@#&OPS~Doctype~OPS^dynamics@afpidaprcoverpage#doctemplate Report No: PIDIAF0019 Project Information Document (PID) Appraisal Stage | Date Prepared/Updated: 01-Dec-2024 The World Bank Strengthening Reform Management in Jordan (P171965) – Additional Financing Request 2 @#&OPS~Doctype~OPS^dynamics@afpidaprbasicinformation#doctemplate BASIC DATA A. Product Information Main: Strengthening Reform Management in Jordan (P171965) Operation ID Product/Financing Instrument P171965 Investment Project Financing (IPF) Beneficiary Country/Countries Geographical Identifier Jordan Jordan Practice Area (Lead) Governance Borrower(s) Implementing Agency Ministry of Planning and International Cooperation Ministry of Planning and International Cooperation Additional Financing Request 2 Estimated Appraisal Date Estimated Board Date 25-Nov-2024 20-Dec-2024 Development Objective Current Development Objective (Approved as part of Additional Financing package on 28-Jun-2023) To strengthen coordination and delivery of policy reforms in Jordan with a focus on the updated Reform Matrix Components 1. Enhancing Reform Management by the Reform Secretariat 2. Supporting reform implementing MDAs through Reform Support Fund 3. Strengthening the PIM-PPP and Public Procurement Framework and Function @#&OPS~Doctype~OPS^dynamics@afpidaprprojectfinancing#doctemplate COSTS & FINANCING (US$, Millions) SUMMARY Proposed Last Approved Addition Total Page 1 The World Bank Strengthening Reform Management in Jordan (P171965) – Additional Financing Request 2 Total Operation Cost 15.80 7.50 23.30 Total Financing 15.80 7.50 23.30 Of which IBRD/IDA 0.00 0.00 0.00 FINANCING DETAILS Additional World Bank Group Financing Last Approved Financing Total Non-World Bank Group Financing Trust Funds 15.80 7.50 23.30 Free-standing TFs for BankNEW 9.30 7.50 16.80 Trust Funds 6.50 0.00 6.50 IDA Resources @#&OPS~Doctype~OPS^dynamics@afpidaprenvsocrisk#doctemplate Other Decision (as needed) B. Introduction and Context Country Context 1. Jordan’s economy has shown resilience against external shocks, and the impact on economic growth from the ongoing conflict in the Middle East has been relatively contained, with the economy expanding by 2.0 percent in the first quarter of 2024, down from 3.0 percent in the same quarter of 2023. The slowdown was driven by reduced contributions from sectors more exposed to the conflict and trade disruptions in the Red Sea. Inflationary pressures eased in the first seven months of 2024, with headline inflation falling to 1.7 percent from 2.7 percent in 2023. The Central Bank of Jordan maintained its policy rate at 7.25 percent. The real effective exchange rate appreciated in the first five months of 2024, driven by the US dollar's strength despite favorable inflation in Jordan. Efforts to expand economic opportunities have shown results. The Department of Statistics reported that 34.0 percent of the working-age population was economically active on average in H1-2024, up from 33.2 percent during the same period last year. Women's labor force participation rose, from 13.8 percent to 14.7 percent on average during H1-2024, while unemployment declined from an average of 22.1 percent in H1-2023 to 21.4 percent during H1-2024. Page 2 The World Bank Strengthening Reform Management in Jordan (P171965) – Additional Financing Request 2 1. In 2021-2022, the Government of Jordan (GOJ) has adopted a three-track program of political, economic, and public sector modernization reforms to address these challenges—and with the explicit purpose of strengthening the social contract between the government and citizens. The three reform dimensions are closely interlinked. Political reforms intended to modernize the political system led to party-driven parliamentary and political life, based on which a new Elections Law and a new Political Parties Law were enacted in addition to constitutional amendments. The Public Sector Modernization Roadmap targets improved government effectiveness and accountability through stakeholder consultation, citizen feedback loops and e-participation, and reforming human resource management in the civil service. The Economic Modernization Vision (EMV) aims to double the country’s growth rate to absorb a million Jordanian youth into the job market over the next ten years, improve living conditions and welfare, and promote sustainable growth. The objective of the EMV is threefold: to (a) transform the economy, (b) improve the quality of life, and (c) ensure sustainability. Eight interdependent drivers support the achievement of these objectives: High-Value Industries, Future Services, Destination Jordan, Sustainable Resources, Invest Jordan, Vibrant Jordan, Green Jordan, and Smart Jordan. Sectoral and Institutional Context 2. The original Project supported the implementation of the Five-Year Reform Matrix for 2018-2022, focused on promoting inclusive growth and job creation, and was launched by the GoJ in February 2019. The Reform Matrix comprised of a set of policy and structural sector specific reforms over a period of five years that pertain to the most critical economic policy issues facing Jordan. The original project has been implemented by the Reform Secretariat in the Ministry of Planning and International Cooperation (MOPIC) and the Government Procurement Department in the Ministry of Finance. The Reform Secretariat has been providing technical assistance and coordination to ministries, departments, and agencies (MDAs) to help implement various reforms outlined in the Reform Matrix for 2018-2022, which includes Public Investment Management (PIM), Public Private Partnerships (PPP), and public procurement reforms. The original project has also supported the implementation of the Reform Support Fund (RSF), a financial vehicle that facilitates the Reform Secretariat to extend coordination support and technical assistance to MDAs implementing the list of reform activities in the Reform Matrix. 3. On October 19, 2022, the Cabinet of Ministers approved the updated Reform Matrix, which expanded the scope of reforms and extended its timeline from the end of 2022 to the end of 2024. The updated Reform Matrix 2018-2024 added three pillars, including (a) public sector efficiency and governance, (b) agriculture, and (c) tourism. The Reform Matrix was updated through intensive stakeholder consultations internally within the government and externally with the private sector, civil society, and international partners. In response to the expansion of the Reform Matrix, the MOPIC requested additional financing and restructuring of the original project. In 2023, the first additional financing for US$9.3 million, on top of the original US$6.5 million, was approved, increasing the Project's total allocation to US$15.8 million. The first additional financing extended the Project closing date to June 30, 2025. 4. The Reform Secretariat is updating Reform Matrix 2.0 in consultation with the donors . The Reform Matrix 2.0 has extended the duration of the reform initiative by three years (2026-2028) and expanded the policy reform actions to be undertaken under the original 12 policy reforms. 5. The Reform Secretariat plays a critical role in ensuring that the updated Reform Matrix 2.0 is fully aligned with the Economic Modernization Vision 2033 and other government reform initiatives. The updated Reform Matrix is aligned with the Vision, the overarching economic strategy for Jordan for the next ten years, both the reform areas and implementation arrangements. The GoJ approved the first phase of executive plan for the Vision in December 2022. MOPIC is vested with the responsibility to coordinate the preparation of these plans and the Reform Secretariat supports the working groups tasked with drafting them. To coordinate and harmonize the reforms in the updated Reform Matrix with other government reform initiatives, the Reform Secretariat will liaise with the Delivery Unit and the Public Sector Modernization unit in the Prime Page 3 The World Bank Strengthening Reform Management in Jordan (P171965) – Additional Financing Request 2 Minister’s Office (PMO), which has the mandate to oversee the implementation of the Vision and other economic and governance reforms C. Proposed Development Objective(s) 6. The Project Development Objective (PDO) remains relevant and will not be changed: “to strengthen coordination and delivery of policy reforms in Jordan with a focus on the updated Reform Matrix.� D. Project Description 7. The project will use the existing components of the project. Component 1 would continue to reform management by the Reform Secretariat; Component 2 will support reform implementation through the Reform Support Fund; and Component 3 will continue supporting PIM-PPP and Public Procurement framework and functions. 8. Component 1. Enhancing Reform Management by the Reform Secretariat. This component will continue supporting RS in maintaining its current institutional capacity to provide technical and coordination support to the reform-implementing MDAs and management of the Project activities as well as managing two of the World Bank Program for Results operations. This component will finance the cost of the RS’s team during the additional implementation period under the proposed additional financing, as well as the operating costs of reform coordination with reform-implementing MDAs and the operating costs required for the management of the Project. 9. Component 2. Supporting reform implementing MDAs through the Reform Support Fund. Component 2 will continue supporting the operationalization of the Reform Support Fund (RSF) established within the RS under the original financing of the Project. Through the RSF, the RS will continue providing technical and coordination support to the reform- implementing MDAs on their requests for the support needed to implement policy reforms as outlined in the updated Reform Matrix 2.0. The technical assistance involves seconding technical staff to MDAs, hiring consulting services to commission assessments, developing guidelines and procedures to inform policy reforms, training, and procuring IT systems and equipment. 10. Component 3. Strengthening the PIM & PPP and Public Procurement Framework and Function. This component specifically supports the implementation of PIM, PPP, and public procurement reforms. The AF will continue to build the capacity of the PIM and PPP units further through staffing, consulting, and other services and IT developments. The additional financing will support strengthening the Institutional capacity of PPC and PCC and professionalization/capacity building of the procurement workforce. @#&OPS~Doctype~OPS^dynamics@afpidlegalpolicyandscreeningrisk#doctemplate Legal Operational Policies Policies Triggered? Current Projects on International Waterways OP 7.50 No Projects in Disputed Area OP 7.60 No Summary of Screening of Environmental and Social Risks and Impacts Page 4 The World Bank Strengthening Reform Management in Jordan (P171965) – Additional Financing Request 2 As with the parent project and the first AF, the environemntal and social risk rating associated with the second AF is considered Moderate, similar to the parent project and the first AF. The project involves 'soft' interventions like purchasing IT equipment and furniture, with no civil works, resulting in minimal environmental impact. Indirect environmental risks stem from reforms in sectors such as debt management, digital economy, and climate investments. No environmental assessment is required due to the policy-oriented nature of activities, and the risk is rated Low. If strategies or legal frameworks are developed, environmental aspects should be incorporated in the appropriate assessments, and the risk rating adjusted accordingly. Social risks are considered Moderate, mainly due to the indirect effects of reforms on vulnerable groups and potential socio-economic impacts. The project does not involve land acquisition or civil works, but the reforms may have broad social benefits and risks, necessitating adequate stakeholder engagement and information disclosure. ESS1 is crucial for assessing and managing indirect environmental and social risks and impacts of reforms or investment projects. The project will support 'soft' interventions only, such as hiring expert consultants at RS and MDA levels to inform policy dialogue, with no direct environmental or social risks or impacts. The Reform Support Fund will not involve any civil works or land acquisitions. The project will indirectly support numerous policy or procedural reforms through the updated Reform Matrix, coordinated by the Reform Secretariat. These reforms could have downstream environmental and social implications, such as PPP reforms, investment strategies, and climate change strategies. While reforms may offer broad social benefits, they could also cause adverse socio-economic impacts or social tensions if not informed by stakeholder engagement and information disclosure. Many reforms and technical assessments are supported by donor-funded technical assistance under the Multi-Donor Trust Fund (MDTF), incorporating environmental and social screening by the Bank. The existing environmental and social (E&S) screening procedures in the Project Operations Manual (POM) aim to ensure that E&S risks and impacts are considered in project-funded reforms and studies. However, a review revealed gaps in the current procedures, leading to incomplete E&S risk management. To address these issues, the Reform Secretariat (RS) will enhance and expand the E&S procedures, developing more detailed measures to ensure thorough consideration and management of all potential E&S risks and impacts. The updated procedures will be incorporated into the revised POM under the second AF, ensuring formal adoption and consistent application, thereby strengthening the project's overall E&S framework. Component 3 of the project focuses on building the capacity of the PPP/PIM unit to implement its processes effectively. These units act as gatekeepers in the PPP and PIM lifecycles, screening and reviewing proposed public investments and public-private partnership projects for feasibility. The processes have been informed by environmental and social considerations consistent with World Bank PforR Core Principles. The Reform Secretariat (RS) at MoPIC will ensure that the PPP unit at the Ministry of Investment hires specialized environmental and social consultants for each feasibility study to align with the ESSs. These requirements are referenced in the updated Environment and Social Commitment Plan (ESCP) for the second AF. The project's E&S documents, including the ESCP and the Stakeholder Engagement Plan (SEP), have been updated for the second AF. The project will use the borrower's framework for ESS2, and the planned activities under the second AF would not require a SESA unless otherwise indicated by E&S screening. The project's grievance mechanisms (GMs) need strengthening, as highlighted by the last project's MTR. The RS has developed a reporting template shared with all MDAs, with the first GM reporting expected by January 2025. The SEP, updated and disclosed in November 2024, aims to enhance communication channels, strengthen MDAs' capacity, promote transparency, and foster inclusive participation, particularly among vulnerable groups. The plan emphasizes the importance of a robust grievance mechanism and systematic monitoring and reporting. E. Implementation 11. The second AF will continue to use the same implementation arrangements. The RS will continue to be the PMU responsible for managing this Project, responsible for, among other things, overall day-to-day project management and Page 5 The World Bank Strengthening Reform Management in Jordan (P171965) – Additional Financing Request 2 coordination of reforms, liaising with various entities on reforms, including PIM, PPP, and public procurement reforms. The Secretariat will also continue to be responsible for financial management, procurement, environment and social safeguards, and monitoring and evaluation of the project. @#&OPS~Doctype~OPS^dynamics@afpidisdscontactpoint#doctemplate CONTACT POINT World Bank Jad Raji Mazahreh Senior Financial Management Specialist Borrower/Client/Recipient Ministry of Planning and International Cooperation Implementing Agencies Ministry of Planning and International Cooperation Omar Fanek Director Reform Secretariate omar_fanek@reformjo.org FOR MORE INFORMATION CONTACT The World Bank 1818 H Street, NW Washington, D.C. 20433 Telephone: (202) 473-1000 Web: http://www.worldbank.org/projects @#&OPS~Doctype~OPS^dynamics@afpidapproval#doctemplate APPROVAL Task Team Leader(s): Jad Raji Mazahreh Approved By Page 6 The World Bank Strengthening Reform Management in Jordan (P171965) – Additional Financing Request 2 Practice Manager/Manager: Clelia Kalliopi Helena Rontoyanni 17-Oct-2024 Country Director: Holly Welborn Benner 01-Dec-2024 Page 7