COMMISSION STAFF WORKING DOCUMENT ex-ante evaluation statement Accompanying the document Proposal for a DECISION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on providing macro-financial assistance to the Hashemite Kingdom of Jordan
Date: 2025-08-05
Institutions: Directorate-General for Economic and Financial Affairs, European Commission
Subjects: EU aid, EU loan, European neighbourhood policy, Jordan, economic reform, economic stabilisation, financial aid, macro-financial assistance

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 5.8.2025  SWD(2025) 245 final  COMMISSION STAFF WORKING DOCUMENT ex-ante evaluation statement Accompanying the document Proposal for a DECISION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on providing macro-financial assistance to the Hashemite Kingdom of Jordan {COM(2025) 456 final}  
 
 
Ex ante evaluation statement 

EU macro-financial assistance to the Hashemite Kingdom of Jordan 

TABLE OF CONTENTS 

1.1 

1.2 

Introduction ............................................................................................................................. 2 

Jordan’s macroeconomic situation .......................................................................................... 4 

1.3. 

IMF and other donor support .................................................................................................. 6 

1.4. 

External financing needs .......................................................................................................... 8 

1.5. 

Structural reform challenges ................................................................................................... 9 

2.1.  Objectives............................................................................................................................... 11 

2.2  Monitoring indicators ............................................................................................................ 11 

3.1 

3.2 

5.1 

5.2 

5.3 

5.4 

5.5 

6.1 

6.2 

Delivery mechanisms ............................................................................................................. 11 

Risk assessment ..................................................................................................................... 12 

Exceptional Character and Limited Time-frame .................................................................... 13 

Political preconditions and EU-Jordan relations .................................................................... 14 

Complementarity ................................................................................................................... 14 

Conditionality ......................................................................................................................... 15 

Financial Discipline ................................................................................................................. 15 

Evaluation .............................................................................................................................. 15 

Achieving cost-effectiveness .................................................................................................. 15 

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PROBLEM ANALYSIS AND NEEDS ASSESSMENT 

1.1 

Introduction 

Jordan’s  economy  grew  by  an  estimated  2.5%  in  2024,  reflecting  only  modest  resilience  in  a 
context  of  rising  global  and  regional  risks.  Growth  remains  subdued  compared  to  peers  and 
insufficient to address persistent structural vulnerabilities, while the economic outlook is clouded 
by  significant  downside  risks.  The  unemployment  rate  stood  at  21.4%,  with  even  higher  rates 
among youth, and female labour participation remains among the lowest globally. Fiscal pressures 
grew, with the general government deficit widening to 5.6% of GDP, though the government met 
its  combined  primary  balance  (excluding  grants  and  including  utilities)  target  through  capital 
spending  cuts  and  revenue  enhancing  measures.1  Public  debt  rose  slightly  to  90.4%  of  GDP 
(excluding  SSC  holdings).2  Inflation  stayed  below  2%,  helped  by  lower  import  prices  and 
continued monetary tightening. The current account deficit widened to close to 6% of GDP due to 
weaker exports and lower tourism revenues. Jordan’s dependence on energy and food imports and 
a limited export base continue to weigh on external balances. Despite reserves of around USD 21 
billion, the economy remains vulnerable to external shocks, underscoring the need for sustained 
international support. 

Over the past years, Jordan has managed to maintain overall macroeconomic stability thanks to a 
generally sound policy mix and substantial support from international partners. In mid-2022 the 
government launched the Economic Modernisation Vision (EMV) in an effort aimed at revitalising 
the economy. The EMV built on earlier reforms like the 2018 London Initiative’s Reform Matrix, 
and identifies eight key sectors, including manufacturing, agriculture, ICT, mining, and healthcare, 
as drivers of growth. It also includes plans for public administration reform (merging ministries, 
reallocating powers) and political modernisation to enhance citizen engagement and the role of 
political  parties,  with  reform  efforts  already  ongoing.  Reforms  aimed  at  economic  growth  and 
more  efficient  public  administration  are  expected  to  improve  public  finances  through  higher 
revenues and better financial management, which would help reducing public debt as a share of 
GDP. The first executive programme (2023–2025) of the Vision concludes this year, laying the 
groundwork for follow-up phases in 2026–2029 and 2030–2033. This strategy, together with the 
structural reform agendas linked to previous IMF programmes and EU Macro-Financial Assistance 

1 The combined primary deficit reached 4.9% of GDP in 2024, and includes the fiscal impact of loss-making energy 
and water utilities (1.9% of GDP). The financial performance of utilities is monitored under the IMF programme, 
which includes targeted reform measures. Additional structural reforms in these sectors will also be supported through 
the IMF’s Resilience and Sustainability Facility (RSF). 

2 Debt including SSC’s holdings reached 114.7% of GDP.   

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(MFA) operations, aims to boost investment, enhance competitiveness, and support sustainable 
growth.  

These reforms have taken place against the backdrop of successive external shocks, including the 
prolonged conflict in Syria and the resulting refugee crisis, which, despite recent positive steps 
toward  Syria’s  reintegration  and  reconstruction,  has  not  yet  created  conditions  conducive  to  a 
large-scale return of Syrian refugees from Jordan. Over the past years, Jordan has also faced a new 
wave  of  compounding  external  pressures,  including  the  COVID-19  pandemic,  Russia’s 
unprovoked war of aggression against Ukraine, growing instability along the Syrian border, the 
conflict in Israel/Gaza, and linked Red Sea disruptions affecting vital trade corridors, as well as 
the  recent  escalating  violence  between  Israel  and  Iran.  Despite  mounting  regional  challenges, 
Jordan has remained committed to preserving macroeconomic stability and advancing structural 
reforms. The post-election government reshuffle in September 2024 reinforced policy continuity 
and  progress  under  the  USD  1.2  billion  IMF  Extended  Fund  Facility  (2024-2027),  which  has 
completed  three  positive  reviews  to  date  (the  last  one  concluded  on  April  2025).  Jordan  also 
sustained close cooperation with key international partners. Although US budget support remains 
uncertain,  the  government  successfully  mobilised  critical  external  financing  from  the  EU,  the 
World Bank, and GCC partners, helping to ease near-term funding pressures and reaffirm support 
for the reform agenda. On 25 June 2025, the IMF also approved approximately USD 700 million 
under  the  Resilience  and  Sustainability  Facility  (RSF)  to  support  reforms  addressing  climate-
related and pandemic preparedness risks. 

In light of the multiple external shocks and Jordan’s vital role in supporting stability in the region, 
the country received substantial support in various forms from its international partners in the past 
decade. This includes four consecutive IMF programmes since 2012, four MFA operations by the 
EU since 2014, significant US assistance, and targeted support for hosting Syrian refugees. The 
first three MFA programmes (MFA I: EUR 180 million; MFA II: EUR 200 million; MFA III: EUR 
500 million + EUR 200 million top-up in response to COVID-19) provided a total of EUR 1.08 
billion in loans between 2014 and 2023. Following a request  by the Jordanian authorities on 8 
October 2023, the EU adopted a new MFA IV operation in 2025, amounting to EUR 500 million, 
with disbursements planned over 2025–2027. The MFA IV will be disbursed upon fulfilment of 
agreed  policy  conditions  in  the  Memorandum  of  Understanding  (MoU),  covering  measures  in 
public  finance  management  and  tax  administration,  governance  and  anti-corruption,  social  and 
labour market policies, energy and business environment. 

In  this  context,  and  given  Jordan’s  continued  sizeable  financing  needs  and  the  many  different 
challenges faced by the country, the Jordanian authorities requested a follow-up MFA V operation 
of EUR 500 million. The request highlighted the deteriorating economic and political environment, 
noting that regional turmoil intensified throughout 2024, compounding an already uncertain and 
unstable global context. Further, these developments have weighed on foreign direct investment, 
exports, and domestic consumption, further weakening Jordan’s economic and fiscal outlook and 
increasing the risk of larger external financing needs. Escalating tensions between Israel and Iran 

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in  mid-June  triggered  renewed  regional  violence,  prompting  flight  suspensions  in  Jordan.  This 
latest shock risks undermining Jordan’s fragile economic recovery, undermine investor and tourist 
confidence, and add to an already uncertain outlook. 

The present note provides the context and rationale for a forthcoming Commission proposal on a 
follow-up  MFA  operation.  Following  an  in-depth  assessment  of  the  political  and  economic 
situation in Jordan, the Commission is preparing to submit to the European Parliament and the 
Council a proposal to provide MFA of up to EUR 500 million to Jordan. The proposed legal basis 
will be Article 212 of the Treaty on the Functioning of the EU. 

1.2 

Jordan’s macroeconomic situation 

The Middle East faces growing instability from the war in Gaza, a fragile Lebanon ceasefire, the 
fall  of  Syria’s  regime,  and  the  recent  Israel-Iran  conflict.  These  tensions  heighten  pressure  on 
Jordan’s security and economy, with rising volatility and increasing downside risks, Economic 
growth  decreased  to  2.5%  y-o-y  (year  on  year)  in  2024  (from  2.9%  in  2023),  due  to  the 
increased uncertainty resulting from the instability in the region, including the war in Israel-
Gaza, and the moderation of global growth. Key sectors such as tourism and trade continued to 
perform relatively well, despite disruptions linked to the war, and exceeding initial expectations, 
supported by an increase in regional tourist arrivals that partially offset the decline in visitors from 
the West. Despite this, tourism revenues fell by 2.3% in 2024, and the number of visitors declined 
by 3.9%. The sectors that contributed most to economic growth were manufacturing, agriculture, 
transport and communications, as well as financial services. Jordan started 2025 with sustained 
economic growth, broadly in line with the 2.5% recorded in 2024, driven by continued recovery 
in tourism, manufacturing and agriculture. However, the second quarter is expected to have been 
affected  by  the  escalation  of  tensions  between  Israel  and  Iran,  which  prompted  the  temporary 
closure of Jordanian airspace. These disruption, led to suspension of flights and disrupted cargo 
traffic,  and  caused  broader  uncertainty,  thus  likely  weighting  on  investor  and  consumer 
confidence. 

The  unemployment  rate  remains  high,  despite  a  small  decrease  to  21.4%  in  2024  (from 
22.0% in 2023). The unemployment rate among men stood at 18.3% and at 33.3% among women. 
Youth unemployment remains an important challenge and continues into young adulthood, as the 
unemployment rate for the age brackets of 15-19 years and 20-24 years was 54.7% and 46.4%, 
respectively.  At  only  34.3%,  labour  force  participation  remains  an  important  challenge,  where 
men’s  and  women’s  labour  force  participation  are  both  low  or  very  low  at  53.6%  and  14.8%, 
respectively, which compares to 72% and 18% in the MENA region, respectively.  

Inflation pressures are contained, in line with recent monetary policy decisions. Inflation fell 
to 1.6% in 2024 on average y-o-y (from 2.1% in 2023) though it picked up at the beginning of 
2025 (2.2% in Jan-Feb 2025, y-o-y) in line with the central bank’s monetary easing. Most recently, 
main drivers of inflation were prices for rents, meat and poultry, and tobacco and cigarettes. Price 
decreases  were  recorded  in  particular  for  clothing,  dairy  products  and  oils,  the  latter  two  had 

4 

 
 
contributed  to  driving  inflation  in  previous  years.  Since  September  2024,  the  Central  Bank  of 
Jordan (CBJ) cut its interest rate in 3 steps by 100 basis points to 6.5%, marking the end of the 
monetary tightening phase that began 2.5 years earlier. Between March 2022 and July 2023, the 
main rate was raised in 10 steps from 2.5% to 7.5%. The CBJ decisions were necessary given the 
JOD’s peg to the USD, to be in line with the US Federal Reserve’s monetary tightening/easing and 
avoid  pressures  on  capital  flows,  and  indeed  contributed  to  the  moderation  of  inflationary 
pressures.  

The banking system remains liquid and well capitalised. The capital adequacy ratio stood at 
18% in 2024 (from 17.9% in 2023), well above the required 12%. The non-performing loans (NPL) 
ratio slightly increased to 5.6% in 2024 (from 5.1% in 2023), while the coverage ratio for NPL 
stood at 74.8% in 2024. Banks’ profitability remained stable with an estimated return on assets of 
1.2%.  

Public  finances  show  vulnerabilities,  though  the  IMF’s  overall  public  debt  sustainability 
assessment is supportive. The general government deficit reached 5.6% of GDP in 2024, which 
is higher than in the previous year (from 5.1% of GDP in 2023). The primary deficit (excluding 
interest  payments  on  public  debt)  stood  at  0.1%  of  GDP  (0.4%  of  GDP  in  2023).  Current 
expenditures  accounted  for  89.9  %  of  public  expenditures.  Besides  interest  payments  (20%  of 
current  expenditure)  main  components  of  expenditure  were  military  expenditure  (29.6%), 
compensation of civil sector employees (19.3%) and pensions (16.3%). Public debt amounted to 
90.2% of GDP (excluding the debt held by the Social Security Investment Fund, SSIF) in 2024, 
slightly  higher  than  the  89.2%  of  GDP  in  2023.  Including  the  SSIF  debt,  public  debt  stood  at 
116.8% of GDP in 2024, which compares to 113.8% in 2023. Jordan’s public debt is assessed as 
sustainable with a high probability by the IMF (Article IV, June 2025).  Indeed, while the high 
level  of  public  debt  renders  Jordan  vulnerable  to  a  tightening  in  financial  conditions,  the large 
share  of  concessional  debt  provides  an  important  cushion.  Moreover,  Jordan  has  significant 
buffers: foreign exchange reserves correspond to 7.7 months of imports; and assets of the Social 
Security Investment Fund reached 40 percent of GDP. The risk of sovereign stress is assessed as 
moderate by the IMF. 

Jordan’s external situation remains fragile, but foreign exchange reserves are adequate. The 
current account deficit (including grants) widened to 5.9% of GDP in 2024 (from 3.6% in 2023), 
as the services surplus decreased, while the goods deficit and the primary income deficit widened. 
Main domestic goods export items were chemicals and minerals (30% of goods exports) mainly 
destined for India and Arab countries, as well as clothes (20%) largely destined for the US. The 
largest  goods  import  groups  were  transport  equipment  &  spare  parts  (10%  of  goods  imports) 
mainly from China, the US and South Korea; petroleum products (6%) mainly from Saudi Arabia 
and India; and textiles (5%) from Asia. The current account deficit continued to be mitigated by 
strong  secondary  income  flows:  remittances  reached  6.8%  of  GDP  in  2024,  while  programme 
financing  (World  Bank,  IMF  and  other  bilateral/multilateral  support)  reached  4.2%  of  GDP. 

5 

 
 
Foreign direct investment decreased to 3.3% of GDP in 2024. The CBJ's gross foreign reserves 
remained strong and above 100% of the IMF’s reserve adequacy metric.  

The outlook over the next few years is uncertain. Looking ahead, a modest uptick in growth for 
2025 and in the following years was expected by the IMF in June 2025, but this forecast predates 
the  Israel-Iran  conflict.  The  regional  wars  pose  an  important  downside  risk  to  the  outlook,  in 
particular due to the increased level of uncertainty in the region and the possible future impact on 
the important tourism sector, further fuelled by the recent missile strikes between Israel and Iran. 
External  and  fiscal  deficits  are  expected  to  remain  high,  reflecting  the  underlying  structural 
challenges to sustainably improve fiscal revenue and the trade deficit. Given the large public debt 
burden,  the  fiscal  consolidation  course  needs  to  continue,  in  addition  to  ongoing  economic 
modernisation  efforts  to  improve  the  business  environment,  to  foster  private  sector  growth, 
including by attracting foreign direct investment.  

Table 1: Jordan – Selected macroeconomic indicators, 2020-2024 

*SSC: Social Security Corporation, LFS: Labour Force Survey 

Sources: Central Bank of Jordan, Jordan Department of Statistics, Ministry of Finance 

1.3. 

IMF and other donor support 

Jordan is implementing the EFF arrangement with the IMF, that was approved in January 2024 
and amounts to USD 1.2 billion for the period 2024–2027. This programme replaced the previous 
four-year EFF, which had been set to expire in March 2024, but was ended early as most funds 
had  already  been  disbursed.  A  new  arrangement  was  deemed  necessary  to  sustain  reform 
momentum and address heightened regional and economic uncertainties. As of July 2025, Jordan's 
performance under the current EFF has been strong, with all quantitative performance criteria and 
structural benchmarks met across the first three  programme reviews (July and December 2024, 

6 

 
 
 
  
 
and April 2025), triggering disbursements totalling USD 391 million out of the approved USD 1.2 
billion.  

The  ongoing  EFF  supports  continued  fiscal  consolidation  to  place  public  debt  on  a  downward 
trajectory, while safeguarding monetary and financial stability and accelerating structural reforms 
to  foster  growth  and  job  creation.  The  main  elements  of  the  new  EFF  build  on  the  previous 
arrangement and include:  

•  Placing public debt on a downward trajectory, with a target of reducing debt to below 80% 
of  GDP  by  2028.  This  will  be  achieved  through  continued  fiscal  consolidation  by 
broadening  the  tax  base,  improving  spending  efficiency,  and  strengthening  social 
protection.  

•  Advancing structural reforms to improve the business climate, boost private sector growth 

and competition, and foster job creation, particularly for youth and women.  

•  Reforming  the  utilities  sector,  including  actions  to  ensure  the  financial  viability  of  the 

electricity sector and enhance service delivery.  

As part of its successive reviews, the IMF concluded that Jordan’s public debt was assessed as 
sustainable with high probability. Public debt peaked at 90.4% of GDP in 2024, and is expected to 
start declining in 2025 and to fall just below 80 percent by 2028. Jordan’s high public debt renders 
it  vulnerable  to  a  tightening  in  financial  conditions,  but  the  large  share  of  concessional  debt 
provides  an  important  cushion.  Moreover,  Jordan  has  significant  buffers:  foreign  exchange 
reserves at 7.7 months of imports; and assets of the Social Security Investment Fund reached 40 
percent of GDP. The risk of sovereign stress is assessed as moderate by the IMF.   

In addition to the EFF programme, on 25 June 2025, the IMF also made available around USD 
700 million in loans to Jordan under the RSF to support policy reforms that reduce macro-critical 
balance of payments risks associated with climate change and pandemic preparedness. 

The  World  Bank  has  also  a  large  active  portfolio  in  Jordan.  In  April  2024,  it  launched  a  new 
Country Partnership Framework (CPF) for 2024–2029, focused on three key pillars: i) creating 
more  and  better  private  sector  jobs,  especially  for  youth  and  women;  2)  strengthening  human 
capital  outcomes;  and  3)  building  resilience  and  sustainability.  In  alignment  with  the  CPF,  the 
World  Bank  approved  in  April  this  year,  a  USD  1.1  billion  in  new  financing  for  Jordan, 
encompassing four projects aimed at promoting inclusive growth, supporting startups and small 
and  medium-sized  enterprises,  expanding  social  assistance,  and  advancing  sustainable  energy 
initiatives.  Additionally,  in  July  2024,  the  World  Bank  approved  USD  700  million  for  two 
programs designed to enhance Jordan's education, health, and social assistance sectors. The World 
Bank also administers the Jordan Inclusive Growth and Economic Opportunities Multi-donor Trust 
Fund (USD 72.8 million) which includes contributions from the UK’s Foreign, the Commonwealth 
and Development Office, Canada, Germany, Norway, and the Netherlands.  

7 

 
 
The  EU  remains  a  vital  development  partner  for  Jordan.  Through  the  Neighbourhood, 
Development  and  International  Cooperation  Instrument  Global  Europe  (NDICI)  2021-2024, 
Jordan received over EUR 360 million in bilateral EU funding, supporting democratic reform, the 
green transition, private sector development, education, and social protection. In 2021, under the 
Economic and Investment Plan (EIP), the EU launched 23 flagship projects in Jordan, committing 
approximately EUR 439 million (via grants, blending and guarantees) and leveraging around EUR 
4.8 billion in total investment. High-impact projects include the Aqaba Amman desalination and 
conveyance  plant  (EU  grant  EUR  97  million,  EIB  loan  EUR  300  million),  the  Al  Ghabawi 
wastewater treatment plant (EU grant EUR 30.7 million, EBRD loan EUR 41.3 million), and a 
EUR 68 million programme for green economy initiatives (solar irrigation, EV chargers, marine 
conservation). These efforts are now framed under the EU–Jordan Strategic and Comprehensive 
Partnership  (SCP),  which  underpins  a  partnership  worth  EUR  3  billion  (2025-2027),  including 
macro-financial assistance, and provides a more structured and long-term framework for political, 
economic, and financial cooperation.  

1.4.  External financing needs  

According to  the  IMF’s  latest  estimates  (third EFF Review, June 2025), the external  financing 
needs will remain considerable at USD 3.1 billion in the period 2025-2027, partly reflecting the 
structural challenges to sustainably improve the fiscal performance and current account deficit, as 
well  as  the  aim  to  further  strengthen  reserve  buffers  amid  significant  downside  risks.  The 
remaining EFF funds (USD 783 million of USD 1.2 billion) would cover 25% of these external 
financing  needs  over  2025-2027.  Factoring  in  the  IMF  programme  and  other  official  budget 
support, the remaining external financing gap stands at USD 1.4 billion for the years 2025-2027 
according  to  the  IMF’s  methodology.  In  net  terms,  IMF  disbursements  and  the  World  Bank 
arrangements together represent USD  2 794 million of external financing for the years 2024-2027. 

A  considerable  share  of  the  country’s  external  financing  needs  relates  to  the  accumulation  of 
international reserves (USD 5 billion over the years 2024-2027) programmed to reach just above 
100% of the reserve adequacy metric of the IMF. While good progress has been obtained in this 
area with international reserves increasing from USD 18 billion in 2021 to USD 20.1 billion in 
2024, in terms of months of imports, reserves declined from 9.2 months of imports (2021) to 8 
months of imports (2024). Given the increased uncertainty and challenging external environment, 
further  strengthening  reserves  is  important  to  rebuild  buffers  for  possible  external  shocks  and 
maintaining external stability.   

According to the methodology agreed in the Economic and Financial Committee, and taking into 
account the IMF and World Bank net disbursements, Jordan’s residual external financing gap 
amounts to USD 3.9 billion in 2025-2027. This gap is larger than the one estimated by the IMF, 
as bilateral and multilateral support loans are subtracted in the calculation and are added to the 
financing side below the line (lower part of Table 2). The proposed MFA operation of a further 

8 

 
 
EUR 500 million (USD 5753) would cover 14.6% of the estimated residual external financing gap. 
4 Such an engagement would be in line with the principles of fair burden-sharing among donors 
and value added of the EU’s MFA enshrined in the Joint Declaration of 2013 of the Parliament 
and the Council on Macro-Financial Assistance5 also when adding it to the currently ongoing MFA 
operation.  The  proposed  amount  appears  adequate  in  the  light  of  available  information  about 
Jordan’s macro-fiscal outlook and the resulting external financing needs.6 

Table 2: Jordan’s external financing gap and potential financing sources 

*  All amounts were converted on the basis of the exchange rate of 1 EUR = 1.15 USD, 18.06.2025. 
Sources: Latest IMF staff estimates and projections (June 2025) and commission staff calculations. 

. 

3 Converted to USD using the exchange rate of 1 EUR = 1.15 USD, 18.06.2025. 

4 When expressed in terms of the IMF remaining external financing gap of USD 1.9 billion, the MFA proposal of 
EUR 350 million (USD 385 million) would cover 20.1%. This strongly contrasts with the 5% calculated according 
to the other external financing gap methodology, as in the case of Jordan, the traditionally and structurally large 
engagement from key partners in the form of grants (e.g. US) implies a particularly large correction of the residual 
financing gap relative to the residual financing gap under the IMF methodology. 

5 Joint Declaration by the European Parliament and the Council adopted together with the Decision providing further 
macro-financial  assistance 
to  Georgia  (Decision  No  778/2013/EU  of  12  August  2013).  Available  at: 
https://eurlex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32013D0778&from=EN. 

6 A large part of the outstanding amount is expected to be covered by donors (including EU Member States) in line 
with  their  long-standing  engagement,  although  the  IMF  cautiously  indicated  the  contribution  of  several  important 
donors as “zero” for the years 2025-2027 in the absence of detailed information at this stage. 

9 

 
 
 
 
 
 
 
 
1.5. 

Structural reform challenges 

Reform achievements in 2019-2024 

Jordan’s reform agenda in recent years has been guided by three main strategic documents: the 
Government’s  Economic  Priorities Program  (GEPP)  2021–2023,  the  Five-Year  Reform  Matrix 
2018–2022  (extended  to  2024),  and  the  Government’s  Indicative  Executive  Program  (GIEP) 
(2021-2024).  These  earlier  strategies  served  as  transitional  frameworks,  with  many  of  their 
priorities  feeding  or  complementing  the  Economic  Modernisation  Vision  (EMV)  pillars.  The 
GEPP  aimed  to  address  key  bottlenecks  in  the  labour  market  and  private  sector  through  53 
measurable targets, many of which were drawn from the Matrix and the GIEP. The Reform Matrix 
focused on deep structural reforms to promote inclusive and sustainable growth, create jobs, and 
ensure  fiscal  stability.  Its  reform  pillars  covered  areas  such  as  revenue  mobilization  and  debt 
management,  public  sector  efficiency,  private  sector  development,  labour  markets,  social 
protection,  infrastructure,  utilities,  and  tourism.  The  GIEP  complemented  this  framework  by 
expanding  the  government’s  vision  to  include  political  reforms,  anti-corruption  measures,  and 
priorities related to the green and digital transitions. A mid-term review of the Reform Matrix in 
2020 showed that 46% of the reforms had been implemented. Notable delays were observed in the 
transport and utilities sectors, while it was considered that more substantial progress was achieved 
in  areas  such  as  macroeconomic  stability,  business  environment  reforms,  and  public  financial 
management. 

Jordan  further  advanced  key  reforms  in  2024  and  early  2025.  Key  achievements  included  the 
continued rollout of electricity tariff adjustments for businesses and households and the adoption 
of  a  roadmap  for  improving  cost-efficiency  and  reducing  National  Electric  Power  Company 
(NEPCO)’s  financial  losses.  The  government  also  made  substantial  progress  in  public  sector 
modernisation, particularly in civil service recruitment and promotion, and advanced digitalisation 
efforts,  notably  the  full  rollout  of  e-invoicing  for  sales  transactions.  In  the  area  of  business 
environment reforms, Jordan streamlined procedures for business licensing and customs clearance, 
including mandatory use of the digital licensing hub platform to facilitate predictable import and 
export processing. 

Main government reform priorities ahead  

Jordan’s EMV (Economic Modernisation Vision), launched in mid-2022, outlines an ambitious 
ten-year plan to generate one million  jobs,  improve living  standards,  and  foster stronger, more 
inclusive growth. The EMV was developed through a broad consultative process involving public 
institutions, the private sector, civil society, and international partners. It represents a shift toward 
a longer-term, strategic approach to economic development, contrasting with the previous short- 
and medium-term plans, aiming to address persistent structural challenges and tap into Jordan’s 
competitive  potential.  The  strategy  is  centred  on  eight  main  drivers,  spanning  both  productive 
sectors  such  as  manufacturing,  ICT,  healthcare,  agriculture,  and  tourism,  and  cross-cutting 

10 

 
 
priorities including human capital, business environment reform, sustainable resources, green and 
digital transitions, and urban development.  

For 2025, Jordan's reform agenda, includes enhancing private sector competitiveness, improving 
governance,  and  bolstering  social  resilience.  Key  initiatives  include  streamlining  business 
regulations and enforcing the competition legislation. Labor market reforms are also prioritized to 
increase flexibility and promote higher participation rates among youth and women. In the energy 
sector, efforts are directed towards increasing the share of renewables and enhancing grid stability 
to ensure sustainable energy provision. 

In the context of the EMV, the government also envisages to modernise the public administration. 
The  authorities  have  started  implementing  their  Public  Sector  Modernisation  Roadmap  to 
enhancing  public  sector  services,  where  proposals  have  included  the  merge  of  a  number  of 
ministries and public institutions and the reallocation of competences. Both the EMV and Public 
Sector  Modernisation  are  widely  supported  by  the  different  ministries  as  an  important  push  to 
advance the economic development of the country.  

2. 

OBJECTIVES AND RELATED INDICATORS OF THE MACRO-FINANCIAL ASSISTANCE 

2.1.  Objectives 

The objectives of the proposed MFA operation are to:  

i)  contribute  to  covering  the  external  financing  needs  of  Jordan  in  the  context  of  a  sizeable 

external financing gap; 

ii)  support  the  fiscal  consolidation  effort  and  external  stabilisation  expected  under  the  IMF 

programme; and 

iii) support  and  shield  structural  reform  efforts  that  aim  to  improve  overall  macroeconomic 
management, strengthen economic governance and transparency, and improve the conditions 
for sustainable growth. 

2.2  Monitoring indicators 

The Commission will assess whether the objectives of the assistance have been achieved, including 
as part of the ex post evaluation (see below), on the basis of the following indicators:  

i)   progress with macroeconomic and financial stabilisation, notably by assessing the degree of 

adherence to the IMF-supported programme; and 

ii)   progress with the implementation of structural reforms, notably the specific policy measures 
to be identified as conditions for disbursement of the assistance, which will be included in a 
Memorandum of Understanding to be negotiated between the Commission and the Jordanian 
authorities. 

11 

 
 
 
3.  DELIVERY MECHANISMS AND RISK ASSESSMENT 

3.1 

Delivery mechanisms 

The MFA operation under consideration is expected to cover part of the residual external financing 
gap and would amount to a maximum of EUR 500 million in loans, available for a period of up to 
2.5 years. Given the proposed size of the operation, the Commission is considering releasing the 
assistance in three instalments. 

As the proposed amount represents a significant share of the residual financing, it is important to 
ensure the MFA’s value added, notably by providing the EU with sufficient leverage to promote 
reforms. To this end, policy conditions will be attached to the MFA’s disbursements, with each 
instalment  being  subject  to  good  progress  with  the  IMF  programme  and  the  specific  measures 
agreed with the EU in the Memorandum of Understanding as well as the fulfilment of the political 
precondition (see below). 

The Commission  proposes to  provide the proposed MFA in  the form of  loans. As usual,  these 
loans will carry very favourable conditions in terms of maturity (up to 35 years) and grace period 
(10 years) and an interest rate corresponding to the EU’s triple A rating (the rate at which the EU 
borrows  the  funds  in  the  international  capital  markets,  in  line  with  the  EU  unified  funding 
approach).  

3.2 

Risk assessment 

There are fiduciary, credit, policy and political risks related to the proposed MFA operation. 

There  is  a  risk  that  the  MFA,  which  is  not  dedicated  to  specific  expenses  (contrary  to  project 
financing, for example), could be used in a fraudulent way. In general terms, this risk is related to 
factors such as the quality of management systems in the Central Bank and the Ministry of Finance, 
administrative  procedures,  control  and  oversight  functions,  the  security  of  IT  systems  and  the 
appropriateness of internal and external audit capabilities. 

To mitigate the risks of fraudulent use, several measures will be taken. First, the Loan Agreement 
will comprise a set of provisions on inspection, fraud prevention, audits, and recovery of funds in 
case of fraud or corruption. Also, the assistance will be paid to a dedicated account of the CBJ.  

Moreover, in line with the requirements of the Financial Regulation, the Commission has carried 
out an Operational Assessment of the financial and administrative circuits of Jordan in 2024 (ahead 
of  the  MFA  IV)  to  confirm  that  the  procedures  in  place  for  managing  programme  assistance, 
including MFA, provide adequate guarantees. The operational assessment notes clear progress in 
public finance management systems and other financial circuits since 2020, when the last exercise 
was undertaken. The report concludes that the status of Jordan’s financial circuits and procedures 
is deemed favourable for an MFA operation. As the operational assessment was conducted less 
than a year ago and its findings remain valid, the Commission considers that a new assessment is 
not required for the proposed MFA V operation.   

The Commission is also using budget support assistance to help the Jordanian authorities improve 
their  governance,  rule  of  law,  accountability  and  effective  administration.  These  efforts  are 
strongly supported by other donors. 

12 

 
 
Finally,  the  assistance  will  be  liable  to  verification,  control  and  auditing  procedures  under  the 
responsibility  of  the  Commission,  including  the  European  Anti-Fraud  Office  (OLAF),  and  the 
European Court of Auditors.  

A second risk stems from the possibility that Jordan might fail to service the financial liabilities 
towards the EU stemming from the proposed MFA loans (default or credit risk). This could be 
caused by a significant additional deterioration of the balance of payments and the fiscal position 
of the country or/and by unforeseen events. This risk is mitigated, however, by the fact that the 
EU’s MFA would be part of an international package of official assistance led by the IMF that is 
supporting  an  adjustment  and  reform  programme  to  restore  fiscal  and  balance-of-payments 
sustainability by implementing a series of policy measures, included those to be agreed in the MoU 
between  the  EU  and  the  Jordanian  authorities.  In  particular,  the  IMF  programm  provides 
reassurance in terms of public debt sustainability of the country. Moreover, the risks for the EU 
budget are, in the first instance, covered by the EU’s External Action Guarantee. 

Furthermore,  there  are  risks  stemming  from  a  possible  weakening  of  the  European  and  global 
economic environment and longlasting regional instability, which would have a significant effect 
on Jordan’s fiscal and balance of payments situation. 

Having made a thorough assessment of the risks, the Commission considers that there are sufficient 
grounds and guarantees to proceed with the proposed MFA to Jordan.  

The  Commission  will  maintain  close  contacts  with  the  Jordanian  authorities  during  the 
implementation of the MFA in order to quickly address any concerns that may arise.  

4. 

ADDED VALUE OF EU INVOLVEMENT 

The EU’s financial support to Jordan reflects the country’s strategic importance to the EU in the 
context  of  the  European  Neighbourhood  Policy.  The  MFA  instrument  is  a  policy-based  crisis 
instrument to alleviate short- and medium-term external financial needs. As part of the overall EU 
package  of  assistance,  it  would  help  support  the  EU’s  objectives  of  economic  stability  and 
economic  development  in  Jordan.  By  supporting  the  authorities’  efforts  to  set  a  more  stable 
macroeconomic  framework  and  improve  economic  governance,  the  proposed  assistance  would 
help improve the effectiveness of other EU financial assistance to the country, including budget 
support operations. 

The  EU’s  MFA  would  also  complement  the  standard  EU  aid  packages  provided  under  the 
Neighbourhood, Development and International Cooperation Instrument (NDICI). By supporting 
the adoption by the Jordanian authorities of an appropriate framework for macroeconomic policy 
and structural reforms, the EU’s MFA would increase the added value and effectiveness of the 
EU’s involvement through other financial instruments. The proposed MFA would  substantially 
increase  the  EU’s  leverage  on  policymaking  in  Jordan,  helping  to  steer  the  country  towards  a 
reform trajectory that should restore macroeconomic stability, address governance problems and 
boost potential growth in the longer run. 

5. 

CHARACTERISTICS OF MACRO-FINANCIAL ASSISTANCE 

5.1 

Exceptional character and limited time frame 

The MFA operation would aim to support the restoration of a sustainable external finance situation 
for  Jordan.  It  would  run  in  parallel  to  the  IMF’s  EFF  arrangement  (2024-2027),  which  has 

13 

 
 
completed three positive reviews to date. The proposed MFA would only be implemented if the 
IMF  programme  remains  on  track.  Against  this  background  and  given  the  expected  time  of 
approval  of  the  MFA,  the  assistance  is  expected  to  be  implemented  in  2026-2028.  The 
disbursements are expected to take place in three installments, with an availability period of 2.5 
years.  All  disbursements  are  conditional  on  the  IMF  programme  remaining  on  track  and  on  a 
number of policy measures agreed with the EU and listed in the Memorandum of Understanding 
underpinning the proposed MFA operation. While in the short term, the country faces substantial 
balance-of-payments financing needs, the macroeconomic and structural adjustment programme 
agreed with the IMF and supported by the proposed MFA (and MFA IV, 2025-2027) is expected 
to gradually strengthen the country’s balance of payments and fiscal positions. 

5.2 

Political preconditions and EU-Jordan relations 

Countries that are covered by the European Neighbourhood Policy are eligible for MFA. A pre-
condition for granting MFA is that the eligible country respects effective democratic mechanisms, 
including a multi-party parliamentary system and the rule of law, and guarantees respect for human 
rights.  

Political  pre-condition:  Jordan  fulfils  the  political  preconditions  for  receiving  MFA.  It  has 
continued its political reform efforts to strengthen parliamentary democracy and the rule of law. 
In 2021, Jordan launched a political modernisation process aspiring to foster political participation 
of  women  and  young  people,  to  overcome  tribal  allegiance  and  encourage  the  formation  of 
nationwide programme-based political parties, introduced through amendments to the Elections 
and  Political  Parties  Laws.  In  2023,  the  government  amended  the  Labour  Code  in  line  with 
international human rights standards.   

While major political, security, economic and social challenges remain, despite a very challenging 
regional  context,  Jordan  is  making  steps  towards  a  more  effective  democratic  political  system 
based  on  the  rule  of  law  and  respect  for  human  rights.  The  EU  remains  fully  committed  in 
supporting Jordan in this challenging transition process. In this context, the political preconditions 
for Macro-financial assistance are considered to be satisfied.7.  

EU-Jordanian relations: The EU and Jordan enjoy good relations and have been linked by an 
Association  Agreement  since  2002  (advanced  status  since  2010).  In  2022,  they  signed  the 
Partnership Priorities (PPs), which aim to strengthen cooperation even further and will guide the 
partnership until 2027. The PPs are based on common values and dialogue, and promote reforms 
in areas such as good governance, the rule of law, human rights, security, social cohesion and equal 
opportunities for all, non-discrimination, environmental and climate protection, green economy, 
digitalisation, energy, water,  education, job creation,  macroeconomic stability and the business 
environment. 

5.3 

Complementarity 

The proposed MFA would complement the assistance provided by other multilateral and bilateral 
donors in the context of the ongoing IMF programme, ensuring reasonable burden-sharing. The 
EU’s  MFA  would  also  complement  EU  support provided  under  the  NDICI.  By  supporting  the 

7  A  more  detailed  assessment  of  Jordan’s  compliance  with  the  political  precondition,  provided  by  the  European 

External Action Service (EEAS), is reproduced in the Annex to this staff working document. 

14 

 
 
 
adoption by the Jordanian authorities of an appropriate framework for fiscal and macroeconomic 
policy and structural reforms, the EU’s MFA would increase the added value and effectiveness of 
the  EU’s  involvement  through  other  financial  instruments.  The  proposed  MFA  would  increase 
substantially the EU’s leverage on policymaking in Jordan, helping steer the country towards a 
sustained reform trajectory to restore macroeconomic stability, address governance problems and 
boost potential growth in the longer run and in a sustainable manner. 

5.4 

Conditionality 

Disbursements under the proposed MFA operation will be  conditional on  continued  successful 
programme reviews under the IMF programme. In addition, the Commission and the Jordanian 
authorities  should  agree  on  a  specific  set  of  structural  reform  measures,  to  be  set  out  in  a 
Memorandum of Understanding. These reform measures should support the authorities’ reform 
agenda and complement the programmes agreed with the IMF, the World Bank and other donors, 
as  well  as  the  policy  reform  programmes  financed  by  the  EU’s  under  NDICI.  They  should  be 
consistent  with  the  main  economic  reform  priorities  agreed  between  the  EU  and  Jordan  in  the 
Association  Agreement,  the  PPs,  Jordan’s  Economic  Modernisation  Vision  and  other  strategic 
documents.   

The  Commission  will  seek  a  broad  consensus  with  the  Jordanian  authorities,  to  ensure  their 
ownership and foster smooth implementation of the agreed conditionality. These policy conditions 
should  address  some  of  the  fundamental  weaknesses  shown  over  the  years  by  the  Jordanian 
economy and economic governance system. Possible areas of conditionality could, in principle, 
include  reforms  to  improve  economic  governance,  including  public  finance  management  and 
measures  to  strengthen  domestic  revenue  mobilization,  social  and  labour  market  policies,  and 
governance and fight against corruption, business environment and utilities. 

5.5 

Financial discipline 

The  proposed  MFA  operation  for  Jordan  of  up  to  EUR 500 million  in  loans  is  planned  to  be 
disbursed in three instalments to be released from 2026, until the programme expires in 2028. The 
required provisioning at a rate of 9% of the External Action Guarantee will be programmed under 
the NDICI, for a total amount of EUR 45 million (budget line 14 02 01 70 ‘NDICI – Provisioning 
of the Common Provisioning Fund’).  

6.  EVALUATION AND COST-EFFECTIVENESS 

This assistance is of exceptional and macroeconomic nature and will be evaluated in line with the 
standard Commission procedures.  

6.1 

Evaluation 

Ex post evaluations of MFA operations are envisaged in the multi-annual evaluation programme 
of  the  Commission’s  Directorate-General  for  Economic  and  Financial  Affairs.  An  ex post 
evaluation of the proposed MFA to Jordan will be launched within a period of 2 years after the 
availability period has expired. A provision for the ex post evaluation is included in the proposed 

15 

 
 
Decision  for  the  assistance,  and  will  also  be  included  in  the  Memorandum  of  Understanding. 
Budget appropriations from the MFA grant budget line will be used for this evaluation.   

6.2 

Achieving cost-effectiveness 

The proposed assistance would entail a high degree of cost-effectiveness for several reasons. 

i)  Since the assistance would  be leveraged by  the assistance  provided by the international 
financial institutions, with which, as noted, it would be closely coordinated, its ultimate 
impact could be very significant compared to its cost. Moreover, in negotiating specific 
policy  conditions,  the  Commission  will  be  able  to  draw  on  the  expertise  of  these 
institutions, including the IMF and the World Bank, and to influence their conditionality 
as well in ways that will take into account the EU’s views.  

ii)  Providing coordinated macroeconomic support to Jordan on behalf of the EU countries, the 
MFA would be more cost-efficient than the provision of a similar total amount of financial 
support by EU Member States individually.  

iii) A substantial part of the proposed assistance would be provided in the form of loans, the 

budgetary impact of which is more limited. 

iv)  Finally,  the  Commission  will  aim  to  achieve  synergies  with  other  EU  policies  and 
instruments used to support the implementation by the beneficiary of the relevant measures.  

16 

 
 
 
 
 
 
ANNEX 

EUROPEAN EXTERNAL ACTION SERVICE 

Assessment of democracy, Human rights, the rule of law and political reforms in 
Jordan 

Jordan  is  a  strategically  important  partner  of  the  EU  in  the  Middle  East,  a  voice  of 
moderation and peace in a very challenging regional context. Jordan also plays a very 
positive role in ensuring the Southern co-ownership of the Union for the Mediterranean 
(UfM), which it co-chairs with the EU since 2012. In the context of the 2002 Association 
Agreement and the revised Partnership Priorities for 2021-2027, the EU and Jordan have 
committed  to  deepen  their  dialogue  and  collaboration  through  a  new  Strategic  and 
Comprehensive Partnership (SCP). The joint declaration signed in January 2025 aims to 
reinforce cooperation across policy areas, and to “better tackle common challenges and 
advance shared values of peace, democracy and human rights” . 

Amid regional tensions, through intense political and diplomatic action, Jordan has been 
advocating peace and the respect for international law in the region. In parallel, despite 
many political, security, economic and social challenges, Jordan is keen to project stability 
by continuing its own modernisation agenda.  

Under the leadership of King Abdullah II, Jordan is making steps towards a more inclusive 
democratic political system with enhanced participation particularly of women and youth.  

Jordan’s engagement on democracy and human rights is regular and profound both with 
the  EU  and  in  multilateral  fora.  The  Association  Council  on  15  July  2024  in  Brussels 
discussed openly relevant issues, and regular meetings of thematic joint subcommittees 
take place alternatively in Brussels and Amman. .  

During  its  fourth  Universal  Periodic  Review  in  January  2024,  Jordan  supported  204 
recommendations out of 279, an acceptance rate of 73%. The peer review highlighted 
many achievements and commended Jordan for being a global leader in refugee support, 
hosting millions of refugees from the region.  

Jordan is implementing its political modernisation agenda, aimed at establishing a party-
based political system and a more representative electoral process. Jordan’s commitment 
to  democratic  processes  is  evidenced  by  the  holding  of  elections  despite  regional 
instability  and  security  concerns.  The  parliamentary  elections  on  10  September  2024 
concluded the first stage of this process that was launched in 2021 by King Abdullah II. 

17 

 
 
 
In  support  of  these  efforts,  the  EU  deployed  an  Election  Observation  Mission  that 
delivered an overall positive assessment , including a set of recommendations. The EU 
remains  fully  committed  to  supporting  Jordan  in  this  endeavour  through  both  political 
dialogue and cooperation. 

The  Constitution of  Jordan  enshrines  the  respect  of  fundamental rights  and  freedoms, 
good governance and the rule of law. However, there is scope for improvement regarding 
their implementation. 

The space for civil society in Jordan has faced several limitations in recent years, notably 
through legal and administrative restrictions, as well as enhanced monitoring of activities 
of  civil  society  organisations.  The  EU  in  statement  has  expressed  concern  after  the 
adoption of the amended Cybercrime law in August 2023 .  

The  new  laws  on  Political  Parties  and  on  Elections  to  the  House  of  Representatives 
promote women's participation in politics. The Labour Law was amended in 2023 to better 
protect women against sexual harassment and sexual assaults at the workplace and to 
provide  childcare  services  at  office  premises.  In  practice,  however,  everyday  life  for 
women can be challenging in Jordan. Legal discrimination persists under the Personal 
Status Law, and women are unable to pass their citizenship to their children. Social and 
cultural norms hinder women’s participation in the labour market, with female labour force 
participation at just 14%. Gender-based and domestic violence is experienced by 27% of 
Jordanian women according to the World Bank. Jordan’s first ever Law on the Rights of 
the Child was adopted in 2022 covering a broad range of rights.  

Jordan is a regional leader on the rights of persons with disabilities, illustrated by its co-
hosting of the Global Disability Summit with Germany in 2025. Jordan has gained three 
places in the World Economic Forum Global Gender Gap Index 2024, ranking 123rd out 
of 146 countries, improving its overall score. 

In sum, while major political, security, economic and social challenges remain, despite a 
very  challenging  regional  context,  Jordan  is  making  steps  towards  a  more  effective 
democratic political system based on the rule of law and respect for human rights. The 
EU remains fully committed in supporting Jordan in this challenging transition process. In 
this context, the political preconditions for Macro-financial assistance are considered to 
be satisfied. 

18