The Hashemite Kingdom of Jordan The National Social and Economic Development Plan (2004 – 2006) Ministry of Planning and International Cooperation 1 CONTENTS Item Page Number Introduction 4 Section I: General Framework of the Plan 10 I. Framework Preparation Methodology 10 II. Real Sector: 10 Objectives 10 Policies and Procedures 11 Statistical Tables 13 III. Monetary Sector: 18 Objectives 18 Policies and Procedures 18 Statistical Tables 19 IV. General Budget: 19 Objectives 19 Policies and Procedures 19 Statistical Tables 20 V. Public Debt 21 Objectives 21 Policies and Procedures 21 Statistical Tables 21 VI. Balance of Payments 22 Objectives 22 Policies and Procedures 22 Statistical Tables 23 VII. Social Sector 24 Objectives 24 Policies and Procedures 24 Statistical Tables 25 Section II: Main Economic and Social Axes 26 I. Human Resources Development: Public Education 26 Higher Education & Scientific Research 34 Labor and Vocational & Technical training 41 2 Youth Care 49 Culture 60 II. Basic Governmental Services: Water and Sanitation 66 Health 76 Communications & Information Technology -Communications -Information Technology 84 -Post Sector 88 Infrastructure -Construction Sector 93 -Energy Sector 104 -Transport Sector 108 III. Governorate Development and Poverty Alleviation: Governorate Development Strategy 121 Social Development 126 Municipalities 136 Housing 141 Agriculture 147 Tourism 168 Environment 176 IV. Institutional and Organizational Framework and Policies: Administrative Development 183 The Judiciary 189 Trade 197 Industry 203 Media 209 Aqaba Special Economic Zone 214 3 Social and Economic Development Plan for the Years 2004 – 2006: A New Vision for Sustainable Development Introduction: Economic Reforms in Jordan were launched at the beginning of the 1990’s as a result of the severe financial and economic crisis the Kingdom faced towards the end of 1998. Reform efforts during this period concentrated on achieving total economic stability, rectifying structural activities and financial imbalances. Towards the end of the past decade economic indicators demonstrated that these reform efforts successfully achieved a macro economic policy for managing the overall economy, through gradually decreasing the financial deficit and applying a wide range system of structural reforms. In spite of this, social development remained below the level aspired for, with unemployment and poverty rates persisting at relatively high levels, and average per capita income witnessing a fairly limited growth rate. Additionally, other challenges which faced Jordan were a continued increase in its foreign debt, an increase in the general budget deficit, a weak initiative spirit on behalf of the private sector, and inefficient government services, which contributed to exposing Jordan’s economy to regional and international upheavals. The pace of reforms was accelerated with the accession of His Majesty King Abdullah II in 1999. This Majesty’s vision of sustainable development is based on the partnership between the private and public sectors, and His Majesty thus called for convening a number of national economic forums, in which the private sector contributed to formulating national strategies, policies, reforms and programs that represent the priorities for the next phase. The results of these reforms are beginning to show positive indications at the macro-economic level. In light of His Majesty’s keenness for the benefits of development to reflect on the levels and conditions of the citizen’s life, and His Majesty’s continued directives as to the importance of investing in reform activities in their various forms, His Majesty instructed the government in November 2001 to adopt an economic and social transformation program. The purpose of this program is to accelerate the implementation of economic reform policies, programs, projects and procedures, over which there has been a national consensus (financial, administrative, legislative and judiciary reforms), and improving the quality of life for Jordanian Citizens. This was 4 achieved by creating direct and tangible impact on the level of basic government services, particularly education, health, water resources and development of the governorates, in addition to enhancing the role of the private sector by enhancing its participation in privatization operations and investment in grand developmental and growth projects, and adopting new rapid, accurate, transparent and effective mechanisms for decision making. Reform efforts have been undertaken by Jordan since the economic crisis that Jordan faced towards the end of the eighties and have contributed to achieving financial and economic stability, and helped in achieving growth rates in terms of the gross domestic product at fixed prices, over the past four years, that exceeded the population growth rates. The Central Bank’s reserves in foreign currencies increased to unprecedented levels, covering 8 months of commodities and services imports. The rate of inflation remained within acceptable levels which did not exceed 2.5%, and national exports grew at very high rates, reaching 25.1%, 15.1%, and 5.3% in 2001, 2002, and 2003 respectively. In addition, privatization increased gradually in various productive sectors, and the culture of the productive private investor has started to formulate gradually within clear parameters becoming more efficient and effective. All this was achieved in spite of unfavorable regional and international circumstances, which underscores the importance that reform has had in helping the economy respond quickly to developments and to absorb external shocks. Jordan today stands at the threshold of a new stage in its development, based on preserving actual achievements and building on them and responding to new development requirements and challenges posed by social and economic circumstances and developments at local, regional, and international levels. The most salient challenges are the continuous increase in the rate of unemployment and poverty, the vast imbalance in the labor market, the high deficit in the general budget, the large volume of foreign debt, the shallowness of the capital market, the changes in business partnerships, and the volume and structure of foreign aid. These challenges have come to dictate, more than ever before, self-reliance in financing development requirements, and diligent work in order to stay in line with the latest developments in changing production patterns, which now emphasize on high value-added sectors, and utilize efficient knowledge- based economy mechanisms. In response to these challenges, the government has prepared the National Social and Economic Development Plan for the years 2004 – 2006, 5 which emphasizes the importance of maintaining the fundamental principles of the economic policy, represented by sustained monetary and financial stability, enhancing accountability and transparency principles, activating partnership between the public and private sectors, and guaranteeing the role of the private sector as a main partner in the economic activity. These basic principles represent the launching pad towards adopting economic policies and procedures that could contribute to achieving a quantum leap in the performance of the national economy, and creating a tangible transformation in the quality and standard of living of Jordanian citizens by targeting the achievement of a real economic growth rate of 6% by the year 2006, and maintaining inflation rates within acceptable levels which will not exceed 1.8%. This Plan also targets poverty and unemployment reduction, through the implementation of qualitative and quantitative investments in areas of local development, and creating programs that aim to empower citizens, specifically youth and women and providing them with adequate opportunities. In addition, this Plan aims to encourage and enhance private investment. A further aim of the Plan is to ensure that the financial deficit will not exceed 3% of gross domestic product, and that foreign debt will not exceed 60% of gross domestic product by the end of 2006. Unlike other prior development plans, The National Social and Economic Development Plan is characterized by the fact that it was launched in response to His Majesty’s directives, stressing that every Ministry and Governmental Bodies should develop their own clear vision and work plan. The Plan which came as a response to challenges facing the development efforts, includes an executive program that constitutes policies, programs and projects that will be implemented during the period 2004 – 2006, as well as including subjective estimates of the financial costs of these programs and projects, and concerned financing plan for the rapid and correct implementation by virtue of work plans, clear phased programs, and the implementation of action plans. This Plan also emphasizes the importance of maintaining financial and monetary stability, reducing debt burdens by setting up prioritized development projects financed by the treasury or by grants and loans, which takes into consideration current and future expenditures resulting from proposed public investments, which will be subject to implementation in view of the budget and available financing allowances from local and foreign sources. 6 The Government presented the draft Plan at the National Forum organized under the auspices of His Majesty King Abdullah II on 13 November 2003, which was attended by representatives from various segments of the economic, social, political,