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Document of FILECOPY The WorldBank

FOR OFFICIAL USE ONLY Public Disclosure Authorized

ReportNo. P-1803-Jo

REPORTAND RECOMMENDATION

OF THE

PRESIDENT OF THE Public Disclosure Authorized

INTERNATIONAL DEVELOPMENT ASSOCIATION

TO THE

EXECUTIVE DIRECTORS

ON A

PROPOSED CREDIT

TO THE

Public Disclosure Authorized HASEEMITE KINGDOM OF JORDAN

FOR A

TOURISM PROJECT

Mav 25, 1976 Public Disclosure Authorized

This document has a restricted distributionand may be usd by recipientsonly in the performanceof their official duties. Its contentsmay not otherwise be disclosed without World Bank authorization. THE HASHEMITE KINGDOM OF JORDAN

TOURISM PROJECT

CURRENCY EQUIVALENTS

Currency Unit - Jordan Dinars (JD) Fil 1 - JD 0.001 JD 0.33 - US$1.00 JD 1.00 - US$3.03

WEIGHTS AND MEASURES EQUIVALENTS

1 meter (m) - 3.28 feet 1 square meter (m2) - 10.76 square feet 1 cubic meter (m3) - 35.29 cubic feet 1 kilogram (kg) - 2.205 pounds 1 metric ton (m ton) - 2,205 pounds 1 hectare (ha) - 2.47 acres 1 kilometer (km) - 0.62 miles

ACRONYMSAND ABBREVIATIONS

HRC - Hotels and Resthouses Corporation IDB - Industrial Development Bank ILO - International Labour Office MTA - Ministry of Tourism and Antiquities OAPEC - Organization of Arab Petroleum Exporting Countries UNDP - United Nations Development Programme UNESCO - United Nations Educational, Scientific and Cultural Organization USAID - United States Agency for International Development

FISCAL YEAR

January 1 to December 31 FOR OMCIuL USE ONLY

INTERNATIONAL DEVELOPMENT ASSOCIATION

REPORT AND RECOMMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT TO THE HASHEMITE KINGDOM OF JORDAN FOR A TOURISM PROJECT

1. I submit the following report and recommendation on a proposed credit in an amount in various currencies equivalent to US$6.0 million to the Hashemite Kingdom of Jordan on standard IDA terms, to help finance a tourism project.

PART I - THE ECONOMY

2. An economic mission visited Jordan in February 1976, and a Special Economic Report (1144-JO) is being distributed concurrently to the Executive Directors. Country data sheets are attached as Annex I.

3. The last decade has been an exceptionally difficult period for Jordan. The 1967 war with Israel resulted in a severe dislocation of economic activities with the occupation of the West Bank, which accounted for some 35-40 percent of domestic production, and in a large influx of displaced per- sons to the East Bank. The following years were marked by severe fighting with Israel in the Jordan Valley, the internal disturbances of 1970 and 1971, the closure of the Suez Canal for eight years, and of the Syrian and Iraqi borders for over a year, and four alternate years of drought. As a result, Jordan's (East Bank) per capita income in 1975, estimated at around US$590, is probably somewhat lower in real terms than it was in 1966, when more than a decade of sustained high levels of economic growth was disrupted by the war. Despite these serious constraints, the Government was able to prevent a substantial decline in the standards of living of the population, now estimated at some 2 million in the East Bank, and to progressively restore the effectiveness of public economic policies, and of the use of foreign resources, especially since 1971. As a result, the economy gradually recovered its pre- vious vitality.

4. Before the 1967 war, Jordan's real income grew at about 8 percent per year. Price stability prevailed, and high levels of foreign assistance permitted a sustained surplus in the balance of payments. Economic policy was guided by the objective of phasing out budget support by the mid-1970's so that foreign aid could be channeled exclusively to development projects. On the eve of the war, firm budgetary control and resource mobilization efforts appeared to be yielding positive results. In the immediate post-war period, large budget support payments under the Khartoum Agreement encouraged a rapid rise in military expenditures and somewhat lessened the pressures for strict budgetary discipline. The emphasis of economic policy shifted to the short-run aim of revitalizing the economy through high government expenditures; government policy also stressed the support and encouragement of the private sector and the maintenance of price stability by absorbing excess purchasing

I This document has a restricteddistribution 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-

power through easy access to imports. These policies shifted the burden of economic stability on to the balance of payments and profoundly altered the pattern of resource availability and use towards a greatly increased reliance on imports. By the early 1970's, the critical task of short-run economic management had been accomplished and, following the suspension of budget support from Libya and Kuwait in 1971, the Government began to focus once again on medium and long--termeconomic policies. Late in 1971, the Jordan Devel- opment Board was replaced by the National Planning Council, which was charged with reactivating economic p:Lanningand drawing up a Three-Year Plan for Eco- nomic Development (1973-75).

Recent Economic Events

5. As a result of particularly poor agricultural conditions, as well as slow growth in commerce and services in the wake of the October 1973 war, economic growth during the Three-Year Plan period (1973-75) averaged around 3 percent per year. Over the same period, the rate of inflation is thought to have exceeded 14 percent per year on average, compared to an average of about 5 percent per year during 1967-72, and under 2 percent per year for over a decade prior to that. With sustained high levels of public investment, which first exceeded private investment in 1974, the rate of capital formation increased from around 16 percent of GDP in 1966 to around 28 percent in 1975 (both at current prices). Public consumption expenditure has also grown faster than domestic production during this period. This has implied a very high reliance on imports, both to maintain the pace of aggregate expenditure growth and to curb inflationary pressures. As a result, the share of net imports in total available resources increased from 20 percent in 1966 to 30 percent in 1975.

6. Fiscal performance has been characterized in recent years by rapidly growing domestic revenues combined with sharp increases in current expenditures and capital outlays. The buoyancy in domestic revenues, which rose from about 16 percent of GDP prior to the 1967 war to over 25 percent in 1975, reflects increases in both tax and non-tax revenues (particularly receipts from phosphate export royalties). The relative share of direct taxes has increased in recent years (though still less than 16 percent of total tax receipts and only 10 percent of domestic revenues) primarily due to the expansion of the cor- porate tax base and greater collection efforts by the authorities. The rapid rise in current expenditures since 1971 has, to a significant extent, resulted from the pay increases granted to Government employees to compensate for the erosion in their real incomes due to the high inflation experienced in the last few years. The growth of non-defense current expenditures, which com- prised about 55 percent of current expenditures in 1975 compared to 36 percent in 1970-71, has in recent years been higher than that of defense expenditures. The current domestic deficit has remained fairly stable at about US$125 million in the last four years, while the overall deficit has grown substantial- ly. Increasing inflows of external grants (mostly from Arab countries) have mitigated the need for increased reliance on domestic borrowings. -3-

7. Despite growing export receipts, expansionary fiscal policies aimed at reviving the postwar economy and liberal trade policies coupled with peri- odic supply shortfalls due to a poor harvest led to a gradual widening of the trade deficit from a stable average level of around US$125 million prior to the 1967 war and immediately thereafter to over US$570 million in 1975. Exports of goods and non-factor services almost tripled during 1973-1975. Commodities leading this growth are phosphate and fruits. Tourism became again a major foreign exchange earner, accounting for 28 percent of exports of goods and non-factor services in 1975. On the other hand, imports of goods and non-factor services grew more than three times during the same period. The increase in capital goods imports was in particular significant as a result of the Three Year Plan investments. However, due to the sharp increase in budget support from Saudi Arabia and other Arab governments in the wake of the Rabat Conference and rising levels of workers' remittances, which exceeded commodity export receipts in 1975, the balance of payments was in surplus in 1975 (over US$150 million) for the fourth successive year.

8. On December 31, 1975, Jordan's external public debt amounted to US$560 million, of which US$330 million was disbursed (for comparison, 1975 GNP was US$1,100 million). The bulk of the debt is on extremely conces- sionary terms, with debt contracted during 1970-75 at 2.4 percent annual interest, and 25 years maturity with 6 years grace, on average. The ratio of debt service payments to exports of goods and non-factor services was 5.0 percent in 1975 and is expected to rise gradually but not exceed 10 percent by 1980. External reserves at end 1975 amounted to US$530 million gross, or US$486 million net, in comparison to merchandise imports of US$590 million in 1975.

Development Planning

9. The Three-Year Plan was the first Jordanian Plan to be executed without revision or interruption. The first eighteen months of the Plan, however, were spent on project formulation and preparation. Implementation, which did not get started until the middle of the Plan period, suffered from lack of adequate preparation, monitoring and follow-up, shortage of skilled and managerial manpower, as well as delays in equipment deliveries and rising costs, which necessitated updating of feasibility studies and reappraisal of project proposals. Consequently, the physical rate of implementation of the Plan projects was low, even though financial disbursements on projects were high. Nevertheless, the last few years saw the strong re-emergence of longer-term considerations of economic development in public policies, and with the considerable experience gained during this period, the stage was set for the promulgation of the Five Year Plan (1976-80).

10. The Five Year Plan has been drawn around a comprehensive list of investment projects which have been the subject of discussion in Jordan for a decade or more. Significantly, for the first time in Jordan, executing ministries were formally involved in the preparation of the plan; and a high- level ministerial committee deliberated on the setting of priorities. The - 4 -

fundamental objectives and strategy of the Plan are much the same as those prior to 1967, and are appropriate for Jordan. The long-term general development objective is to phase out the reliance of the economy on budget support, to concentrate investment on economically justifiable projects that can contribute to the growth of national income, and to allow increased taxation and exports. The Plan adopts annual average growth targets for GDP of 12 percent (agriculture, 7 percent; mining and manufacturing, 26.2 percent); merchandise exports, 24.2 percent; with imports curtailed to 7.3 percent (elas- ticity of 0.6 with respect to GNP). Total investments under the Plan are envisaged at JD 765 million(US$2.3 billion), equivalent to an estimated JD 650 million (US$2.0 billion) at constant 1975 prices, of which 65 percent is allocated to the public sector (including public investment in the mixed sector). On these assumptions and with the budget support payments envisaged at JD 60 million per year (US$180 million), the Plan estimates gross foreign borrowing requirements at JD 334 million (US$1.0 billion), of which JD 267 million (US$810 million) represents public borrowing, while most of the remaining JD 67 million (US$200 million) for the private sector is to be covered by loans and equity from foreign Arab investors.

11. The agricultural strategy proposed in the Five-Year Plan is based on a reassessment of the agricultural potential of the economy, and aims primarily at stabilizing agricultural production and raising productivity, by major investments in irrigation. It attaches primary emphasis to export- oriented production, particularly for the growing Middle Eastern markets, of high-value fruits and vegetables, where Jordan's comparative advantage lies.

12. The Plan's industrial strategy is to exploit the country's phosphate resources, as rapidly as possible, while encouraging exploration for other minerals; develop with active Government participation, an export- oriented mineral-based industrial sector (particularly fertilizer and cement); expand oil refining; and provide strong incentives to the private sector to develop manufacturing towards import-substitution in the short-run, and exports in the medium-term. To do this, the Government has committed a large part of the Five-Year Plan investment (around 30 percent) to the mining and manufacturing sector, and almost half the increase in domestic output projected in the Plan is expected from this sector. In encouraging industrial growth, the Government is conscious of promoting efficiency in resource al- location, and industrial incentives are being reviewed to eliminate excessive protection. In view of the emigration of Jordanian labor, the pressure on domestic wages, and the absence of a clear comparative advantage in labor-intensive production, the Government is increasingly adopting a cau- tious strategy of higher capital-intensity in industrial production.

Prospects for Economic Growth

13. With the Government's serious concern with development issues, and a purposeful effort to restore the momentum of economic growth prevailing in Jordan prior to the 1967 war, as evidenced in the preparation and adoption of the Five Year Plan and in efforts to strengthen planning institutions, there are good prospects for rapid economic growth in the medium-term, bar- ring adverse political developments. There is considerable Government concern about the provision of an appropriate policy framework for the success- ful implementation of Plan objectives and strategy. Even though the size of the investment program envisaged may tax the physical, human, administrative and financial resources of Jordan, the relative sectoral emphasis of the investment program seems well-placed and the bulk of the projects appear to be at an advanced state of preparation and of high priority.

14. While the JD 765 million is a target level of investment, the Government is aware that actual investment may be lower, for a variety of reasons. With low labor force participation rates, in addition to the high emigration rate of Jordanian labor to neighboring Arab countries in response to large wage differentials, the availability of manpower at all levels is likely to be a major constraint. Rapidly rising government expenditures, due to the size of the investment program, would exacerbate the already substantial inflationary pressures. To implement its investment program, Jordan would require substantial financial assistance. In this connection, a meeting of major donor countries has been called to present the objectives and requirements of the next Development Plan and will take place in Amman at the end of May 1976. Assuming that the borrowing includes a substantial portion of concessional aid as well as conventional loans, the debt service would not represent an excessive burden on the balance of payments.

PART II - BANK GROUP OPERATIONS

15. Jordan has received twelve IDA credits totalling US$59.8 million (net of cancellations). Four credits were made before 1967 - two for agricultural credit and two for water supply - and are fully disbursed. Subse- quently, war and local disturbances (see paragraph 3 above) adversely af- fected the pace of economic activity and Bank Group lending only resumed in mid-1971. IDA credits concentrated mainly on the financing of infrastructure projects such as education, highways, water supply, power and irrigation. Performance under these projects is generally satisfactory. An engineering credit of US$1.0 million to prepare a potash project was also provided in 1975. A first DFC project is being prepared for presentation to the Board of Directors before the end of the current fiscal year. IFC has made two investments in Jordan consisting of a US$244,000 equity participation and a US$1.6 million loan to Jordan Ceramic Industries Limited (JCI) in 1974, and also a US$3.1 million equity participation in the promotion of a phosphatic fertilizer project in 1975. Annex II contains a summary statement of IDA credits and IFC investments as of April 30, 1976, and notes on the execution of on-going projects. -6-

16. At the Government's request the Bank Group assisted since 1974 in formulating and mobilizing multilateral financing for a package of development projects in the Jordan Valley which have since been included in the current Five Year Plan (1976-1980). A large phosphate mining and integrated transport project is under preparation for Bank Group financing and is expected to be presented to the Executive Directors in the second half of 1976. Other large scale projects contemplated include projects in phosphate fertilizer and potash, as well as further development of the water resources in the Jordan Valley. Further Bank projects together with the establishment of industrial zones and supporting services for light manufacturing aim at reducing the concentration of economic activity in the Amman-Zerka area which is already suffering f-romovertaxing of its industrial infrastructure and severe pollution. Preparatory studies are also underway for projects in rainfed areas which would expand cereal and livestock production and reduce the country's dependence on agricultural imports.

17. The Bank was Executing Agency for a two-year UNDP Planning Assist- ance Project based in the National Planning Council which was completed in December 1975. The Bank is Executing Agency for a UNDP-financed study of the manufacturing industry and industrial estates in Jordan. The first phase, consisting of a study of the industrial sector, was completed in December 1975. The second phase, consisting of studies of specific industries and proposals for the establishment of industrial estates during the next Plan period, is expected to be completed by the second half of 1976.

18. At the end of 1975, the Bank Group's share in Jordan's external public debt was estimated at 13 percent, and its share in debt service was 1.4 percent. By 1980 the Bank Group's shares in debt outstanding and in debt service are expected to be about 3 percent and 4 percent respectively.

PART III - THE TOURISM SECTOR

19. Jordan is rich in archaeological treasures and the traditions of ancient peoples and religions. Prior to the 1967 war, tourism development was centered almost exclusively around Jerusalem. However, since the occupation of the West Bank, the focus of activity has shifted to the East Bank, including the capital city of Amman, which serves as a staging point for visits to the seaside resort of Aqaba, the ancient cities of Petra and Jerash, the Dead Sea area and the religious shrines of the West Bank.

20. While one immediate effect of the 1967 war was a general decline in the numbers of foreign visitors to the Middle East, Jordan was particularly hard hit because of' the loss of not only her best known tourist attractions but also of about 80 percent of her hotel accommodations. As a consequence, the number of foreign visitors declined by nearly 60 percent between 1966 and 1971 (from 617,000 to 257,000). Since 1971, however, there has been a substantial increase in arrivals and it is estimated that about 750,000 people -7- visited Jordan during 1975. By far the largest number of these visitors, nearly 80 percent, were on pilgrimages to Saudi Arabia or trips to religious shrines in the West Bank; they frequently stayed less then 24 hours in Jordan and while their numbers were large, their contribution to the economy in terms of foreign exchange revenues was relatively modest. Business and vacation travellers, who tended to stay longer and spend more, accounted for the remaining foreign visitors.

21. The country's hotel capacity has not kept pace with the growth of demand in spite of more than doubling since 1967 to 1,235 rooms. About 85 percent of the lodging establishments and two thirds of the total number of hotel rooms in Jordan are in private hands, while the remainder is either wholly or partially government-owned. To respond to the increased demand a number of hotels are under construction or being planned and it is estimated that by 1980 a total of over 3,600 rooms will exist, of which 3,500 will be located in either Amman or Aqaba.

22. Although the private sector carries primary responsibility for tourism facilities, the Government's Ministry of Tourism and Antiquities (MTA) plays an important role in overall planning and promotion of tourism sector growth by (a) development and implementation of tourism policies; (b) preparation of sector investment plans; (c) identification, protection and improvement of historical and archaeological assets; (d) advertising and promotional activities abroad; (e) planning and implementation of some infrastructure works in selected tourist areas; and (f) in conjunction with the Ministry of Education, development of training programs and facilities for workers engaged in tourism services.

23. The Government, in order to encourage private sector interest in tourism development, offers a number of investment incentives, including exemptions from customs duties and other customs levies, holidays on profits and property taxes, free transfer of profits, and repatriation of capital after two years from the date of commencement of operations. Investors also benefit from the availability of finance on attractive terms from both the Government's Industrial Development Bank (IDB), the most active institution in financing tourism projects, and private commercial banks. Interest rates range up to 9 percent for periods up to 12 years including 2 years of grace.

24. The Government may also invest directly in accommodation and catering facilities through its own Hotels and Resthouses Corporation (HRC), established in order to centralize Government investments in hotels and restaurants which, however, are independently managed and operated. HRC now concentrates on relatively small projects, but the Government is planning to strengthen its operations with the assistance of the ILO, UNDP, and the Swiss Government. Further support for the tourism sector from the Government is derived from investments in the transportation and utilities sectors.

25. One of the main difficulties to be overcome in the expansion of hotel accommodations in Jordan is the shortage of trained staff and experienced management personnel. The Government, with UNDP and ILO assistance, is - 8 - beginning to provide training for hotel employees. A Hotel Training Center, partly financed by UNDP and providing mainly basic-level short courses, is scheduled to begin operations this year and a Hotel Management School, financed in part by the Association under the Second Education Project (Credit 534-JO), is scheduled to begin operations in 1979. Because intensive or- ganized training efforts are only just beginning, the major burden of training employees will remain for the time being with hotel management. With some exceptions, this management is not well qualified to do the job properly and it is therefore probable that the lack of trained manpower will remain a limiting factor in tourism expansion for several years to come.

26. The economic importance of tourism results primarily from the level of net foreign exchange earnings generated by the sector. Since the 1967 war, gross foreign exchange receipts from tourism have grown from JD 4.6 million in 1968 to JD 32.2 million in 1975. This represented over 18 percent of total 1975 exports of goods and services, ranking second behind workers' remittances from abroad (30 percent) and ahead of phosphate exports (10 percent). Net foreign exchange earnings, after deducting imported goods and services, are estimated to be about 65 percent of gross receipts.

27. The projected expansion of hotel rooms and related facilities over the next several years will add a significant number of new jobs. At present, there are an estimated 5,000 people employed directly in the sector, and per- haps another 4,000 people employed indirectly in meeting demand generated by foreign visitors. By 1985 these figures are expected to grow to 18,000 and 15,000 respectively.

28. Given the growing importance of tourism to the economy, the Five Year Plan for 1976-1980 accords high priority to this sector, with total investment during the period projected at US$73.0 million, some 2/3 of which is expected to consist of private sector investments, mainly for hotel accommodation. Tourism development activities will be primarily directed towards business and vacation travellers who are expected to increase by an average of 15 percent annually over the Plan period, reaching a total of 336,000 in 1980. The main objectives of the tourism sector, as set forth in the Plan, are: (a) to increase tourism foreign exchange earnings in real terms from JD 17.3 million in 1974 to JD 42.0 million in 1980; (b) to stimulate domestic tourism; (c) to preserve historical and cultural assets; and (d) to expand training facilities.

PART IV - THE PROJECT

29. The most important of Jordan's tourist assets on the East Bank are located at Petra and Jerash and the proposed project would provide for the improvement and expansion of visitor facilities in each area and for the preservation of their historical assets. Petra, an ancient rockhewn city, was, - 9 - from the fourth century B.C. until its fall to Rome in 106 A.D., the capital city of the Nabataeans, whose power extended at times as far north as Damascus. It is located 250 km south of Amman, in the heart of a surrounding mountain and approachable only through a long, narrow chasm. Jerash, 50 km north of Amman, contains the ruins of a Roman provincial city of the Eastern Empire, which enjoyed its most concentrated period of development between the first century B.C. and the third century A.D.

30. Both these sites have been the subject of detailed planning studies carried out by the US National Park Service in 1968, and both have been recom- mended by UNESCO as Jordan's prime historical and archaeological sites in a report prepared in 1974. During 1975 an IDA mission visited Jordan to discuss the development of the tourism sector and the Government requested the Asso- ciation to assist with the development of its highest priority areas, Petra and Jerash. Appraisal of the project, which would be the first Bank Group tourism project in Jordan, was completed in February 1976. Negotiations were held in Washington in April 1976. The Jordanian delegation was led by Mr. G. Abu Jaber, Director of Tourism in MTA. A report entitled "Appraisal of the Tourism Project" (1069a-JO) is being distributed to the Executive Directors separately. Annex III contains a credit and project summary.

Project Description

31. The proposed project would support the Government's continuing efforts to develop the tourist attractions of the East Bank, while at the same time recognizing and taking into account the need to preserve and protect the antiquities which are currently endangered both by natural forces of erosion and by human activity. The project would consist of : (i) tourist accommodation, related superstructure facilities and supporting infrastructure works near the entrance to Petra; (ii) visitor facilities, infrastructure works and archaeological preservation in the Petra Basin, site of the major monuments of the city; also the resettlement of about 96 Bedouin families currently living in the Basin; (iii) visitor facilities (including a Sound and Light Program), infrastructure works and archaeological preservation at Jerash; and (iv) con- sultant services for a project unit, and on-the-job and overseas training for staff of the Antiquities Department of the MTA.

32. At the entrance to Petra, the accommodation facilities of the present 24-room hotel would be upgraded and an additional 76 new rooms constructed along with expanded catering, shopping, reception and administrative facilities and staff quarters, camp grounds and stables. Modest infrastructure works would be constructed consisting of water supply and sewerage systems, solid waste disposal, electricitiy and lighting, telecommunications facilities, landscaping and watershed protection. With respect to the water supply system the Government, independently of the proposed project, is already expanding the existing system in the nearby town of Wadi Musa and has agreed to complete this work by June 30, 1978 (Section 3.11 of-the draft Development Credit Agreement). The system would be extended, under the proposed project, to the Petra area. The electricity and telecommunications systems in Wadi Musa would be expanded and extended to serve the tourist facilities. - 10 -

33. In order to control erosion and prevent dangerous flooding resulting from the rapid runoff of rain water within the Petra Entrance and Petra Basin and in the Siq, the narrow, winding link between the two areas along which visitors must pass, a number of velocity check-dams would be constructed. In addition the floor surface of the Siq would be cleared and a drainage channel constructed to ensure all-weather access to and from the Basin.

34. Within itheBasin, the visitor facilities to be constructed would include a visitors reception center and first aid station, restrooms, a refresh- ment bar, and a covered terrace for luncheon service. A small research facility for archaeological investigation would be provided and trails would be developed leading from the Siq to the various monuments in the Basin. The project would also provide a number of supporting infrastructure works, including improved water supply and sewerage systems, and electricity and tele- phone connections from the Entrance to the Basin. An existing unsightly visitors camp would be removed no later than January 1, 1979 to preserve the visual impact of itheBasin (Section 3.10 of the draft Development Credit Agreement).

35. One important project component concerns the resettlement of approximately 96 Bedouin families now living within the Petra Basin. These families have walled up the entrances of tombs which they use for living quarters and have been engaged in excavating and selling artifacts. The Government decided some two years ago that in the interest of preserving the archaeological heritage of the Basin, it would be necessary to relocate these families. The project includes lprovision for housing and other community facilities on land near Wadi Musa to be provided by the Government which agreed to give the relocated families priority in the employment created by the project. The Government also agreed to undertake a program of occupational assistance for the Bedouins (Section 3.09 of the draft Development Credit Agreement).

36. In Jerash, the visitor facilities to be provided would cater primarily for the day traveller from Amman and would include improvements to the visitor center, a restaurant, a small museum located in vaults under the Temple of Artemis, and parking facilities. A Sound and Light Program would be developed in several languages together with outdoor seating capacity for about 500 visitors and various administrative facilities. Measures for the protection of the monuments would include the installation of fencing and gates and the construction of trails. The project would also provide for minor water supply installations and connections.

37. In addition to the project components designed to accommodate the expected increase in visitors, the proposed project sets forth a 4 year program of archaeological preservation in the Petra Basin and Jerash sites. Detailed regulations would be issued for the project sites under the Law of Antiquities enacted in January 1976 which provides an adequate framework for the protection of antiquities (Section 3.08 of the draft Development Credit Agreement). - 11 -

38. Project administration costs and the costs of on-the-job and overseas training amounting to 54 man-months for staff of the Antiquities Depart- ment of the MTA are also included in the proposed project.

Project Implementation

39. Responsibility for implementation of the proposed project, with the exception of certain utilities components noted below, would rest with the MTA. To ensure proper implementation of the project including supervision of design and construction workwa Project Unit would be established within the MTA reporting directly to the Minister of Tourism and Antiquities. The Unit would be led by a Project Director who has been appointed and attended negotiations and would include an engineer, an architect, an accountant and a procurement officer; it would be assisted on a consulting basis by archaeological experts, specialists in park service management and a museologist. In order to coordinate the efforts of other Government departments and agencies involved, a Project Coordinating Committee would be established under the chair- manship of the Minister of Tourism. The MTA and the National Planning Council would be permanently represented while representatives of the other departments and agencies would be members for such periods of time as their respec- tive departments or agencies are involved in project execution (Section 3.06 and Schedule 4 of the draft Development Credit Agreement). Appointment of members to the Project Unit would be a condition of effectiveness of the credit (Section 6.01 of the draft Development Credit Agreement).

40. At Petra, the telecommunications system would be installed and operated by the Telecommunications Corporation. The water supply works would be constructed by MTA with the assistance of the Municipality of Wadi Musa and the Public Water Supply Corporation, which already operates the Wadi Musa system and would incorporate this extension into its operations. The Minis- try of Municipalities and Rural Affairs would be responsible for the electric power component (Section 3.01 of the draft Development Credit Agreement).

41. Under the guidance of a special Government committee consisting of the Ministers of Tourism and Antiquities, Interior, and Municipalities and Rural Affairs, the Project Unit would carry out the Bedouin resettlement (Sec- tion 3.09 of the draft Development Credit Agreement). It would be assisted by the Jordan Housing Corporation in the preparation of a site study, design of the various houses and facilities to be provided and supervision of their execution.

42. Following development by MTA of the hotel complex at Petra Entrance and the restaurants in Petra Basin and Jerash, MTA would hire an experienced hotel management company to manage these facilities on terms and conditions acceptable to the Association (Section 4.03 of the draft Development Credit Agreement).

43. The appointment of consultants to prepare the design and supervise the execution of project facilities and related infrastructure of the Petra Entrance, Petra Basin and Jerash components would be a condition of effectiveness of the credit (Section 6.01 of the draft Development Credit Agreement). - 12 -

The Project Unit would prepare and periodically review a critical path chart, and would submit the results of such reviews to the Association (Section 3.07 of the draft Development Credit Agreement). The Project is expected to be implemented over a 4-year period with construction of most of the facilities completed in the first three years.

Cost Estimates and Financing

44. The total cost of the project is estimated at US$12.1 million equivalent with a foreign exchange component of US$6.5 million equivalent (54 percent). Cost estimates (including contingencies) and the financing plan for the proposed project are shown in Annex III and are summarized below:

(US$ million equivalent)

Financing Component Estimated Cost IDA Credit Government

Petra Entrance and Hotel 5.826 2.859 2.967 Petra Basin 2.797 1.502 1.295 Jerash 2.530 1.244 1.286 Project Administration 0.270 - 0.270 Professional Services 0.534 0.250 0.284 Technical Assistance and Training 0.188 0.145 0.043

Totals 12.145 6.000 6.145

The estimated cost figures include physical contingencies of 15 percent for civil works and equipment,which is considered reasonable since most design work and specifications for equipment have already been prepared,and price contingencies averaging 15 percent p.a. during 1976 and 1977, and 10 percent p.a. thereafter.

45. The proposed IDA credit of US$6.0 million would cover approximately 50 percent of the total project costs and about 92 percent of the project's foreign exchange component. The balance of total project costs would be provided by the Govermnent. The Government contribution and the proceeds of the IDA credit required for all project components including the power and telecommunications components would be made available as budgetary allocations to the appropriate Govesrnment agencies. Operating surpluses resulting from the collection of entry fees and other charges, and the revenues from the hotel and restaurant faciLities would be turned over to the Treasury.

46. Part of the expenditures for professional services, for the cost of final design and engineering for the Petra hotel complex and related infrastructure works and the Sound and Light facilities, would be financed retro- actively. This retroactive financing would cover expenditures incurred after March 1, 1976 up to a maximum of US$150,000 (Schedule 1, paragraph 4 of the draft Development Credit Agreement). - 13 -

Procurement and Disbursement

47. Major civil works and equipment contracts would be awarded on the basis of international competitive bidding, in accordance with the Bank Group's guidelines. Project items would be grouped to the extent possible, in order to encourage such competitive bidding, but bidders would also be able to bid on individual items. In evaluating international bids for equipment and furniture, local manufacturers would be allowed a preferential margin of 15 percent of the c.i.f. price of competing imports or the prevailing level of customs duties, whichever is lower. Some furniture contracts are likely to be awarded to local manufacturers and most equipment contracts to foreign suppliers. Some civil works and furniture and equipment contracts (e.g. site museum, stables and camp grounds) would probably be too small to attract foreign bids. These contracts, each not to exceed US$65,000 in value, would be awarded according to local procedures acceptable to the Association. The total value of such contracts would not exceed US$400,000 equivalent. Since the switching equipment under the telecommunications component of the project should be compatible with the rest of Jordan's network in order to permit interconnections, procurement of this equipment, valued at US$200,000, would either be added to a current contract for the supply of such equipment or negotiated separately with suppliers of such equipment.

48. The MTA would carry out, on force account, certain works, such as the archaeological work in both areas and work too specialized for civil works contractors, and the development of trails, trail markers, fencing, and relatively minor landscaping, for which it would not be appropriate to prepare detailed designs for purposes of tender documents. The total value of work to be carried out on force account would not exceed US$900,000 equivalent.

49. The proposed credit of US$6.0 million would be disbursed to meet: (a) 35 percent of total expenditures for civil works; (b) 100 percent of the c.i.f. price of directly imported equipment and furniture or 100 percent of the ex-factory cost of locally manufactured equipment and furniture procured under international competitive bidding, or 40 percent of the total cost of locally procured items; and (c) 100 percent of the foreign exchange costs of professional services, technical assistance, specialists and overseas training for the MTA staff members.

Justification

50. It is expected that the development of the tourist facilities at Petra and Jerash will begin to attract increasing numbers of visitors from 1979 on. Without the project, visitors to the two areas have been projected to increase annually at an average of 13.5 percent between 1975-85. With the project, visitors to Jerash are expected to increase by 15 percent annually over the same period and to Petra by 18 percent annually. Jerash, which is readily accessible from Amman for day trips is projected to receive 180,000 day visitors by 1980 and 337,000 by 1985, while Petra, located at a greater - 14 - distance from Amman and therefore more limited in its appeal to short-stay visitors, is expected to receive 94,000 visitors in 1980 and 218,000 in 1985. Of importance is the expenditures of visitors who would come to Jordan even without the project but who, as a result of the project developments, would spend increased amounts.

51. On the basis of an estimated economic life of the project of 25 years, the economic rate of return would be 30.3 percent on investments of US$6.8 million in Petra and 16.9 percent on investments of US$2.1 million in Jerash yielding a combined rate of return of 20.1 percent on total project investments. The possibility of increased tension in the Middle East, which would reduce the flow of tourists to Jordan, is seen as the main risk affect- ing the project's economic viability. The project has been scaled to mini- mize the effects of the risk and yet permit viable operations. Thus, a 20 percent decrease in visitor arrivals, for example, is projected to reduce the overall rate of return to 15.1 percent. Hotels, restaurants and sound and light activities are expected to generate about 70 percent of the project's gross benefits and 50 percent of the net benefits; entrance fees 20 percent and 40 percent of the gross and net benefits respectively, and other activities 10 percent of both gross and net benefits.

52. The project's revenues would be derived mainly by the MTA, through the introduction of entry and other fees for both sites and from the net income from the hotel and restaurant operations. With respect to the operation of services, MTA is expected to achieve a combined internal financial rate of return of 18.6 percent. With respect to its hotel and restaurants operations MTA is projected to earn a rate of return of 9.9 percent on the Petra operations and 23.7 percent on the operations at Jerash. The Government agreed to establish and review periodically the rates and fees to be charged. These rates and fees would be set at levels that would maximize returns on the project's investments (Sections 4.02 and 4.03 of the draft Development Credit Agreement).

53. The proposed project is expected to increase annual net foreign exchange receipts by about US$1.5 million in 1979 and by about US$4.8 million from 1988 onwards. The Government, as the owner and the operator of most of the facilities to be built under the project, is expected to capture about 85 percent of the project's net benefits; while about 5 percent would go to the hotel and restaurant management company and the rest to souvenir sellers and shop owners. Direct employment generated by the project facilities would amount to 560 jobs while indirect employment in agriculture, handicrafts, transportation and other services is expected to account for an additional 600 jobs. - 15 -

PART V - LEGAL INSTRUMENTS AND AUTHORITY

54. The draft Development Credit Agreement between the Hashemite King- dom of Jordan and the Association, the Recommendation of the Committee provided for in Article V, Section 1 (d) of the Articles of Agreement, and the text of a draft Resolution approving the proposed Credit are being distributed to the Executive Directors separately.

55. Features of the draft Development Credit Agreement of special interest are referred to in paragraphs 32, 34, 35, 37, 39 through 43, 46 and 52 of this Report. The establishment of the Project Unit, the appointment to it of the expert staff referred to in paragraph 39 of this Report and the appointment of consultants referred to in paragraph 43 of this Report are specified in Sections 6.01(a), (b) and (c) of the draft Development Credit Agree- ment as additional conditions of effectiveness of the proposed Credit.

56. I am satisfied that the proposed development credit would comply with the Articles of Agreement of the Association.

PART VI - RECOMMENDATION

57. I recommend that the Executive Directors approve the proposed development credit.

Robert S. McNamara President by J. Burke Knapp

Attachments Washington D.C. May 25, 1976 RaeI of 4 pow TAU.EU - UCIII. ZUKcAltOS DATASWEET LANS83(6 (TUSO ~~(It) ~ ~ ~ ~ RrEcuE outiit ( * TOTAl. ~~~~~~~a.: MO~~NstRECENT cmGO 411A9LE .. 1900 1974 ESTIMATE ft?!8 P. TUNISIA LE" WN0N

UMP PERt CAPItA CUSS) 19 0.0 328.0 344.0 f. 320.0 r00.4

POPIILATIO%AND VITAL STATISTICS PO,uAI.axu (141OVR. NILLtOU) 1.7 2.Z.1 14 .1 2.? OPUPILATIOUGCNSIIY 30 3.

P'CR SQUAll KN. ARASLELAJS .. .. 51.

VITAL STATISTICS CRUCE 8iRTfN RATECPit THOUANO 41. a 490 4. 44:4 39. 41.4 cRuOc GeAYM RtiTE PER TISOUANO 10.0: 7" 1.8 It.4 I34 a. 13.0 WNANT M00TALITY RATE C/ThOU) .. .. 100.a 82.0 LIFE EXPECTAUC?T g1StIR (735) S2.A.j0. S1.4 414 84 10.* GROSSRCPR0GDCTIOu RATE 3.4 3.1 3.5 z.a . 1. 9 OPOPULArtOXGROWTH RtATE (23 tOTAL 2.4 3.1 3.3 2.4 2.1 2.5 JoASA 5.4 .. 3.2 1.4 2.4 .0.

uhga. POPiL&riom C: of t0alLi 44.4 .. 43.4 18.0 40.0 Li S8.0 AGE stRUCTURE (PERCENT) 0 TO 14 YEARS f*i.4 lb.' 47.5 '2.41 40.4 'a 43.4 15 TO 04 1!ARS S1.0 49. 57b 49.5 53.0 104.3 'a 52.4 05 YEARS AUG OVER 4.4 .3. /b 1.0 5.0 .0. la S.0

AGE OEPrNOENCYRATtO 1.4 1.0 /b 1 .0 0.9 t.0 'a 0.9 ECOVOMICOEPENGENCY RATtO Z.3 3.2 7c- 2.3 /a L31.8 ' L.8 FAMtLY PLANNING- ACCEPTORS(CUNJLAFtIVE THOU) .. t..08.0 8?.4 JSERtS(X Jf NARRICO WOMEN4) . . 1.MO. 14.0

Empi.Ot RENT

TOTAL 1.A80* FORCE (tMtOUSAAO) 190.4 /b 380*.0 /4 340. a SZ.4a 1444.0 ¶70.4 LABOR FORCE IN AGRICULTURE CZ) 15.4 lb 29. 4 ib d 5S4' 17.0 19.4 UNEMPLOYED CZ or LA40O3 FORCE) ?.0 7lb 8.0 7b4- t..4.0 71 0.4

INCOME OtSTRISUTION

Z 27 PRI1VAT--INCROMERECOO 0Y- HIGM07T 31 Of POPULATION .. .. 23.5 '4 2.4 ' HIlGIEST 241 Or POPULATION . . 1S.5.5 7'd $55.0 LOWEST 201 Or POPULATION .. .. 4.2 ',d 4. ' LOVES? 441 Or POPULATION . .. 11.4 '-4 11.4 0 OtSMRIUTtON 3r LANO OWNERSHIP

Z OWN"EDST top 102 or OWNERS .. M..3O 57.0 lb Z OUNC331 SAALLEST 101 OWNERS . ... 0. 5 1.4 Lk HEALTH ANG NUTRtTt3N

POPUJLATIONA'-R PHYICICAN 5900.0 Ic 2080o.0 2504.0 72110.0 5910.4- t14740 POPUJLATtONPER NtURSINGPERSON 194o 7dL50.0 1020.4 670.0 71 a. I.105.4 IC POPULATIONPER HOSPtTAL 310 680.0 90. a 910.4 t oL 410.to477 260.4 PER CAPITA SUPPLY af CALORIES (Z OF RE0UtREHENTS) 90.0 94.4 99.0 97.0 81.4 30.4 PROTEIN (GRAMS PER OATf) S7.43 60.0 01.0 40.4 i50. 7e0. -Of WHICH ANIMAL AND PULSE 16.0 18.0 I .23.0/c 14.0 LI 11.4

DEATH RATIE MNTOU) AGES 1-4 .. .4 Li ..... 4

EDUCAT IOM AUJUSIEO ENROLLMENTRAT10 PRIMARY SCmoo. 70.0 /f 70.4 lb I . 183.0 10?.0 111.0 '4 SECOINOAPTSCHO4L Z4.0 77f 30.4 = .. 1.4 MD. 40.0 77: YEARS OF SOHIOOLIHOPROVIDED (FIRST AND SEC3ON LEVEL) 12.0 12.0 12.4 13.4 13.4 12.4 VOCATIONALCRMROLLMNET CI or SEcOOMOAnv)S 1.4 /f 1.0 lb.f I1. b.c 14.:4 3404 1. aid ADULT LITERACY RATE (Z3 32.0 7 t02.00 .. /0.4 s18014 69.0 Es HOUSING

PERSUONS PER ROOM (AVERAGE) . ... 2.7 la 2.1 OCCUPIED OWELLINGS WITHOGUT PIPED 941:3 (1 79.4 lb ..... 60.0 Is 30.4 ACCESS TO ELCCTRICITY (Z OF ALL DVELLING3) 17.0 .... 24.0 /a 98.4 RURAL OVELLtNQS CONNECTED tO ELECTMIRCXTY (Z) 1.43.

CONSUMOPTIOIN 360O10 RECEIVERS (PER THOU POP) 38.0 100.4 203.0 69.0 77.0 215.0 PASSEMGERCARS (PER THOU "PsP 4.4 7.0 6.0 .. 13.4 58. ELEClttICITY (KCNH/YRPER CAP) 19.0 71.0 101.0 8t:4 155.0 441.4 NECWSPRINT (50/Y* PER CAP) 4.2 0.3 0.03 - .0.1 1.7

SEE lO0fES AND OEFtXtTIONS ON1 page 2 O%m.a Ia mmmi, dta (. 160 Vegas to .959.41l, far 1970, to l%9&.71-7 fa nt ha% B%int. to 1n73. a Pa. impagM ss amd_ fotes 'At jade., t Of Sb. fIgM_ far 1960 em tim lb. 1%1 Cos figma fa I0 d tYA IfOAt lAttimrt. ce motly fim tba 3971 hemosilmlseqw (amt %,) lbhis probably' MaoecuWeee.t. fasmia fault" ea rafoggee. 'A l, imN-bbeo- solasta -s 411eb4aoiv. oin boMo. VA~JordwAm Gseqom.t dA to - -- a per aimpta 1mom about equal to tbo piOU 1.y.2.n la Lobo sea the ame too psin, Mb bmas It" med olIrlie _rmtimn in tb. tw emtole. a. Sililar.

1959431 Ma/b ftw I_ywe and ten 4 1962# 4 Zsamiusg mdslwo; a boLado rar hoptiala wev7 } 8 1959S63Inlloat h Ptmul a Jkled mm 1S el: d at 1MU a1Sx

1966; & tit &ob atio o pislat0a under 15 ub 65 ed ea to I farm a e 12-59 YGarS4 12.59 yee 4L I96 6iL sleltu mm Aebmls. X f hRati of population etdw 15 a 65 a ead to total lao fore.; api a; MO& schools, r 1971 th wo 13,20 svaotA earalad Lin geal edasatim mad ialaO vmotlml .A U I &ed sad rite, 12 ,ee and mrasi I.A s,weT y I tU*t. Ifia 7y

PmM nUp I. Z ?s*a papalatima in mge 13s-59kamrt a 1967; / d 19666 4A 2966. 'DU za2j 19 hatle cot paplatm ad 15 and 65 ad aer to total labw f(ree; & heAS oly U romiplmt; 1g hroei in #oAr mt soiY_5 manl If Oa.ot boml Wmaman l 1% .

!mist 41 Rreomal .apmb1ae tmm of Ba,ebaa.n atekirta; At 1966; Ic totLig m_ant mat mid sid"v. a bobu.sg 26 Percent of privet macole; 4571.OWp and ~r, ro" ad alite. M *obaaz20, 1976

s0rzm Or MM RMEME 2 - . Po elatlt dLvided by e of pracicg aea -* coopotsg lAnd aM a4 ilMud usta.s. IXeGndRIPHdsate twaIn, 'trazad' or 'Certif"ed' nurta, and of LTd area usad tan-orarly a permasotly aunId.Uaz p*rsomnail it&h trainitg or epriance. erit ¢ulkitche pgasdms on Its faillow. l bed Povulation di-rid-d by nader of hospital beds so: M= andprivate 119oaral In i.J.ad bospital. and -l r2IP pa capita eatmie. at aske` rICeS, "al"s- r abilitatlm casitere; aenludee mwsing hows mod escabl±samnc :or ",A fti 841etorn mtwd ads trld Bnak Atl" (LM2-74 beasi). custodiAl and zrewtive car. Per civila octuly of caLories of rcrulreo.ents) - larpted from energ7 equxT"lent ar%fife fo t ipllo L7L -c.dt onttOt7 per zapiza cer ia7; M£on.;, :=FA of july fIrst; if Mt callable, aV114" available supple comrse dkwtic : onOr., la3s :spoMrA, or ewo nderew tMted. and chsge in stock; not supplies excludo tinal food, 3eeds, quantt- tie usad in tood processing and lose.. on distribtion; requLrmts Mjtton d iy - oer sonar. ba M4dya polAtin p square dla- I c o. tni;td by FADOhasd on p#oislogical needs for normA. activity --ir1C tecoae) oi total o.. and health cesidring ntvrontetl tasPersaure, bo*' w±itAi, ae and Peoulatton Ams±t'y oar otos no arable aid - Cmuted as aOroe for sea dlstrdtbuionx of populaion, and e11aming 10% for wet. at boueenold -fOi .ad oniJ'. levL Percaiboieslyof rotin nesscar day) - Protein content of per~ Pital 7italstatstic*tattsties thouand* dwallivIbittoperMhosan ofodd r ot rffd(rd ood I-IL daPI;;rre7tr.od net supp.L7 of food is definedd Dt as C _d- _--_ "ritdrrtt_ nd - b1rtl_ pert*nd of above; raqufreme for aLL contrits es taolisted by IL 5cecc 7er population; Val fIve-ye avairagee eing in 5160, 1970 ncl Reosarch Sarerce. provide for a -4-o- allowance of 60 gera of total 1975 for devlcpig coutries. protaIn per day, nd 20 Cru of ani1 and pulas protin, of 4tici 10 I2dd death rat. o* tlousand - Asnale iathe p.o. t2ionand of mid-rear raw ahoold Sbe -a4-1 ,rotedn; the" standards ar lower than those of popuation unalj' ft e-yar* ,averas aidig In 1960, 1970 and 1975 75 Pont of total protein aod 23 grm of amma protein an an ave for developing comtrle. ftor th world, proposed by ?AD in the Thrdd =r1d food Swee. r.tsnt - morzlLeat ofof ' Infthou)1:ants onder ome yer }a Feto' f oul1d - P plyre of food R2im ! -t< ir brths. 'dWc1 .rc sanli eDd% an> pa r day '!tmm at '3$r_j';trq* iva.ap ner of eamrsof life emin- D- mAa deths per thowsand In a"e gm" 1-4 M *gtlbfrthFThihefljfiSi yeau aVagee andIng in 1961% 1970 and 7yea Ea cad age gr4p p; seueetd as e indlWator of .l- 1975 far devloeing coestioo. antritAm. IroJs !sw itmn rate - Avrsa trade of live Jaghter a metl win ba f ar .orm- ro troadtivepSal irf she epraaes petst age- Ldonl pofina fertilty ratel wiually fti-yes avasgas ding In 1960, e nro ratio- - 2woIw of -IL ageb an par- fl70 en for d97delopi curis. cntsu or pr ni- p ti il chbl.l* aged 6-U Lo ton rtst- total - Cm ad _a1 grth ratts of amdJ- yeart btt ad3usted for dilffert 1angeb of pr imy eAdatlan; for cum- year p0tD _SSO, 'or0-7t¢, and 1960 to "Mt recot yar. tries dtth iversal eastic, enroll th myoed 1.20%st ,ms 0100 -ate n cohputd like -r- th rat, of total ppil ae balov or abo the official sebool ae. i- on; ezorant iti of urbwn are" m affect coepr- Adjud olmt rSto - saondrL slcool - Ceputad as abae; second- bility of data o countrtie. 4 meducatlm requuw at -lst r yean of aproved priwAy irfftrs- Irban orolation (t of total) - Ratio f' urban to total population; dtf- tion; Worldow a ger rlt, obatIooal or teachr training LartrustlOi fbr fermi afio.itiano of orbrc- as*aaa my at ffct ceeoarahility of data- cuplin of 12 to 177yers of age; ccrre_epdeso com ae ga amg couttries. A% ser.=r- * uad (-li ps), torkug-Ing-age (l5-7 yeuyes), Tears of Schoolf odd (Irst and eownd 3 - Teotal yar. of lt ii17 71y years aad ovr) as prcertages of ld-er plat. soolg at seonea lel, ocotiomanhtra.im nV be p i io - Ratio of population *Uer 15 and 65 and over to or compltely Ixcded. ibnsa6f yMAa lS ragnh eo. 7ocational snrollnt (it of sacond) - 7oraetaml in tstAtainwinclude '3eenca7t -AA%iOrsrto - Aatio Of opulAtion under 15 aid 65 and o. -- clrL, LtsLor oter pogram eidch eopato ndApenMAtly Or Mo- ,aMFr _orc-m 2ss truop ofr 1S-6t 7ears. as dapwrmatu of seondary ititutlms. .amilyclstdSl - accotors (cunlat±ve. o - C)ulative Ad eS ft Adolt M - Litrwatet alltv (ails to red end rite) as pe- acceptro of birth-ontrol UTices widE acsaise of national fmAly c' fp orItati7 adult poputon aged 15 year and over. puanning progra since inception. - Aily on" osr( f td -an . Perataga of malrried wom fchld3-rngag (wh5 yri' ottCuse hirth-cantrol. d_e Mt- w row (amm . r ; of t te gr r z a vces soall irrtid *m n s_ age v up. c t c i *rb r d_llingms 1 m- ut stzmatwes and uniccapied parts. 731DMglUlt OCD-inid didl ln- t t7 Jtd 2t 7tz7 7 - Occpwid cormtiwoal dmell- Toxa labor f'rce (tboulmand) - 7!omica 217 ctiwU p;a7ns, including ings i u Mnam rural aasi t inside or outsid piped ete arad forcas and np bt mldla h ewive, stun, faciitie. asste.; prentae ofaf all occupi e dtfinitions in various contiae are not comsarable. Accews to olectrtcitv (S of ill daallncv) - Convettional. a1Us with tabor fons in a triclture (t) - Agricultura labor fain. (in farming 0 e tltrMct in quarscvtg as preGnt of total d7al1Ings IAnurban :orestry, rtonnc)nand .>3g) "A percentage of total labor force. and rural area. oricr) S enolorfd are usca.L.rddsflned as p- Rrl d is onecrtd to lectrict (i) - C tedt as aboe for rural sonsbwn7 areu ab"Le nd Ii to tae Allob, out of a job on a given Odnc day, rmiand out of a Job, and si7cilg work for a specified 7Ini7 period not ceeding one weak; :t not be conparekia betm com- o on WrIe do to different dufnnitions of unamplored and sn,-t of data, F' do ic!ier (anr hotpc - All type of recaiverAt ibr radio broad- e.g., aloysat office statistics, ocaa survys, co Lsory on- cssts7to r b.i per thusand of populAtion; miclude. '.inmsed ploytmot inswasrae. r7ceitos in countr.ie and ins years wo rmegcistracio of -a- sate we in affect; dat.a for recent year MW not be coptrable stone sat ogm- ocee distributio n - 'rautage of prtvete tncm (both in cash snd trIA abrl rbeedlicenslng. .1nd)received by rie5st SS, rtheat 20%, pCoret 20%, end pooroet (ow 2u - notengar cam corise motor cars seang ±04 of population. 1 t P I IU ula eS, borf and JILtrU

'itribution of lend swarshi) - Pezantage of land Owned by vealtht_t % ( nor can) - Annual cormtion of idtril, eom oal, t.oP and poores .O5 of la1n owmrs. p?tvaoeoactraldty in kllowtt A pa. Capital geall baaed am peoduntion data, without allownoe for looses in grids btut allow- RealtO anc Vistrttion lIg for SU and mucpo of electrictr. PoMilat&wM ,r 'tar-PopuLation dLVided by nader of practicing # tw ('itt r r can) - Per eapita aual consustin IA kilogram PbptCIAle qU&Iif a *daical school at univerwity leve. tstimadtedf= maetoc proDmatlon pra. nt eoportaf nDwveprnt. Annex I Page 3 of 4

ECONOMICINDICATORS

GROSS NATIONALPRODUCT IN 1974 ANNUALRATE OF GROWTH(7., constant prices)

US %.ln.1/ 1960-65 1965-70 1975

GNP at Market Prices 1,151.8 100.0 11.4 0.9 2.0 Gross Domestic Investment 294.2 25.5 10.2 4.4 3.2 Gross National Saving - 87.6 - 7.6 Current Account Balance 206.3 17.9 Exports of Goods, NFS 359.0 31.2 17.1 -0.8 -15.0 Imports of Goods, NFS 818.5 71.1 6.3 3.5 12.4

OUTPUT, LABORFORCE AND PRODUCTIVITY IN 1975

Value Added 1J Labor Force2 (Estimate) V. A. Per Worker US Mln. % Thous. Z US $_Z

Agriculture 93.9 10.3 115.0 30.0 816.5 34.4 Industry 209.7 23.1 36.1 9.4 5,808.9 245.0 Services 604.1 66.6 223.7 58.4 2,700.5 113.9 Unallocated , . 8.0 2.1 Total/Average 907.7 100.0 382.8 100.0 2,371.2 100.0

GOVERNMENT FINANCE Central Government ( JD Mln.) 74 of GDP 1975 1975 1973-75

Current Receipts 3/ 161.0 48.8 45.3 Current Expenditure 125.0 37.9 37.6 Current Surplus 36.0 10.9 7.7 Capital Expenditures 4/ 77.2 23.4 19.3 External Assistance (net) 3/ 77.0 23.3 21.8

MONEY. CREDIT and PRICES l7 1972 - 1973 1974 1975 (Million JD outstanding end period)

Money and Quasi Money 135.1 146.5 176.1 216.7 270.7 6/ Bank Credit to Public Sector 23.3 23.5 38.7 41.7 49.7 6/ Bank Credit to Private Sector 44.9 47.9 59.3 80.3 114.2 6/

(Percentages or Index Numbers)

Money and Quasi Money as X of GDP 60.5 61.2 70.4 64.7 82.0 General Price Index (1963 = 100) 5/ 119.7 129.4 142.9 171.5 192.1 Annual percentage changes in: General Price Index 4.3 8.1 10.4 20.0 12.0 Bank credit to Public Sector 307.6 -3.6 .84.7 10.5 19.2 Bank credit to Private Sector 3.0 6.7 23.7 35.4 42.2

NOTE: All conversions to US dollars in this table are at the average exchange rate prevailing the period covered.

1/ Data refer to East Bank only. 2/ Total labor force; unemployed are allocated to sector of the normal occupation. "Unallocated" consists mainly of unemployed workers seeking their first job. 3/ Includes Foreign Budget Support. JD 73.5 million in 1975. 4/ Development expenditures. 5/ Annual Average of Amman Cost-of-Living Index. 6/ November 1975.

not available

not applicable Annex I Page 4 of 4

TRADE PAYMENTSAND CAPITAL FLOWS

BALANCEOF PAYMENTS MERCHANDISEEXPORTS (AVERAGE1973-75)

1972 1973 1974 1975. US $n e/ (Millions US $) Fruits & Vegetables 24.2 25.3 Exports of Goods, NFS 112.4 170.4 253.9 379.6 Cigarettes ?.0 2.1 Imports of Goods, NFS 330.0 416.6 611.4 952.7 Phosphate 43.2 45.2 Resource Gap (deficit = -) -217.6 -246.2 -357.5 -573.1 Cement 7.6 7.9 Chemical Products9 3.9 L.1 Interest Payments (net) 9.4 15.5 20.9 28.4 All other commodities 14.7 15.4 Workers' Remittances 20.7 44.9 75.3 166.7 Total 95.6 100.0 Other Factor Payments (net) Net Transfers 191.2 197.4 270.5 437.5 EXTERNAL DEBT, DECEMBER 31, 1975 Balance on Current Account 3.7 11.6 9.2 59.5 US $ "ln Direct Foreign Investment -1.1 -3.5 3.3 11.0 Net MLT Borrowing Public Debt, incl. guaranteed 331.6 Disbursements 30.1 38.9 45.1 84.6 Non-Guaranteed Private Debt Amortization -11.7 -15.9 -16.2 24.1 Total outstanding & Disbursed Subtotal 18.4 23.0 28.9 60.5 I/ Capital Grants . . , DEBT SERVICE RATiO for 1975 - Other Capital (net) 0.3 0.2 1.7 - 1.1 Other items n.e.i -2.5 6.8 -22.1 2g.9 Increase in Reserves (+) 18.8 38.1 21.0 158.8 Public Debt, incl. guaranteed 5.0 Non-Guaranteed Private Debt Gross Reserves (end year) 281.9 326.4 375.9 513.2 Total outstanding & Disbursed Net Reserves (end year) 269.9 312.5 349.8 486.2

RATE OF EXCHANGE (Average during the Period)

Through 1972 1973 1974 1975

US$ 1.00 = JD 0.357 0.327 0.321 0.319 JD 1.00 = US$ 2.800 3.055 3.119 3.130

FOREIGN TRADE OF OIL (MlillionUS$)

1965 1972 1973 1974 1975

Imports 9.05 12.78 12.81 :L5.93 18.67 (Petroleum) (5.97) (9.27) (10.27) (11.16) (12.21)

Exports - - 0.52 0.43 0.28

Oil Transit Fees 4.80 8.60 10.40 3.60 7.51

1/ Ratio of Debt Service to Exports of Goods and Non-Factor Services.

not available

not applicable

Europe, Middle East and North Africa Region Country Department II May 25, 1976 ANNEX II Page 1 of 4

STATUS OF BANK GROUP OPERATIONS IN JORDAN

As of April 30, 1976

A. STATEMENT OF IDA CREDITS

US$ Million Credit Amount (less cancellations) Number Year Borrower Puroose IDA Undisbursed

Four credits fully disbursed 10.0

262 1971 Hashemite Highway 6.0 0.2 Kingdom of Jordan 285 1972 Education I 5.4 1.7

385 1973 Water Supply 8.7 2.2

386 1973 Power 10.2 4.4

498 1974 Irrigation 7.5 7.4

534 1975 Education II 6.0 6.0

570 1975 Power II 5.0 5.0

S-19 1975 Potash 1.0 1.0

TOTAL: 59.8 27.9

of which has been repaid 0.2

Total now held by IDA a/ 59.6

Total undisbursed 27.9 27.9 a/ Prior to exchange adjustments

B. STATEMENT OF IFC INVESTMENTS Amount in US$ Million Year Obligator Type of Business Loan Equity Total

1974 Jordan Ceramic Ind. Ltd. Ceramic Tiles 1.6 0.2 1.8

1975 Jordan Fertilizer Ind. Co.Phosphatic Fert. - 3.1 3.1

Total Commitments 1.6 3.3 4.9 Less Commitments Repaid, Sold or Cancelled .2 - .2 Total Commitments now held by IFC 1.4 3.3 4.7 Total Undisbursed - 2.3 2.3 ANNEX II Page 2 of 4

B. PROJECTS IN EXECUTION I/

Cr. No. 262: Highway Project; US$6.0 Million Credit of June 28, 1971; Date of Effectiveness: August 16, 1971; Closing Date: June 30, 1976

The project includes the construction of a highway from Amman to Zerka and the financing of a study to determine the most suitable means of distributing traffic from this new road within Amman. Completion of the road construction works has been delayed for over two years from its original date of September 1973, due mainly to management problems of the contractor. Total construction costs have increased by about 15 percent due to this de- lay, extra works and higher prices. The Closing Date, originally December 31, 1974, has been extended twice, to June 30, 1976.

Cr. No. 285: Education Project; US$5.4 Million Credit of February 11, 1972; Date of Effectiveness: July 27, 1972; Closing Date: April 30, 1977

The project includes construction and equipping of two comprehensive secondary schools, a polytechnic and trade training center, a teacher's training college for preparatory and secondary schools, and extension of an agricultural teacher training college and related technical assistance. All contracts for civil works were awarded to local firms on the basis of international competitive bidding. Contracts were signed in May 1974, and construction started in early June 1974. Following initial delays, construction is progressing satisfactorily with implementation now scheduled for completion by April 30, 1977; consequently the Closing Date was extended by one year to April 30, 1977. Cost overruns are expected to be about 35 percent and will be met by the Government. About 95 percent of equipment and all furniture has been procured; however, installation has lagged behind due to lack of central storage facilities and poor logistical planning.

Cr. No. 385: Amman Water Supply and Sewerage Project; US$8.7 Million; Credit of May 24, 1973; Date of Effectiveness: August 22, 1973; Closing Date: December 31, 1977

The project aims at alleviating serious water shortages and insuf- ficiency of sewerage services in Amman, reducing the high percentage of unaccounted for water, and developing the administrative structure of the entity

1/ These notes are designed to inform the Executive Directors regarding the progress of projects in execution and, in particular, to report any problems which are being encountered, and the action being taken to remedy them. They should be read in this sense and with the understanding that they do not purport to present a balanced evaluation of strengths and weaknesses in project execution. ANNEX II Page 3 of 4 responsible for Amman's water supply and sewerage systems. The project is progressing satisfactorily and procurement is on schedule. Total project costs are still within appraisal estimates. The leak detection survey was completed in March 1975 and some improvements have been achieved in reducing the high unaccounted for water through repair of major leaks and improved billing and collection procedures. Proposals for a revised tariff structure have recently been completed and are being reviewed by the Government.

Cr. No. 386: Power Project; US$10.2 Million Credit of May 24, 1973; Date of Effectiveness: August 21, 1973; Closing Date: March 31, 1977

The Project is to help the conversion from diesel to steam powered generation by adding two 33 MW steam generating units and one 12 MW gas turbine, all to be installed at a new power station at Zerka, near Amman and by providing management consultancy services to assit the Jordan Electricity Authority in organizing and expanding its power generation and transmission operations. Project execution is proceeding satisfactorily and, despite initial delays, the gas turbine unit was commissioned in May 1975. Project completion is expected by September 1977.

Cr. No. 498: Northeast Ghor Irrigation and Rural Development Project; US$7.5 Million Credit of July 25, 1974; Date of Effectiveness: August 1, 1975; Closing Date: June 30, 1979

The project is part of an overall development scheme for the East Bank of the Jordan Valley, other parts of which will be financed by the German Federal Republic, USAID, and the Kuwait Fund. The project consists of the agricultural development of 7,700 ha net, of which 6,660 ha are already under irrigation, and the provision of rural facilities for domestic water supply, health, education, roads, and community development for a population of about 25,000. The Contract for the main irrigation works has been approved and contracts for the supply of equipment for operations and maintenance and for research and extension services have been awarded. The project is a year behind schedule and progress in implementation has been unsatisfactory; on the basis of bids received, a cost overrun of about 131 percent in total project cost is expected. The Government has been requested to take steps to ensure that additonal funds are available for the project. Recently, project management and planning has improved through an increase in staff at the Jordan Valley Commission, the executing agency.

Cr. No. 534: Second Education Project; US$6.0 Million Credit of March 12, 1975- Date of Effectiveness: June 16, 1975; Closing Date: December 31, 1981

The project is designed to expand vocational and technical education, to promote quality improvements in secondary education by replacing uneconomic- ally small, rented school buildings and providing schools with adequate workshops, and to support integrated rural development projects in the Jordan Valley through a pilot scheme of non-formal basic education. The project ANNEX II Page 4 of 4

includes construction, furniture and equipment for the following institutions: a Polytechnic at Irbid; a training complex at Aqaba; a Hotel Training School at Amman; three comprehensive secondary schools; extension of preparatory and secondary schools (seven pre-vocational workshops; five science lab- oratories, four wom,en'scraft centers); and a rural development center. Im- plementation of the project is proceeding satisfactorily. Despite financial constraints on UNDP, recruitment of experts and the awarding of fellowships by UNDP and bilateral agencies is proceeding satisfactorily.

Cr. No. 570: Second Power Project; US$5.0 Million Credit of July 7, 1975; Date of Effectiveness: November 18, 1975; Closing Date: December 31, 1979

The project adds 32 megawatts to total generating capacity. It also includes reconditioning of the diesel-electric power station at Marqa and a Power Development Study for Southern Jordan. On the basis of bids received, a cost overrun in total project cost of about 14 percent is expected; implementation of all project components is proceeding satisfactorily.

Cr. No. S-19: Potash Engineering Credit; US$1.0 Million of July 7, 1975; Not Yfet Effective; Closing Date: July 31, 1977

The Bank Group has provided an engineering credit of US$1.0 million to help meet part of the cost of a feasibility study estimated at US$10.0 million, for the construction of trial dikes for the production of potash from Dead Sea brine via solar evaporation. USAID is providing US$6.0 million and the Arab Potash Company (APC), the executing agency, is providing US$3.0 million from equity funds. The lUSAID loan was signed in March 1976 but is not yet effective because of a delayed selection of a contractor to undertake the civil works. Effectiveness of the Association credit is contingent upon effectiveness of the IJSAIDloan. However, project execution began in January 1976 and is being funded from APC's internal funds. ANNEX III Page 1 of 4

JORDAN

TOURISM PROJECT

CREDIT AND PROJECT SUMMARY

Borrower: The Hashemite Kingdom of Jordan

Amount: US$6.0 million

Terms: Standard

Project The project would consist of: Description: (a) tourist accommodation, related superstructure facilities and supporting infrastructure works near the Petra Entrance;

(b) visitor facilities, infrastructure works and archaeological preservation in the Petra Basin; also the resettlement of about 96 Bedouin families currently living in the Basin;

(c) visitor facilities (including a Sound and Light Program), infrastructure works and archaeological preservation at Jerash;

(d) funds for a project unit and on the job and overseas training for staff of the Antiquities Department of the Ministry of Tourism and Antiquities. ANNEX III Page 2 of 4

Estimated Cost: The cost of the project is estimated at US$12.1 million equivalent with a foreign exchange component of US$6.5 million equivalent. Details are given below:

(US$ '000 Equivalent) Component Local Foreign Total

A. Petra Entrance (1,664) (2,005) (3,669) 1. Hotel and Related Facilities 1,030 1,342 2,372 2. Infrastructure 476 551 1,027 3. Visitor Center Improvements 3 15 18 4. Camp Ground 27 18 45 5. Staff Quarters 91 61 152 6. Stables 37 18 55

B. Petra Basin (799) (964) (1,763) 1. Visitor Facilities 88 115 203 2. Infrastructure 376 309 685 3. Archaeological Preservation 82 312 394 4. Bedouin Resettlement 253 228 481

C. Jerash (730) (864) (1,594) 1. Restaurant Facilities 93 149 242 2. Infrastructure 161 145 306 3. Sound and Light Facilities 94 215 309 4. Visitor Center Improvements 6 21 27 5. Archaeological Preservation 376 334 710

Base Cost: 3,193 3,833 7,026

D. Project Adm;inistration 216 54 270

E. Professional Services 291 243 534

F. Technical Assistance and Training 52 136 188

G. ContingencieS (1,891) (2,236) (4,127)

Physical Increse 485 569 1,054 Price Increase 1,406 1,667 3,073

TOTAL PROJECT COST 5,643 6,502 12,145 ANNEX III Page 3 of 4

Financing Plan: (US$ '000 Equivalent) Local Foreign Total

IDA - 6,000 6,000 Government 5,643 502 6,145

TOTAL 5,643 6,502 12,145

Estimated Disbursements: (US$ '000 Equivalent) Year 1 2 3 4 5

IDA Credit: Annual 216 3,564 1,743 380 97 Cumulative 216 3,780 5,523 5,903 6,000

Procurement Major civil works and equipment contracts would be Arrangements: awarded on the basis of international competitive bidding, in accordance with the Bank Group's guidelines. Project items would be grouped to the extent possible, in order to encourage such competitive bidding, but bidders would also be able to bid on individual items. In evaluating international bids for equipment and furniture, local manufacturers would be allowed a preferential margin of 15 percent of the c.i.f. price of competing imports or the prevailing level of customs duties, whichever is lower. Some furniture contracts are likely to be awarded to local manufacturers and most equipment contracts to foreign suppliers. Some civil works and furniture and equipment contracts (e.g. site museum, stables and camp grounds) would probably be too small to attract foreign bids. These contracts, each not to exceed US$65,000 in value, would be awarded according to local procedures acceptable to the Association. The total value of such contracts would not exceed US$400,000 equivalent. Since the switching equipment under the telecommunications component of the project should be compatible with the rest of Jordan's network in order to permit interconnections, procurement of this equipment, valued at US$200,000, would either be added to a current contract for the supply of such equipment or negotiated separately with suppliers of such equipment.

The MTA would carry out, on force account, certain works, such as the archaeological work in both areas and work too specialized for civil works contractors, and the development of trails, trail markers, fencing, and relatively minor landscaping, for which it would not be ANNEX III Page 4 of 4

appropriate to prepare detailed designs for purposes of tender documents. The total value of work to be carried out on force account would not exceed US$900,000 equivalent.

Consultants: Total consultants' services would amount to 230 man-months.

Economic Rate of Return: Jerash investments: 30.3 percent Petra investments : 16.9 percent Combined : 20.1 percent

Appraisal Report: Report No. 1069a-JO IBRD-1198OR j.7 MAY 1976

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