reduction through their fiscal systems, Jordan’s performance (6<sup>th</sup> out of 14) is mid-range as well but less than half of that in the top three performing countries, Mexico (2012), Panama and Uruguay.

**_Figure 10_** _Fiscal Impact on Monetary Poverty (points reduction in poverty headcount, PPP $3.2)_

<!-- Start of picture text --> 6<br>4<br>2<br>0<br>-2<br>-4<br>-6<br>-8<br>Tanzania (2011) Ghana (2012) Armenia (2011) Sri Lanka (2009) Brazil (2008) Namibia (2009) Peru (2011) El Salvador (2011) Dominican Republic (2006) Colombia (2010) Russia (2010) Colombia (2014) Paraguay (2014) Chile (2013) Jordan (2018) Romania (2016) Mexico (2014) Mexico (2012) Panama (2016) Uruguay (2009)<br><!-- End of picture text --> Source: CEQ Institute database (as of May 2020) Why does Jordan’s fiscal policy not have as much impact on equity and in poverty as in many other countries? Jordan’s revenue and spending as a percentage of GDP is relatively high at the aggregate level compared to other countries in the CEQ database. However, the composition of both has historically been less progressive than elsewhere. We first look at the revenue levels and composition. In terms of total fiscal revenue as a percentage of GDP, Jordan performs in the middle of the database; at 24.8 percent of GDP in 2010, it was 18<sup>th</sup> best of the 49 country-years, although that had fallen to 26<sup>th</sup> by 2018. However, this masks Jordan’s significant reliance on non-tax revenue. In terms of total tax revenues, Jordan was 25<sup>th</sup> (2010) and 28<sup>th</sup> (2018) at 15.7 percent and 15.0 percent respectively. Finally, at less than 1 percent of GDP (Figure 11), Jordan’s revenue collection from PIT—the most progressive revenue mechanism—is particularly low, while its dependence on indirect taxes (around 10.5 percent of GDP) is relatively high (Figure 12).

On the spending side, Jordan’s central public expenditures in 2018 were 18<sup>th</sup> out of 46 country-years observations almost the same as 2010 (15<sup>th</sup> ) as a percent of GDP. However, considering in-kind expenditures on health and education where Jordan achieves the greatest absolute inequality reduction and for which the income gradient in HCI is flatter than in most countries for which we have data, total education spending was still only 33<sup>rd</sup> out of 47 in 2018 (38<sup>th</sup> in 2010), and 32<sup>nd</sup> (2018) and 24<sup>th</sup> (2010) out of 48.<sup>56</sup> Nonetheless, significant policy changes in social protection spending between 2010 and 2018 (mostly in the last couple of years) have had a material impact. In 2010, total direct transfer spending (generally the most progressive type of spending) was 30<sup>th</sup> out of 43; by 2018 it was 17<sup>th</sup> . Once Takaful expansion is completed in 2021, it would be 11<sup>th</sup> . Moreover, the poverty-targeted approach of Takaful compared to the less progressive NAF categorical targeting and near-universal bread subsidy compensation benefits means the impact on inequality has also been increasing. The impact of direct transfers on inequality was only 30th out of 43 country-years, reducing inequality by only 0.7 points (Figure 13). By 2018 it was 20th (1.2 points) and our projections for 2021 once the full Takaful expansion is taken into account is 11th (2.4 points), meaning inequality is reduced by direct transfers alone by 2.4 points.

56 Not all fiscal components are reported for all countries in the CEQ database, so the denominator varies by item.