10.3) (1396) (13.4) (17.0) (17.9) (18*5) (18.5) (19.2) Extraord. Expend. 2.8 3.0 4,3 5.8 4.7 6,0 4.9 7,8

Total Expend. 17.7 21.3 23.9 29.3 30e7 32.2 33.0 38.7 Domestic Revenue 8.0 8.7 10.3 10.9 12.3 1308 14).7 20.8

Deficit 9t7 12.6 13.6 18.4 18.4 19.1 18.3 17.9 Foreign aid for public expend. 10.9 12.5 i.2 19.7 18,4 18.1 18.9 17*9

Residual surplus or deficit +12 .0.1 +1.6 +1.3 -1.0 +0.6 -o.7

1] For more details see Appendix Table 8.

2/ 1960/61 and 1961/62 are only preliminary and not closedaccount data. For 1962/63 only partial account data are available; they include.an,.extra- ordinary i-eceipt of JD 3.6 million under foreign aid.

26. Jordan's reveiue system is based large o1 indirect taxation. About 6 per cent of the domestic revenue is derived from customs, excise duties and licenses, only 18 per cent comes from direct taxes and 23 per cent from fees, interest and profits. Income taxes represent only 7 per cent to 5 per cent of the total domestic revenue. Despite some recent upward revisions, customs and excise duties are moderate, some categories of imported goods are fully exempt and moderate duties of 15 per cent to 20 per cent are levied on more than half of the total imports. 27. Jordan's liberal policy as regards private consumption is the main obstacle to increased tax revenues. Also the availability of foreign assistance may have been a disincentive to mobilizing more internal revenue. In fact, actual expenditure over a number of years has been below total income, in- cluding foreign assistance. This allowed the Treasury to build up cash balances with the commercial banking system amounting in December 1962 to JD 15.1 millianY (see Appendix Table 10). This accumulation was intended to be a safeguard in

/ Whereas the budget figures show a small deficit for 1960/61 and only a small surplus for 1961/62, the banking statistics show an increase in the total public deposits of JD 1.1 million in 1961 and JD 3.5 million in 1962. The discrepancy between the budget figures and the banking statistics is partly due to the inaccuracy of the budget statistics and partly to the fact that banking statistics are given at the end of the calendar year, while budget figures cover the Jordan from March to April, In addition, the substantial increase of the public deposits in 1962 results from an extraordinary receipt of JD 3.57 million from the Tapline settlement, which is reflected in the budget figures for 1962/63. 8 case of a sudden cut in foreign aid. It was facilitated by the fact that budget support was granted on a cash basis, while generally development aid was spent, under the supervision of the contributing countries, on the projects for which the allocations had been made.

28. Appendix Table 8 indicates that expenditures were regularly over- estimated,while income was underestimated. The cost of the army and security forces,accounting on the average since 1955/6 for 60 per cent of the total pub- lic expenditures, has been roughly covered by British and U.S. assistance. For 1962/63 the preliminary data (see Appendix Table 8) seem to indicate that the public accounts will be closed with a surplus of about JD 0.6 million. The budget for 1963/64 is presented with a sizeable deficit of JD 5.94 million, primarily due to a JD 3.44 increase in ordinary expenditures, of whi0i JD 2 million is for army and security forces. The non-recurring Tapline receipt of JD 3.57 included in the 1962/63 revenue no longer constitutes a counterweight for increased expenditures. The budget includes for the first time a German contribution of JD 180,000 in the form of budget support. The 1963/64 JD 5.94 million deficit is to be financed from the Governmentts deposits with the banking system. According to the 1963/64 budget,the total amount of foreign grants and loans estimated at JD 20.36 is no longer sufficient to cover the military and security expenditures, estimated at JD 21.10 million.

External Receipts and Payments

29. Jordan's balance of payments presents features very similar to her public finances. The countryls foreign exchange earnings in recent years have usually covered only a very small part of its external payments.

Table 3: Summarized Balance of Payments in JD Million Pro- visio 1950 1953 1955 1956 1957 1958 1959 1960 1961 1962

Exports 2.0 2.7 3.6 5.2 5.5 3,6 3. 4.0 5.3 59 Tourism earnings 0.7 1.7 2.5 2.0 1.2 1.2 2.9 3.2 4.3 5.1 Other invisibles net 0.2 0.1 1.6 0. 1.0 1.14 0.3 -0.9 0.5 3.2

2.9 4.5 7.6 7.7 10.7 9.1 6.6 6.3 10.1 142 Imports 13.5 18.2 25.3 21.9 29.8 34.0 39.14 41.4 40.9 435

Deficit on current account 10.6 13.7 17.7 11,2 19.1 21.9 32.8 35.1 30.8 29.4 Private donations 1.6 2.3 1.7 1.7 4.2 3.2 5.8 7.6 7.0 7.9

Deficit after private donations 9.0 11.4 16.0 12.5 14.9 21.7 27.0 27.5 23.8 216e Foreign graAts and UK loansl/ 6.0 12.8 16.7 16.7 15.9 24.2 25.6 26.0 25.0 22.9 Other capital inflow & errors & omissions -0.7 0.5 1.8 0.1 1.4 1.0 2.9 1.7 3.8 Changes in reserves (-Increase) 3.7 -1o9 -2.5 -4.2 -0.9 -3.9 0.4 -1.4 -2.9 -6.0

1/ Includes interest-free loans from the U.K. and UNRWA relief aid. -9-

30. Until 1960 exports reflected the wide fluctuations in agricultural production. Since then they have shown a slight tendency to increase as exports of phosphates now accounting for over one-third of total exports have increased substantially and fruit and vegetable production has grown with the extension of irrigated lands. However, earnings from exports have not helped to lessen the growing trade deficit. In 1956, a good crop year, they covered 24 per cent of imports, while in 1961, also considered a good crop year, they accounted only for 13 per cent of the imports, and figures for 1962 do not show any improve- ment.

31. Jordan's net invisible earnings, other than tourism, are small in relation to imports. Tourism has increased substantially over the past three years, amounting in 1961 to well over JD 4 million, and the 1962 figure has risen to over JD 5 million, nearly equalling earnings from exports.

32. Far more important are Jordan's foreign exchange receipts from private transfers. They increased rapidly from JD 1.7 million in 1955 to JD 7.9 million in 1962, surpassing by almost 35 per cent foreign exchange earnings from exports. A growing number of Jordanians emigrate to work abroad and transfer part of their earnings to their families at home. Official statistics report for 1962 about 62,000 Jordanians living temporarily abroad (half in Kuwait). Indications are that presently some 5,000 work in Germany.

33. The increase in imports slowed down gradually from over 20 per cent * per year in the early fifties to around 15 per cent per annum between 1957 and 1959 and about 5 per cent from 1959 to 1962. Increased earnings from tourism and private transfers tended over the past four years to stabilize Jordan's current account deficit at about JD 25 million on average.

34. The main source of external receipts is foreign assistance which has allowed Jordan to follow liberal import policies and at the same time to build up her reserves.

Growth of Foreign Reserves

35. Because Jordan spent each year since 1953, except for 1959 and 1962, less on imports than it had the means to pay for, the country has accumulated relatively large reserves amounting on a gross basis to JD 40.0 million at the end of June 1963, more than half of which are he'.d in sterling by the Currency Board as backing for the note issue, the balance being held, also mainly in London, by the commercial banks. Deducting the foreign exchange liabilities of the commercial banks, Jordan's net reserves have decreased from a high of JD 33.1 million at the end of 1962 to JD 28.7 million, equal to about 8 months current import requirements, on June 30, 1963.

Nbney and Banking

36. Though a law establishing a Central Bank was issued in 1959, no steps were taken until early 1963 to organize it, and it is not expected to operate effectively for one or two years more. In practice no changes have occurred in Jordan's Currency Board system. The currency issue still requires a 100 per cent backing by sterling assets, and there is no indication that the government -: 10 envisages in the near future any change to this system. It is considered to provide an effective check on inflationary pressures. Indeed, though existing price index series are inadequate to measure the fluctuations of the cost of living, indications are that prices have generally been fairly stable. The Amman wholesale price index (1953 = 100) rose from 86.7 in 1956 to 93.3 in 1959. In 1960 the index increased to 101.3, but dropped to 87.7 in 1961 and84.74 in 1962.

37. Money supply increased from 1956 to June 1963 on the average at about 11 per cent per year, except from 1958 to 1959, when a slight contraction occurred. Since 1959 the total resources of the economy increased generally at a rate slightly below the increase in money supply.

Table 4: Money Supply

In JD Million

June 30. 1955 1956 1957 1958 1959 1960 1961 1962 1963 Monetary circulation 11.1 14.6 1.7 15.2 15.3 15.6 17.0 19.1 21.4 Private Demand Depositsi/ 6.4 5.7 7.5 9.2 9.0 10.5 12.0 14.4 15.9

Total Money Supply 17.5 20.3 22.2 24.4 24.3 26.1 29.0 33.5 37.3

1/ Including demand deposits of public entities.

38. Bank credit to the private sector rose from JD 7.5 in 1956 to JD 23.3 million in June 1963. The increase in bank advances was mainly related to the growth of imports, but in recent years advances against personal guarantees and credits for residential construction also absorbed a growing share of the total credit volume and some banks even ventured into hire-purchase fi- nancing. The credit expansion has been partly offset by the increase in private time deposits, from JD 2.5 million in 1956 to JD 8.6 million in June 1963.

39. However Government deposits and deposits of public entities have become an important part of the liabilities of the banking system. Govern- ment deposits rose from JD 8 million in 1956 to JD 15.1 million in 1962 and other public deposits increased over the sa,ne period from JD 0.5 million to JD 4.3 million. A sharp decline of Government deposits to JD 8.5 million has been observed during the first half of 1963 while other public deposits remained stable. While drawing down substantially its bank deposits, the Government opened a dollar account which was credited at the end of June 1963 with the equivalent of JD 3.2 million ($9 million). ~: 11 :-

Table 5: Bank Deposits (in JD million) June 30, 1956 1957 1958 1959 1960 1961 1962 1963 Total Deposits 16.2 19.4 22.5 24.0 27.6 30.9 39.3 35.0 Of which: Public deposits 8.4 9.2 12.1 12.7 14.7 15.8 19.4 13.0 Private demand deposit 5.2 6.6 6.8 7.1 8.5 9.3 11.5 13.0 Private time deposit 2.5 3.2 3.3 4.0 4.3 5.6 8.3 8.6

40. Thus total bank deposits amounted at the end of June 1963 to JD 35.0 million of which JD 13.0 million public deposits and JD 8.6 private time deposits. The public deposits, which reflect mainly the counterpart of the Government's surplus foreign exchange, placed with the banksi make the banks on the whole very liquid. Since 1960 part of the public sector deposits are held with most of the existing banks, while previously the Ottoman Bank acted as the exclusive agent of the GovernvostL.

41. Presently, nine banks are operating in Jordan, with branches spread over the ccu.try. Competition is intense between banks and is reflected in the high interest rates offered on deposits. Capital Market and Development Financing

42. Though no organized capital market exists in Jordan, industry has been able to attract increasing amounts of capital through issuing shares. It is the government's policy to build up public confidence in industrial ventures by taking minority participations itself (see Appendix Table 16). However, industry suffers from a lack of adequate medium and long term financing, though some specialized institutions, like the Arab Land Bank and the UNRWA controlled Jordan Development Bank, are operating in this field but with limited resources. The latter has mainly financed agricultural projects. The Industrial Development Fund, attached to the Development Board, was established in 1957 to provide credits for industrial projects but its operations remained very limited, and 50 per cent went to the financing of hotel construction. It was mainly financed by U.S. AID.funds.

43*. The Agricultural Credit Corporation channels short term agri- cultural credit through local cooperatives, and also provides longer term agricultural credits. It has been reorganized as an autonomous public institution.

Foreign Debt

44. Jordan's public foreign debt amounts at present theoretically to JD 25.1 million ($70.2 million) (see Appendix Table 15). About JD million 15 of this is owed to the United Kingdom. JD 11.4 million consist of interest-free loans granted by the United Kingdom, which has agreed re- peatedly to postpone service payments when due. JD 0.5 million bearing interest at 1 per cent per annum resulted from the financial agreement with the United Kingdom in 1951. Repayments have also been postponed on this. JD 3.3 million is owed-in connection with the termination in 1957 of the Jordanian-British Treaty. - 12 -

45. Recently Jordan was granted some additional development loans, all of which were on relatively easy terms. A first JD 1 million Kuwait loan, bearing interest at 4 per cent and repayable over 15 years was made in 1961. Kuwait agreed to postpone payment of the first installment, due in 1962, until August 1963. The second Kuwait loan of JD 7.5 million was granted in 1962 and is divided among three projects: JD 4 million has been allocated to the financ- ing of the Yarmouk project, repayable over 15 years, starting in 1968 and bear- ing interest at 3 per cent; JD 3 million is to finance the project, with interest at 4 per cent and repayable over seven years starting in 1966; and the balance of JD 0.5 million is for industrial development projects to be submitted separately to the Kuwait Fund for Arab Development. IDA granted a $2 million (JD 715,000) credit in December 1961 for a municipal water supply project in Amman. West Germany has made a JD 1.35 million loan at 3 per cent and 20 years for the extension of port. 46. Excluding the interest-free indefinite obligations towards the United Kingdom, Jordan's total foreign public debt is JD 10.5 million, equal to about 45 per cent of the country's free foreign exchange reserves (see Appendix Table 15). Service on this debt will require as from 1966 modest amounts for repayment of principal, reaching a high of about JD 1 million in 1971, while interest payments require about JD 0.3 million per annum in the near future. -:13:-

IV. DEVELOPIENT FROBLENB & NEDS - FUTURE PROSPECTS

Progress of Economic Development

47. The Bank's General Survey Mission put in its 1955 report on Jordan a public investment target of JD 4.2 million per a.num. From 19907 to 1958/59 actual expenditures on development projects averaged about JD 1 million below this level. Since 1960/61 public investment expenditures have increased to about JD 5 million and may reach in 1962/63 JD 7 million. However, Jordan's share in the financing of these projects did not rise substantially and averaged from 1957/58 to 1961/62 between 30 to 40 per cent, the balance being covered by foreign grants and loans.

Table 6: Expenditures on Development Projects!/for which Jordan Received Foreign Aid - JD Million

1956/57 1957/58 1958/59 1959/6o 19606I 1961/622/

Expenditures on-- "economic projects" under the Develop- ment Board and the Ministry of Public Works 1.7 3.6 4.8 3.3 4.93/ 5.1

Financing U.S. project aid- 0.5 1,7 2.0 1.6 2.4 2.4 U.K. Development Loan 1.1 0.5 0.6 0.5 0.5 0.5 Other Development o o / Loans - - - - 0.1-' 0.t-' Jordan Budget 0.1 1.4 2.2 1.2 1.9 1,8

1/ Other extraordinary expenditures included in the budget are mainly related to construction and maintenance of administrative buildings,and educational and health facilities amount on the average to about JD 1.5 million per year.

2/ Preliminary actuals for 1960/61 and 1961/62.

3/ Including JD 0.8 million contributed to the Hidjaz Railroad.

4/ U.S. figures for U.S. fiscal years ending June 30.

5/ Proceeds of the JD 1 million Kuwait loan granted in 1960. -:14

48. In the first place a large proportion of the total public investment expenditures has been used for road construction. Between 1957/58 and 1962/63 it is estimated that about JD 8.5 million will have beeh spent for that-purpose. Jordan has now an excellent road network, which if properly maintained would meet most of the traffic needs of the country for several years.

49. The construction of the port of Aqaba is the second project to which JD 3 to 4 million from British and German development loans have been allocated. The port facilities comprise a phosphate berth and handling plant with a capacity of 1,000,000 tons a year, and a general cargo berth. The latter is presently being extended.

50. The East Ghor Canal is the third main project for which large amounts were earmarked. At present the main canal,of a total length of 69 km., nears completion. The total area irrigated through the canal, which is fed by the Yarmouk river, will be 120,000 dunums (12,000 hectares). The two first sections of the scheme are completed and 60,000 dunums (6,000 hectares) are now irrigated. The total cost of the scheme is estimated at JD 6.1 million ($17 million) 1/.

51. The balance of the investment expenditures has mainly been allocated in relatively small amounts to exploration and development of water resources, agricultural credit, government participation in new established industries, public participation in hotel construction, geological surveys and mapping, exploration of phosphates, feasibility study of a potash plant, education and health facilities, municipal development, and some agricultural research.

Development Plans

52. Two years ago the and the United Kingdom made clear their policy not to increase their budget support now amounting to about JD 16 million per year. More recently they expressed the intention to reduce gradually this assistance and to concentrate more on development aid.

53. Consequently the Government put the Development Board in charge of preparing a development program and early in 1962 a "Five-Year Program" for 1962-1967 was adopted. The development expenditures under this program were estimated at JD 127.3 million, of which JD 66.9 million was to be in the public sector, with emphasis on projects related to water resources and trans- port. The private sector was expected to invest JD 60.4 million mainly in agriculture, mining, industry and construction. The financing of the program was to be as follows:

JD Million Jordan Government 21.1 Private financing (mostly domestic) 46.98 External assistance 58.93

127.32

1/ Originally the cost of the East Ghor Canal scheme was estimated at JD 4.3 million ($12 million). The target was to achieve a growth rate of 10 per cent per anum and to create at least 60,000 additional jobs.

54. One of the basic assumptions of the Five-Year Program was that budget support would be continued through 1962/67 at JD 16 million per annum in addition to a total amount of development aid in the form of grants and loans of JD 58.9 million, of which JD 45.5 were for the public sector and JJ 13.4 for the private sector. Development expenditures under the program were defined as covering the capital requirements for both private and public investment as well as recurrent expenditures in excess of the 1960/61 level in developmental areas of government activity such as education, health and social affairs.

55. The Government ihich came into power in January 1962 gave economic development top priority and ordered the Five-Year Program to be revised. New projects were to be integrated and the level of the plan adjusted in the light of additional information which had become available. 56a The Development Board, assisted by Ford Foundation advisors, is in fact now working out a complete new Development Program for the periodl963/ 64-1970/71. It is s;xpected to be ready before the end of 1963. Since, at the time of the mission's visit, no final decisions had been made by the Govern- ment on the level and the content of the new program, it would be premature to make any detailed appraisal. However, indications are that the general objectives of the Government's development policy, in order of priority, are as follows: 1. Reduce to a minimum extent the need for foreign budget support. 2. Increase per capita income. 3. Increase employment opportunities.

57. Preliminary estimates indicate that the target for fixed investmenj/ in the public sector would amount to JD 116.5 million and private investment JD 109 million, or a totalol J225.5 million for the eight-year period. The program is estimated to achieve a growth rate of GNP of 5 to 6 ner cent per an num or aout 3 ner oent ner capita. This projection i1.s based on capital output ratios estimated at 4.5/1 for the projects included in the public sector; 7/1 for residential construction (JD 66 million of the private sector program) and 2/1 for priva,6e investment in small industries, farming and services.

58o The main difference between the provisional new program and the previous Five-Year Plan consists of the inclusion within the public sector of the major mining projects, which were formerly expected to be implemented by private initiative. Otherwise the provisional program is mainly based on projects in the agricultural sector and on the further development of transportation.

1/ Under the new plan development expenditures would no longer inca:ude incremental current expenditures "of a developmental nature" in fields like health, education and social affairs, as was the case in the Five- Year Program. -: 16 :-

Agriculture

59. Allocationsto the agricultural sector amount provisionally to JD 43.4 million. The projects include the completion of the East Ghor Canal, the further irrigation and drainage of the Jordan Valley including the construction of a dam on the Yarmouk river, construction of water -torage facilities in the side Wadis, agricultural settlement in the Jordan Valley and agricultural credit. The East Ghor Canal irrigation scheme will bring about 120,000 dunums (12,000 hectares) of land under irrigation, of which 60,000 dunums are already cultivated. If the construction of the Yarmouk dam were started in 1964, 200,000 dunums could be irrigated as from 1966/67 and an additional 200,000 dunums by 1970. The East Ghor Canal Authority estimates that gross production on irrigated lands amounts to JD 36 per dunum, which would mean that the total gross production in the Ghor scheme would amount to about JD 4.5 million, half of which would be exported. This would represent an increase of 15* r cont to 20 :er cent in JorrIan's a:-ricultural :)u'put.

Mining

60. The program concentrates on the rapid development of the phosphate exploitation both in Rusaifoh andEl Hasa. These projects would absorb JD 6.9million and by 1970 yield a total production of 2,500,000 tons.

61. The provisional plan allocation for the construction of a potash plant based on Dead Sea brine, and for which feasibility studies were under- taken in a pilot plant, amounts to JD 9.8 million. In addition, private participation in this venture would contribute JD 2.65 million. Production is estimated at 250,000 tons a year starting in 1966. 62. Under a German assistance grant, drilling will be undertaken to assess the feasibility of copper mining in the Wadi Araba. JD 4 million have been allocated to this still highly tentative project. Transportation and Communications 63. Transportation projects included in the provisional plan are closely related to the expansion of the export of minerals. A German team completed a railway survey and concluded that the most economical solution for the transport of phosphates would be to extend the existing railroad from Ma'an to Aqaba. The Dead Sea Aqaba road, surveyed by a British firm, would mainly be required for the potash plant at t:e south eid of the Dead Sea and the cost of this project should e considered in the light of the potential returns from the potash exploitation. The Aqaba port expansion would also be necessary if the phosphate production increased to the estimated volume of 2,500,000 tons by 1270/71. Atotal amount of JD 12.7 million has been tentatively allocated to these three projects.

64. The transportation sector includes also the expansion of the Amman and Jerusalem airports, with a view to accomodate increased tourist traffic. The economies of these projects are beinr situied by a British firm. -: 17 :-

65. The renovation of the Hejaz railway is still listed among the pro gram projects,mainly for political reasons, though it would be of no practical economic advantage to Jordan, since it would carry only seasonal pilgrim traffic from and Jordan to Medina. An amount of JD 4.7 million is allocated to this joint Syrian-Jordan-Saudi project as Jordan's share i4n the total cost.

Manufacturing Industry and Power

66o Very obviously the promotion of industryparticularly of import substituting industries, deserves continued exaaination and attention. Feasibility studies, such as those undertaken by the Industry Institute of Lebanon, are most useful to help private initiative determine ventures with the best prospects. The prevailing system of financial assistance for industry consists of government minority participations in the larger enterprises. There is,however, need for long-term industrial credit and therefore the Govern- ment intends now to establish an Industrial Credit Corporation,which would absorb the existing Industrial Development Fund, and f6r which an allocation of JD 3 million is included in the tentative program. In addition, an Industrial Advisory Service is to be established to help private entrepreneurs on technical and managerial problems. This latter initiative might contribute to develop and strengthen existing small industries, mostly of the handicraft type, which generally have technical skill but are held back in their expansion by managerial deficiencies and inadequate equipment and premises. In this respect, it might be worthwhile to relate the Industrial Advisory Service to the establishment of a small industry estate in Amman, which would give the best skilled handicrafts the orportunity to rationalize their workshops.

67. The only power project in the program consists of the establishment of a hydroelectric plant at the Yarmouk Dam. An allocation of JD 9 million is provisionally made for this purpose. The plant would have a capacity of 50,OOO kw. According to tae 3yro-Jordanian agreement on the Yarmouk project, a nerceata-e of the noiver nroduction will be supnlied to Syria. Re- lated to the Yar-nou Yoer Plant is the distribution system, for which a survcy has ;een made by a Gerlian team.

Tourism

68. The twelve new hotels just completed or under construction should be sufficient to serve the needs of the increasing tourist traffic for some- time to come. Over-investment in this sector may even be feared in view of the highly seasonal character of tourist ectlvity in Jordan.

69. On the whole the main projects proposed under the new program are in line with the development of Jordan's potential natural resources. The question,however,arises whether the implementation of a program of this magnitude in the proposed time period lies within Jordan's capacity, administratively and financially? -: 18 :-

Administrative and Institutional Improvement

70. In its 1961 report on the economy of Jordan the IDA mission pointed out that Jordan's performance in improving the transportation system, expanding the power generating facilities and extending the irrigated area were evidence of a growing capacity to utilize funds for important investment purposes. The past two years have brought confirm- ation of Jordan's improving record in the field of development. In the first place public investment expenditures for 1962/63 reached probably JD 7 million as compared with *JD 3 to 5 million in previous years. In the second place, the Government has taken a series of important administratLve and legislative measures as a first step to translate repeatedly stated intentions into action.

71. A start was made in inroving the general administration by eliminating more than three hundred incompetent civil servants who were replaced by more qualified personnel. A provisional law reorganized and staffed the budget departments of the Ministry of Finance and new budget procedures were established. Amendments were made to the fiscal system, some direct and indirect tax rates were revised in accordance with recommendations of the Royal Fiscal Corimission and a new company law, requiring publication of balance sh(ets, will soon be enforced. As mentioned previously, a start was made in organizing the Central Bank.

72. More specifically in the field of development, the Agricultural Credit Corporation has been reorganized and made, to a great extent, autonomous. Other government agencies, such as the Central Water Authority and the East Ghor Canal Authority actively pursued their program of exploration of water resources and construction of irrigation works. The East Ghor Canal Authority gave evidence that it was able to manage the existing irrigation scheme and to collect the water charges. It also accomplished successfully a delicate task of land re-distribution in the East Ghor area,and some progress was made in limited areas to the Tfest Bank o-n hill reclamation, terracing and extension of fruit orchards and drought resistant tree plantations. The Department of Statistics, with the assistance of UN experts and the British Middle East Office, is carrying out valuable work in the field of demography, industry, manpower and national accounts.

73. Thus the Jordanian authorities have demonstrated in recent months their growing awareness of the problems and needs of their country.

74. However, despite the Government's attempts to reorganize and improve its administration, much remains to be done to bring the standards of administrative and technical performance up to a level to cope with the increase in development spending. One of the main problems in this respect is the difficulty of retaining qualified Jordanians withinethe country, given the present level of salaries in the public sector.l/ Though thousands

1/ Government salaries range from JD 35 ($98) per month for clerks to JD 135 ($374) per month for the highest ranking civil servant. -: 19 :- of Jordanians study abroad, many return to their country only for a limited period, causing a high rotation of personnel and endangering the continuity of effective administration. A solution to the problem of the status of the civil service is an important factor for the success of Jordan1s development efforts.

75. Also the problem of duplication between different administrations and agencies needs to be tackled. Especially in the field of development the responsibility of the different administrations and agencies should be clearly determined in order to avoid cumbersome procedures as well as tensions and conflicts. In the field of public finance, the present system should not only be amended,but all the recommendations of the Royal Fiscal Commission should be considered with a view to overhauling the present tax structure and improving tax collection.,

76. The success of the agricultural development policy will ultimately depend pot only on the technical achievements in the field of irrigation and water storage, but also to a great extent on the improvement of storage, grading, packing and marketing techniques, without which the benefits of the important investments would be lost. Unfortunately little progress has been made in these fields. Also agricultural research and the establishment of suitable cropping patterns to adjust the agricultural production to the soil conditions and to the marketing possibilities has not proceeded along with the extension of the irrigated area. The quality of the existing agricultural extension service is another weakness.

77. Due regard should also be given to the marketing problems resulting from the expansion of the phosphate production and the construction of the potash plant. Especially for the potash plant it may be necessary to enter into partnership with an established foreign concern to ensure adequate technical know-howmanagement and marketing experience. As for phosphate rock, indications are that the coming years will see the develop- ment of an increasingly competitive international market. Nevertheless, Jordan should exert every effort to market her out.pat, given the paucity of her other alternatives for export expansion.

FINANCING DEVELOPET AND AID REQUIR"EENTS

78. Though it is premature to speculate on what will be the ultimate content and level of the development program which is now being prepared, it is evident from Jordan's past performance, even assuming that the recent attempts at administrative and institutional improvement will rapidly show practical results, that the tentatively envisaged program of investment of over JD 14 million a year in the public sector will present a severe challenge to the administration. This would be almost a 300 percent increase over the actual average investment expenditures realized in the recent past.

79. Whatever its size, the financing of the program must be considered in the light of the policies envisaged by the Government of Jordan as well as by the main aid-giving countries. If these policies assume that Jordan will become gradually less dependent on foreign aid for current expenditures, the Government will have to make a major effort to increase its revenues in order to compensate for the decreasing budget support. -: 20

The substitution of budget support by domestic revenue will have to be a gradual process. Barring a drastic reduction of military outlays, a considerable number of years will be required before Jordan will be able to raise ar-ditional domestic revenue to make uo for the JD16 million per annum the country receives at present as budget sunport, which covers almost 60 per cent of the ordinary expenditures, and to allow in addition for any future increase in public consumntion. Whether the expenditures for defense and security can be leveled off or reduced, involves political judsments beyond the scope of this renort. However, it is clear that the further expansion of Jordan's comnara4ive high level of consumption is incompatible with the desire of mobilizing more domestic resources and with the aim of achieving greater independence from foreign aid. 80. The fact that Jordan's budget may still require for a number of years a considerable though decreasing amount of foreign support, does not mean that Jordan is incapable of making any contribution toward the cost of the development program. Instead of further accumulating external reserves the Government could gradually use a portion of these reserves for productive investment. (This would involve drawing down its cash balances with the banking system, and due regard would have to be paid in the process to the situation of the banks.) The funds which could thus be made available are, however, relatively small as compared with the financial requirements of the development program, even if the pronosed program were reduced and concentrated upon the major projects in agriculture and mining.

Balance of Payments Prospects

81. Assuming that the major agricultural and mining projects included in the provisional development program were efficiently operating at full capacity, admittedly an optimistic assumption, Jordan's foreign exchange earnin;s from exports of agricultural products would be expected to rise from JD 2.5 million at present to JD 10 million by 1970/71; exports of phosphates and potash would amount to JD 9 million and JD 2.8 million resnectively while earnings from tourism and private transfers might increase by the end of the decade to JD 7 and JD 10 million. Thus foreign exchange from all earnings on current account by 1970/71 would total about JD 40 million against JD 18.5 million in 1962. Assuming only a 4 per cent annual increase in imports which would maintain the per capita imports of consumer goods at about its present level and permit some increase in capital goods imnorts, Jordan's deficit on current account would still amount to JD 17 million, as compared with JD 21.5 million in 1962. Assuming that UNRJA relief aid would be maintained at its present level of about JD 6 million, the deficit would be reduced to JD 11 million, as compared with JD 16 million in 1962.

82. Thus Jordan would still require, under the most optimistic assumptions, about JD 11 million foreign support to meet its deficit on current account. This imnlies on the public finance side that Jordan would be able to increase domestic revenues by at least JD 5 million in order to make up for a.similar reduction in foreign budget support. Furthermore these assumptions do not allow for any further increase in public consumption which would require additional domestic resources. -: 21 :-

83, For an extended period of time, Jordan will remain dependent on foreign subsidies both for her public current expenditures and for her balance of payments. As described previously, about JD 15 million or 60 per cent of Jordan's JD 25 million foreign public debt is at present an interest-free loan from the United Kingdom, which has agreed repeatedly to postpone repayments when due. More recently Jordan took up about JD 10.5 million of loans granted by Kuwait, Germany and IDA on relatively easy terms; these will require as from 1964 annual interest payments of about JD 0.3 million and as from 1966/67 principal repayments increasing from JD 0.2 million to a high of JD 1 million by 1970/71. However low this debt service may appear as compared with Jordan's potential foreign exchange earnings, it is evident that as long as the country feels that it must have such a large military establishment, and until its development program is much further advanced, the aid which Jordan receives will have to be on special terms. She has demonstrated some ability to use development aid fruitfully and a willingness to improve her administrative procedures and institutions concerned with economic development. To the extent that financial helpt to Jordan is changed from budget support to development aid the assistance received in the future is likely to be significantly influenced by her further efforts to mobilize her own resources for productive purposes. STATISTICAL APPENDIK

Table Noo

Industrial Origin of 1

Composition of Gross Domestic Capital Formation 2

Total Resources of the Economy and their Use 3

Agricultural Production 4

Area cultivated, Rainfall and Agricultural Production 5

Production of Phosphates and of Cement 6

Manpower 7

Public Finance 8

Money Supply 9

Banking Statistics 10

Direction of Foreign Trade 11

Domestic Exports 12

Imports 13

Balance of Payments 14

Public Debt 15

Government Participation in Industry and Power 16

Volume of Cargo handled at Aqaba 17

Power Production and Installed Capacity 18 Table 1: INDUSTRIAL ORIGIN OF GROSS DOESTIC PRODUCT (JD Lillion at Current Factor Cost)

1959 % 1960 % 1961 %

1. Agriculture, forestry and fishing 11.4 14.1 13.0 15.1 23.1 21.5

Crops and forestry 10.3 9.3 19.9

Livestock 1.1 3.7 3.2

2. Nanufacturing and Mining 7.4 9.1 8.3 9.6 10.7 10.0

3. Construction 3.7 4.7 3.0 3.5 3.4 3.2

4. Electricity supply 0.7 0.9 0.8 0.9 1.0 0.9

5. Transport 10.8 13.7 11.3 13.1 12.8 11.9

6. Wholesale and retail trade 15.7 19.9 17.5 20.3 22.0 20.4

7. Banking o.4 0.5 0.5 0.6 0.7 0.7

8. Ownership of dwellings 5.4 6.8 6.1 7.1 7.1 6.6

9. Public administration and defense 16.1 20.5 17.6 20.4 17.8 16.6

10. Services 7.5 9.5 8.1 9.4 8.9 8.3

Gross domestic product at factor cost 79.1 100 86.2 100 107.5 100

Indirect Taxes 7.9 8.1 8.8

Gross domestic product at market prices 87.0 94.6 116.3

Net factor income from abroad 1.0 1.1 1.8

Gross National Product 88.0 95.7 118.1

Foreign grants in kind and cash 25.1 25.5 24.6

Foreign grants aa % of )NP 28.6% 26.6% 20.8% Table 2: COIiPOSITION OF GROSS DOMESTIC CAPITAL FORMATION JD Million)

1959 1960 1961 1. Fixed capital formation 14.9 14.7 14.6

a) Dwellings 3.4 3.8 3.2

b) Non-Residential buildings 1.1 1.2 1.1

c) Other construction and works 4.1 3.7 4.8

d) Transport equipment 2.4 1.4 1.6

e) Machinery and other equipment 3.9 4.6 3.9 2. Change in stocks -5.o -0.8 2.4

a) Livestock -3.2 -0.7 -1.2

b) Other commodities -0.3 1.6 5.0

c) Statistical discrepancy -1.5 -1.7 -1.4

Gross domestic capital formation 9.9 13.9 17oO TABLE 3: TOTAL RESOURCES OF THE ECONOMY AND THEIR USE In JD Million at Current Market Prices

1959 1960 1961

G.D.P. 87.0 94.6 116.3

Imports of Goods and Services 42.6 45.7 45.8

129.6 14o.3 1.62.1

Less Exports of Goods and Services 11.6 12.5 16.5

Available resources to the economy 118.1 127.8 145.6

-Jse of Resources

Gross Domestic Fixed Capital Formation 14.9 14.7 14.6

Change in Stocks -5.0 -0.8 2.4

Private Consumption 80.5 86.2 99.7

Public Consumption 27.7 27.7 28.9

of which Security Expenditures 17.9 18.4 18.5

118.1 127.8 145. 6

1/ Discrepancies exist between data on public finance and balance of payments and the data used in the national accounts. Discrepancies in import and export figures are due to adjustments for barter trade.

0------Table 4: I. AGRICULTURAL PRODUCTION

(In thousand tons) Average 192/5D/ 1955 1956 1957 1958 1959 1960 1961 1962 Wheat 15000 79.4 242.5 219.8 65.6 103 j;5 43.6 138.2 111.9 Barley 80 25,4 96.2 80.6 16.8 26.0 133 61.7 35.7 Maize and millet 0.3 6.9 10.1 9.5 5.5 7.1 3.0 8.1 5.3 Olives 60.0 n.a. 71.5 14.9 52.4 11.2 16.7 114.4 7.4 Vegetables 121.0 148.3 177.7 240o2 237.1 350.9 398.6 532.9 494.5 Fruits 141.0 n.a. 56.5 81.9 83,7 101.1 87.1 147.3 158.0

1/ Sources: Survey Mission Report, Table 1, p,79. Statistical Yearbook of Ministry of Economy.

II. AREAS PLANTED (1959 = 100) 1954 1955 1956 1957 1958 1959 1960 1961 1962 Wheat 105 104 125 108 116 100 96 105 109 Barley 129 125 136 117 127 100 93 118 130 Maize 183 117 105 92 85 100 90 79 89 Vegetables 63 63 72 94 82 100 90 122 126 Fruits n.a. n.a. 85 88 95 100 104 111 112

III. AREA PLANTED WITH MAJOR CROPS

(In thousand dunums) 1959 1961 1962 Wheat 2,599 2,732 2,848 Barley 805 950 1,050 Maize 120 95 107 Tobacco 28 53 35 Tomatoes 153 1,123 210 Grapes 183 200 197 Bananas 10 9 9 Figs 81 80 81 Citrus 6 17 19 Olives n.a. n.a. n.a. TABLE 5 AGRICULTURAL PRODUCTION, AREA CULTIVATED AND RAINFALL

1955 1956 1957 1958 1959 1960 1961

Average rainfall Cm 25.3 44.8 42.7 32.2 30.0 19.3 36.4

Total non-irrigated cultivated area in '000 Ha 466 561 486 509 439 11 460

Production of dryland farming (in 4000.teW). 183.0 534.o 430.0 216.0 240.0 152.0 443.0

Yield Ton per Ha 0.39 0.95 0.88 0.42 0.55 0.37 0.97

Yield kg per Ha/cm rainfall 1 15 21 21 13 13 19 271/

Total irrigated area in '000 Ha. 27.5 33.5 44.1 38.3 4-3.6 44.4 48o0

Output on irrigated land in '000 ton 153 182 241 242 357 396 553

1/ Fluctuations of the yield in kg. per Ha/cm rainfall originate to some extent in the variations of drought-resistant crops, like olives, grapes and figs, for which the correlation between rainfall and output is considerably lower than for cereals. The high yield for 1961 is attributable, to a great extent, to the olive crop which, following a ra-vticular cycle, increased from 16.700T in 1960 to 114.400T in 1961. Table 6: A. RODUCTION & EXPORTS OF PHOSPHATES (1,000 tons)

1953 1954 195 1956 1957 1958 1959 1960 1961 1962

Production 40 75 164 208 262 294 338 3.62 423 681

EXports 40 b3 151 157 254 268 278 319 383 358

B. PRODUCTION & IMPORTS OF CEMENT (1,000 tons)

1954 1955 1956 1957 1958 i959 1960 1961 1962 - irst half year)

Production/ 86 97 106 106 114 110 165 223 235 imports t a - 5 60 102 53 18 30

1/ The production capacity of Jordan's only cement plant (legal monopoly) has trebled over the past seven years and will reach in 1963 with three furnaces 330,000 tons. Table 7 1960 MANPOWER

Agriculture 150,000 (excluding female labor) 1/ Public Administration 75,000- and Defense

Industrial Workers 22,000

Building ad Construction 18 ,000 Workers

Commerce and Services 14,600

279,600

1/ Government civil servants (including educational personnel but excluding local administration, Development Board, Central later Authority and the East Ghor Authority) were estimated in the budget to be 13,155 in 1960/61 and 15,605 in 1962/63; most of the increase occuring in educational and health services.

Source: Jordan Five-Year Development Program Table 8: PUBLIC FINANCE* (Jordan Fiscal Year April-M4arch) (JD million)

1955/56 1956/57 1957/58 1958/59 1959/60 1960/61 1961/62 1962/63 A. GOVERNMENT RECEIPTS 1963/64 1. Customs and Excises 3.4 3.50 4.21 4.32 5.52 5.56 5.21 6.oo n.a. 2. Taxes (1.61 1.48 1.64 1.52 1.82 2.07 2.46 2.50 n.a. of which Income Tax ( 0.52 0.55 0.67 0.74 0.82 0.92 0.93 3. Licenses 0.47 0.51 0.55 0.78 0.85 1.06 0.85 n.a. Fees 4. 1.55 1.53 1.66 1.60 2.06 1.18 2.09 2.00 n.a. 5. P.T.T. o.46 0.46 0.58 0.62 o.67 0.70 0.79 0.77 n.a. 6. State Domain 0.04 0.05 0.06 0.05 0.08 0.07 0.13 0.06 n.a. 7. Interest and Profits 0.43 0.53 0.69 0.73 0.71 0.91 1.05 1.06 n.a. 8. Loan Repayments 0.01 0.12 0.01 ------9. Miscellaneous 0.44 0.54 0.91 1.49 0.61 2.49 1.89 7.55 n.a. Total Domestic Revenue 7.98 8.68 10.27 10.88 12.25 13.83 14.68 20.79 J n.a. Budget Estimates 6,68 8.04 7.68 9.00 9.19 10.90 12.52 18.93 17.24 Under-estimate of actual receipts 1.30 0.64 2.59 1.88 3.06 2.93 2.16 1.85 B. FOREIGN ASSISTANCE Total of Grants and Loans 10.88 12.52 15.25 19.71 18.41 18.06 18.90 17.932/ 20.36 of whicht U.K. Grants 1/ 1J 1.00 2.00 2.00 2.37 1.50 1.50 U.K. Interest-free Loans 1.75 1.12 0.53 0.63 0.50 0.50 0.50 0.70 0.70 Kuwait Loans - - - - 0.11 0.362 2.44V 2.80 West German Loans ------0.45 0.90 Saudi ArabV Grants - 0.85 3.51 i.50 - - - - - Relief Ai' n.a. - 1.75 - 0.76 0.25 - -- U. S. Aid- n.a. n.a. n.a. 16.58 15.15 15.20 15.67 12.84V] 14.46 Total Public Revenue Domestic and Foreign 18.86 21.20 25.52 30.59 30.66 31.89 33.58 38.72 37.60 Table 8: PUBLIC FINA1FE* (Jordan Fiscal Year April-Miarch) (Cont.) (JD million) Budget 1955/56 1956/57- 1957/58 1958/59 1959/60 1960/61 1961/62 1962/63 1963/64 C, PUBLIC EXPDITURES Army 8.85 12.16 11,78 14.90 15.82 16.15 16.42 16.80 18.6o Security Forces 1.35 1.36 1.63 2.07 2.06 2.27 2.06 2.36 2.50 Education 1.27 1.19 1.62 2.57 2.60 2.61 3.04 3.22 3.52 Health 0.63 0.56 0.66 0.92 1.09 1.15 1.36 1.30 1.30 Other 2.77 2.99 3.87 3.06 4.39 4.68 5.17 7.21 8.15

Total Ordinary Expenditures 14.87 18.26 19.56 23.52 25.96 26.86 28.05 30.89 34.07 Total Extraordinary Expenditures 2.76 3.07 4.29 5.82 4.74 5.98 h.93 7.82 9.47

Total Expenditures 17.63 21.33 23.85 29.34 30.70 32.84 32.98 38.71 43.54 Bud get Estimate of Total Expenditures 19.56 25.65 29.88 35.44 39.30 35.22 33.57 39.24 43.54 Over-estimate of Expenditure 1.93 4.32 6.03 6.1o 8.60 2.38 0.59 0.53 -

Actual Deficit (-) or Surplus +1.23 -0.13 +1.67 +1.25 -0.04 -0.95 +0.60 0.01 -5.94- Figures for Jordan Fiscal Years 1955/56 to 1959/60 are closed account data. Figures for Jordan Fiscal Years 1960/61 and 1961/62 are preliminary actual data. For Jordan Fiscal Years 1962/63 only partial account data are available. Up to the termination of the Anglo-Jordan Treaty in 1956 the U.K. contributed for most of the cost of upkeep of Jordan army. In addition Britain reimbursed to Jordan the cost of pensions paid to servants of the former Mandatory Government in Palestine.

2/ Includes JD 3.57 received by Jordan for Tapline settlement, to be considered as an extraordinary receipt.

/ Drawings on the Kuwait loan of JD 1 million and JD 7.5 million respectively granted in 1961/62 and 1962/63. Table 8: PUBLIC FINANCEi (Jordan Fiscal Year April-March) (Cont.) (JD million) l/ Drawing on the German loan of JD 1.35 million for the Aqaba Port.

Not all relief assistance is reported in Jordan's public accounting data. The U.S. aid amount for 1962/63 does not include project aid.

6/ U.S. aid which constitutes over the past six years by far the major part of foreign assistance to Jordan does not include military aid, and only part of U.S. total aid in kind and technical assistance. Table 9

A N0NEY SUPPLY

JD million (end of year)

June 1955 1956 1957 1958 1959 1960 1961 1962 1963 a) Currency

Total issued 12.93 16.78 15.63 16.33 15.98 16.40 17.97 20.24 22.4o With Banks 1.80 2.22 0.92 1.17 0.71 1.00 1.19 1.02

Net in Circulation 11.13 14.56 14.71 151.6 15.27 15.63 16.97 19.05 21.38 b) Private Demand 6.36 5.68 7.49 9.17 8.97 10.46 11.95 14.43 15.93 deposits 1/

Total Money Supply 17.49 20.24 22.20 24.33 24.24 26.09 28.92 33.48 37.31 1/ Includes demand deposits of public institutions and foreign and international agencies.

B - FACTORS AFFECTING MONEY SUPPLY

Change in Money Supply +2.75 +1.96 +2.13 -0.09 +1.85 +2.83 +-.6 +3.83 influenced by:

Foreign Assets (increase+) +4.12 +0.93 +3.93 -0.47 +1.41 +2.91 +5.972/-0-.6 Increase in Bank Credit triate snBanreCto +1.16 +2.60 to private sector 1/ +0.22 +2.16 +3.63 +1.86 +2.41 +2.96

Government Deposits -2.85 -0.49 -1.20 -0.72 -1.89 -0.02 -2.81 +7.98 (- increase) Time deposits 1/ +0.37 -0.79 -0.13 -1.07 -0.17 -1.81 -2.89 -0.91 (- increase)

Ereors and omissions -0.05 -0.39 -0.69 +0.01 -1.13 -0.11 +1.88 -5.643/ 1/ Including time deposits of public entities and foreign institutions. 2/ The increase in foreign exchange reserves in 1962 is mainly due to a JD 3.57 million receipt from Tapline settlement. 3/ Mainly foreign liabilities which increased from JD 5.47 million at the end of 1962 to JD 11.40 million in June 1963. Also to be taken into account is the dollar account held by the Government which was not yet opened at the end of 1962 but amounted to the equivalent of JD 3.2 million ($9 million) at the end of June 1963. Table 10: BANKING STATISTICS (JD million tend of year)) June 30, 1956 1957 1958 1959 1960 1961 1962 1963 A. Private Deposits Demand 5.15 6.59 6.75 7.12 8.51 9.33 11.47 13.00 Time 2.53 3.24 3.34 3.96 4.25 5.61 8.29 8.58 Total 7.68 9.83 10.09 11.08 1.7 1i9 19.76 218 B. Public Deposits

1. Government 7.96 8.45 9.65 10.37 12.26 12.28 15.09 8.55 2. Other 0.45 0.76 2.47 2.32 2.43 3.53 4.26 4.42 Total 8.41 9.21 12.12 16 1 9 15.19 12.97 C. International Agencies 0.27 0.4o 0.25 0.27 0.14 0.16 0.22 0.42

Total Deposits 16.36 19.4 22.46 24.04 27.59 30.91 39.33 34.97 D. Bank Loans & Advances To Public Institutions and Government 0.63 0.68 0.77 0.76 0.94 0.58 0.73 2.33 To International Agencies 0.06 0.05 0.07 0.04 - - 0.03 - To Private Sector 1. Bills discounted 1.51 2.20 2.68 3.51 4.74 5.38 6.09 6.95 2. Loans & Advances 5.97 7.84 7.47 8.84 11.10 12.68 14.20 16.30 Total Private Sector 7.48 10.0 10.17 12.3 15.84 18. 20.29 23.25

Total Credits 8.17 10.77 10.99 13.15 16.78 18.64 21.05 25.58 E. Foreign Exchange Reserves With Currency Board 17.56 15.63 16.33 15.98 16.40 17.97 20.24 22.41 With Commercial Banks 8.36 11.17 14.40 14.28 14.27 16.08 20.31 14.37 With Government - - - - 1.00 0.53 - 3.21 Total Gross Reserves 25.92 26.80 30.73 30.26 31.67 34.58 40.55 39499 Fbreign Liabilities of Commercial Banks n-a. 3q48 6.39 5.94 5.45 7.01 7.47 11.40 Net Foreign Exchange Reserves n.a. 23.32 24.34 24.32 26.22 27.57 33.08 28.59 Table 11 DIRECTION OF FOREIGN TRADE (JD millions) 1957 1958 1959 1960 1961 1962 A. Imports Total 30.5 34.0 40.3 42.9 of which 41.9 45.6

from Western Europe 12.3 13.6 17.5 18.7 17.1 18.5 major suppliers: West Germany 2. 37 40 TF3. 4.0 United Kingdom 5.0 4.2 4.8 6.0 6.6 7.7 1.3 1.14 3.3 3.1 1.2 2.1 0.8 1.2 1.3 1.5 1.3 1.1

from Middle East 7.1 7.3 7.6 9.4 8,8 10.0 major suppliers: Syria 1.9 2., 3.0 2.7 2.1 2.3 Lebanon 1.6 1.2 1.7 2.2 1.8 2.9 Iran 0.1 0.2 0.8 0.3 0.14 0.1 Egyptian liegion U.A.R. 1.2 1.0 0.7 0.8 0.9 0.8 Saudi Arabia, 1.6 0.7 0.5 2.2 1.2 1.3

from U.S.A. 2.3 2.9 3.8 5.1 7.0 6.1 from Far East 2.1 2.0 2.7 2.6 3.1 3.7 major suppliers: Japan 1.3 1.4 1.7 1.5 1.7 2.3 Ceylon 0.6 0.4 0.5 0.5 0.3 0.4 from Eastern Europe 1.2 2.2 2.1 2.4 2.5 3.1 major suppliers: East Germany 0.1 0.3 0.7 0.1 0T 0 0.2 0.7 0.4 0.3 0.2 0.4 Czechoslovakia 0.5 0.9 0.5 0.3 0.5 0.4 1957 1958 1959 1960 1961 1962 B. 1) Exports Domestic Exports 43 3.1 3.1 3.5 4.3 4.9 of which to Middle East 3.2 2.2 2.0 2.1 2.7 3.4 major buyers: Syria 1.2 1.0 0.7 0.7 '.0.9 Lebanon 1.0 0.3 0.4 0.5 0.6 0.8 Saudi Arabia 0.3 0.3 0.3 0.3 0.14 0.4 Iraq 0.5 0.3 0.2 0.1 0.4 0.5 Kuwait 0.2 0.3 0.4 0.5 0.5 0.8 to Eastern Europe 0.7 0.7 1.0 1.0 1.1 0.5 major buyers: Yugoslavia 0.14 " 0.6 16 0.7 0.7 Czechoslovakia 0.3 0.3 0.2 0.2 0.3 - to 0.2 0.2 0.1 0.3 0.4 0.5 2) Re-exports 1.2 0.4 0.3 0.5 1.0 1.0 긔 Table 13: MPORTS

(JD millions) 1952 L 1961 1962 2955 1958 1959 Agricultural products 6.27 8.02 10.80 11.60 13.42 14.20 of which: wheat and flour 2,34 2,94 3.41 3,80 4.27 3.66 meat and animals 0,32 o..64 0*97 1.10 1.62 2.11 vegetables and fruits 0,68 0199 1.16 1,37 1,51 2,18 edible fats and oils 0.25 0018 0,53 0.55 Oo63 0.87 sugar o,95 1.20 1.70 1,37 2.31 108 -coffee., tea and spices 0,54 0187 o.85 0,88 1015 1,21 Textiles 2,53 2.87 3.38 4.07 5.52 6.c-)2 of which: cotton fibres 1.32 1,28 1.42 1,83 2.21 2.o8 Petroleum products 1.38 1,97 2.64 2.87 2.37 2.64 of which: benzine o.49 0*56 o.65 o.66 0.11 0.04 ,kerosine 0. .o 0,52 o , _54 0.58 0.28 0. 2 . fuel oil 0.30 o,49 0.92 1.07 o,63 0,53 Passenger cars and chassis o.18 o.47 o,,64 0.97 0.68 0191 -Agricultural Producer Goods o.16 0.37 0.46 o-59 o.65 0.90 of which: fertilizers 0.02 0,05 0.09 0.09 o.o8 0.13 tractors and parts 0.06 0,19 0,20 0.32 0.50 0.74 industrial Capital Goods 1.16 3.10 4.ol 4.84 4.9o 5.16 of which: -machinery.,exclusive of electrical machinery o.56 1.29 1.6,R 2 2*93 electrical 0,15 o,56 1.42 1,57 1.54 1084 Raw materials and semi-finished goods 3.*05 5.13 7.44 9.77 8.90 90"rao of -which: cement 0.56 0,05 o.4o 0.0/0 0.17 006ri lumber 0.50 o,42 o.54 0.73 0.79 0,93 iron and steel o.69 1.52 1.79 3.28 2.07 3.17 Others (mainly manufactured consumer goods) 2.6o .5-13 5.62 5.48 6.30 Total imports 17-33 27,o6 34.03 -)+-0,33 41,91 45.63 Source: Foreign Trade Statistics, Department of Statistics, Ariman. Breakdown partly derived from "Jordan?s foreign Trade., 1950-59"5 United States Operations Mission to Jordan. 긔 Table 15: EXTERNAL PUBLIC DEBT OF JORDAN

1. To United Kingdom

a) Interest free loans (Z 1000)

1950 867 15 amiual installments beginning 1956 1952/53 1.500 15 11 it If 1959160 1953/54 5oo 15 11 it 1960/61 1954/55 1.,6oo 15 If 1961/62 1955156 1.750 15 It it 1962/63 1956/57 lsl20 15 it it 1963/64 1957/58 530 10 it 1967/68 1.958/59 630 10 It 1968/69 1959/60 5(Do lo it it 1969/70 1960/61 5oo lo it 11 1970/71 1 61/62 500 10 it 1967/68 1962/63 700 10 It 1968/69 1963/64 700 10 1969/70 Total 11,097

Apart from the first t-v-o installments on the loan of 1949/50 (about JD 133 ,000 paid;in 1956 and 1957 respectively) no other installnents due have been paid, because the British Government has since then consistently agreed to postponem ent.

b) Other obligations to Great Britain

P 0.5 million obligation resulting from U.K.-Jordan financial agreement of 1951; to be settled in half yearly equal installments within 15 years, 0 starting from June 1954; interest rate 1%. U.K. Government has until now agreed to postponement of any settlement.

P 3.3 million obligation resulting from abrogation U.K.-Jordan Treaty in 1956. To be settled in 6 yearly equal installments, starting from 1958 (interest free). No installment has yet been paid., due to British approval f or postponement.

2. To Kuwait

1961 loan of 9 1 million at 4%., repayable over 15 years starting in 3.961/62. However, repayment of the first installment due in 1962 has been post-, polied until 8/1/1963,

1962 loan of -'r"47.5 million (R4 million for the Yarmouk project; f 3 million for the phosphates project and P 0.5 million for an Industrial Credit Corporation) at 3/0 to 4% and repayable over 10 years for the phosphates tranche and 20 years for the Yarmouk tranche, both starting from 1963. 3. West Germany

J.D. 1.35 million (Aqaba Port extension) at 3% repayable over 20 years starting from 1963. lie I*DeA*

2 million (JD 715.000) for Amman Water Supply, repayable over 40 years beginning in 1971.

Source: Rdnistry of Finance, Amman. Table 15a: SUTM4PRY OF EXTERNAL DEBT AS OF JUNE 30, 1963

(In thousa.nds of Jordan dinars)

Financial Agreement with U.K., 1951 500

U.K. Development loans 11,397

Termination of Jordanian-U.K. Treaty 3,300

Kuwait Loan - 1961 1,000

Kuwait Loan - 1962 7,500

German Loan - Aqaba Port 1,350

IDA Credit 1961 - Amman Water Supply 715

Total 25,762

Source: Ministry of Finance, Amman.

.*..... Table 16: GOVERNMENT PARTICIPATION IN INDUSTRY AND POWER

(in Jordan Dinars)

Authorized Government Name of Company Capital Participation

Jordan Petroleum Refinery Company, Ltd. 4,000,000 250,000

Jordan Cement Factories Company, Ltd. 2,000,000 990,000

Jordan Fisheries Company 100,000 15,757

Jordan Vegetable Oils Company 500,000 180,000

Jordan Hotels Company ." 500,000 200,000

Jordan Leather (Tannery) Company 400,000 100,000

Arab Potash Company 4,501,000 500,000

Jordan Phosphate Company 1,200,000 441,900

Central Electric Company (Zerka) 500,000 70,000

Jordan Cardboard Industries 500,000 15,000

Jordan Pharmaceutical Industries 150,000 5,000

Najim 1otor Company 250,000 40,000

The Jordaniaw- Airlines 1,000,000 50,000

The Ajloun Electrical Company 1,000,000 150,000

Holy Land Hotel Company n.a. n.a.

Total ,002657

Source: Ministry of National Economy and Jordan Development Board. Table 17; VOLUME OF CARGO HANDLED AT AQABA PORT

(1,000 Tons)

Petroleum Dry Cargo Exports Total Imports Products Inports (Phosphates)

1957 47.6 - 47.6 99.7 1958 272.4 66.8 205.6 137.8

1959 453.7 149.0 304.7 130.7

1960 461.3 150.0 (est.) 311.3 214.4

1961 420.7 60.2 360.5 281.0

1962 368.6 59.0 309.6 358.o

0 kS4

Table 181 INSTALLED CAPACITY AND FRODUCTION OF ELECTRICITY IN MAJOR TOWNS

19257. 1958 1959 1960 1961 1962 (Est.) Installd Pro- Installd Pro- Instal td Pro- Installd Pro- Installd Pro- Installd Pro- Capacity duction Capacity duction Capacity duction Capacity duction Capacity duction. Capacity duction (Kw) 1000 KWH (Kw) 1000 KWH (KW) 1000 KUH (KW) 1000 KlH (KW) 1000 KWH (KW) 1000 KWH

Amman 5,565 13,575 6,785 15,488 9,225 19,117 9,225 24,474 --194450 30,267 15,450 35,000

Zerka ------4,780 5,400 4,780 15,204 6,030 20,000

Jerusalem 1,830 2,963 1,830 5,393 2,880 6,623 2,880 6,864 5,165 8,070 5,165 10,000

Irbid - - - - - 1,800 - 2,000 - 2,000 3,000

Nablus 900 552 900 1,640 900 2,197 1,350 2,200 1,350 2,500 2,000 3,000

Hebron 110 - 110 - 110 - 360 800 360 1,900 n.a... n.a.

Jenin - - 200 99 200 205 200 275 200 300 n.a. n.a.

Aqaba ------1,075 515 1,075 1,440 1,0.75 1,600

Salt 100 300 250 696 400 892 400 900 400 990 n.a. n.a.

Total capacity Major Cities (in KW) 8,505 . 10,075 13,715 22,070 23,980 n.a.

Total Pro- duction (in 1000 KWH) 17,390 23, 316 29,034 41,428 59,771 73,)96