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Fiscal Decentralization in Practice: Jordan's Nascent Experience

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Fiscal Decentralization in Practice: Jordan's Nascent Experience Fiscal Decentralization in Practice: Jordan’s Nascent Experience A Policy Paper by Al Quds Center for Political Studies Made possible through funding from USAID Author Dr. Rana K. El Akhal Feb 2019 Page 0 of 72 Policy Paper: Towards Fiscal Decentralization in Jordan Table of Contents LIST OF TABLES AND GRAPHS USED IN THE PAPER ......................................................................... 4 ACKNOWLEDGEMENT ..................................................................................................................... 5 EXECUTIVE SUMMARY ..................................................................................................................... 5 1 PREFACE:................................................................................................................................ 12 2 METHODOLOGY USED TO DEVELOP THIS PAPER .................................................................. 14 3 DECENTRALIZATION: BACKROUND AND FRAMEWORK ........................................................ 15 3.1 Concept and framework ................................................................................................ 15 3.2 Decentralization Globally .............................................................................................. 18 3.3 Good or Bad: The Decentralization Debate................................................................... 19 4 FISCAL DECENTRALIZATION ................................................................................................... 20 5 DECENTRALIZATION: THE YOUNG EXPERIENCE OF JORDAN ................................................. 22 Page 1 of 72 5.1 .......... When it all began: overview of previous steps until current date ................................................ 22 5.2 Current Governmental Program for Fiscal Decentralization ......................................... 23 5.3 Formulated Structures and Roles to Serve Decentralization in Accordance to Law 49/2015 ..................................................................................................................................... 25 5.3.1 Structures and Roles as per Law 49/2015 ............................................................. 25 5.3.2 A Lens on Authority-Responsibility Balance in Law 49/2015 ................................ 28 5.3.3 Responsibility to Attain Decentralization in Jordan .............................................. 29 6 GOVERNORATE LEVEL FISCAL BUDGETING; how the governorate budgets were planned and executed ........................................................................................................................................ 31 6.1 Fiscal Decentralization Stakeholders and their Roles.................................................... 31 6.2 Budget Planning ............................................................................................................. 34 6.3 Budget Execution ........................................................................................................... 41 6.4 Monitoring the Execution of Budgets ........................................................................... 41 7 CHALLENGES FACED BY GOVERNORATE COUNCILS .............................................................. 43 7.1 Power, Accountability & Authority of GCs .................................................................... 43 7.2 Legislative & Regulatory Issues ..................................................................................... 44 7.3 Budget Planning Challenges .......................................................................................... 45 7.4 Budget Execution Challenges ........................................................................................ 47 7.5 Administrative Issues ..................................................................................................... 49 7.6 Capacity Issues............................................................................................................... 51 8 AN EYE ON GENDER PERSPECTIVE ......................................................................................... 52 8.1 Representation of Women in the Subnational Bodies .................................................. 52 8.2 Gender Sensitive Budgeting .......................................................................................... 53 8.3 Gender Equality Consideration in Public Consultation ................................................. 53 9 CONCLUSION & SUMMARY OF KEY ISSUES ........................................................................... 54 10 RECOMMENDED POLICIES & ACTIONS .............................................................................. 62 10.1 On the National Vision for Decentralization ................................................................. 62 10.2 On Supportive Structure & Legislative Environment to Decentralization ..................... 62 10.3 On Tracking Progress & Measuring Success & Impact of Decentralization .................. 63 10.4 GC’s Current Level of Authority ..................................................................................... 66 Page 2 of 72 10.5 .................................................. Resources & Independency of GCs 67 10.6 Coordination between GCs & Central Government ...................................................... 68 10.7 Capacities & Awareness ................................................................................................ 69 Annex 1: List of desk review documents ....................................................................................... 70 Annex 2: Global resources and references used ........................................................................... 71 Page 3 of 72 LIST OF TABLES AND GRAPHS USED IN THE PAPER LIST OF GRAPHS GRAPH Page Graph (1) highlights of the Ministry of Finance Program for 23 Fiscal Decentralization 2017 – 2019 Graph(2) Jordan Decentralization Committee Structure 30 Graph (3) Governorate Budget Planning Flow Chart 35 LIST OF TABLES TABLE Page Table (1) Responsibilities of various stakeholders in the 31 governorate budgeting process Table (2) Governorates’ Budgets FY 2018 36 Table (3) Draft Governorates Budgets FY 2019 37 Page 4 of 72 ACKNOWLEDGEMENT The production of this Policy Paper, would have not been possible without the generous candid input and commitment of the; governorates’ council members, governorates’ executive council members, local development departments and municipalities’ local councils in the twelve governorates of Jordan; Irbid, Jerash, Ajloun, Mafraq, Madaba, Salt, Amman, Zarqa, Karak, Tafileh, Maan and Aqaba. As well as the generous input from the fiscal decentralization unit, part of the Ministry of Finance (MoF), and the decentralization unit at the Ministry of Political and Parliamentary Affairs (MoPPA) Special appreciation goes as well to the USAID Fiscal Reform and Public Financial Management (FRPFM) team who provided timely reviews and feedback throughout the process. EXECUTIVE SUMMARY This policy paper was developed after 2 years (2017 & 2018) of implementing the decentralization law in Jordan (law 49/2015), in order to address a key question “to what extent the implementation of gradual fiscal decentralization policy in Jordan enabled the governorate councils to better distribute budget allocation in accordance to local needs and enhance public services at local level”. In order to arrive to a conclusion regarding the above key question, a group of 3 focus groups were conducted with subnational government representatives including: Governorate offices, Local Development Departments, Executive Councils, Governorate Councils, and Local Councils. The focus groups were followed with some validation and enrichment through one to one phone calls with some of the important subnational government representatives who either raised an incomplete point during the focus group, or were unable to attend. a couple of meetings were held as well with the decentralization units of both; the Ministry of Finance and the Ministry of Political and Parliamentary Affairs to get the lens of the units interacting most with the newly elected GCs at the capital. More and more countries are heading to decentralization recently, mostly to attain better results for their public systems in terms of public service responsiveness to needs, effectiveness, efficiency and sustainability. Such results are aspired to impact countries positively, by increasing incomes, productivity, living standards, and other key human development goals such as heath, democracy, and education amongst others. Jordan is no exception, with efforts started ten years before the issuance of the law of decentralization in 2017. Page 5 of 72 Decentralization is not implemented in all countries in the same way and even if the same principles were followed for couple of countries for examples, results are not necessarily the same. Jordan decided to walk the road towards decentralization its own way creating its own model that is build on the basic concept of careful nad gradual steps towards transfer of power from the center to local, and gradual steps as well in the formulation of the governorate councils with 15% of seats are nominated to ensure existence of capacities and previous knowledge in local planning and service delivery. The paper explains in details different types and levels of decentralization and how each type/level is reflected on decision authority transfer. Although the varieties of fiscal decentralization may
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