Jordan : Third water development policy loan

To support the country’s effort towards a more sustainable water sector, AFD and KfW have financed a Development Policy Loan (DPL) dedicated to the improvement of its technical and financial performance. Main actors are the ministries of Finance and water & irrigation, and the Water authority of Jordan (WAJ).

Context

Jordan is one of the countries with the lowest water availability on earth and it is facing sharply increasing water demand. This situation requires optimal use of scarce resources through continuous technical and financial improvement of the water sector, as well as structural reforms and better policy implementation.

The total debt of the sector, which amounted almost JOD 1.7 billion at the end of 2016, shall increase to JOD 2 billion (€ 2.65 bn) by the end of 2017, which represents more than 7 % of the GDP. A large part of this debt is caused by the accumulation of the annual deficit. This situation raised the attention of the IMF, who elaborated a recommendation on the water sector as part of its review in 2012 and in the 2016 Extended Fund Facility (2016). These recommendations led to an action plan to reduce water sector losses and measures to improve the management of the debt of the water sector.

Description

Building on the outcomes of the first water sector development policy loan (2015-2016), four specific objectives were set for this second water DPL:

to improve financial management of thewater sector;
to enhance technical and commercial performance of the WAJ and water companies;
to implement the investments planned in the water sector;
to improve national policies and strategies regarding the water sector

For this second program, AFD and KfW are working together with the ministry of Planning and international cooperation, the ministry of Water and irrigation, the Water authority of Jordan and its subsidiaries for water and sanitation services, and the ministry of Finance. Expertise France carried out the technical assistance program financed by AFD.

The program consists of a € 300 M policy loan as a support to the budget, divided in two equal parts for AFD and KfW.

Impacts

Expected results are the following:

a better financial management of the water sector, enhanced technical and commercial performance of WAJ and other water companies,
a better design and implementation of investment in the water sector in Jordan,
an improvement of the national strategies and policies on water.

Lastly, the program supports the multi-actor governance of the water sector.

Download the project sheet

06/12/2017

Project start date

2 Years

Duration of funding

Water and Sanitation

Sectors

Jordan

Location

Sovereign Concessional Loan

Financing tool