Jordan commodity import program

Evaluation covers the period 1985-4/87 and is based on document review, site visits, and interviews with USAID/J and Government of Jordan (GOJ) officials. Although slow to get underway, the CIP has generally been well managed, and $45 million have now been committed (of a total of $50 million in the first two tranches). The CIP"s slow beginning in the private/mixed sector has been resolved through procedural adjustments, and delays on the public sector side have been partially resolved. Functioning within the GOJ"s relatively open and efficient foreign exchange market, the program seems to be meeting its main objective of increasing Jordan"s foreign exchange supply. Better USAID/J understanding of the GOJ budget process, however, would enable the CIP to ensure more efficient use of the foreign exchange and reduce purchases of items such as vehicles and furniture. Achievement of other CIP objectives has been limited. Evidence suggests that imports have not increased substantially, although goods have probably been ordered earlier and perhaps in a greater share from the United States. Little progress has been made with respect to policy dialogue, as the GOJ, exercising caution in the current uncertain economic climate, has instituted no significant reforms. Similarly unfulfilled is the CIP objective to promote lending to the private sector. The Jordanian banks involved in program still prefer to lend to secure borrowers - companies backed by the GOJ and those which supply it. It is recommended that USAID/J utilize the negotiations on release of the third tranche to press for commitments to use CIP funds (and local currency generations as well) to promote the private sector. The Mission should also: continue to pursue policy dialogue aggressively, as prolongation of the present economic downturn could increase CIP leverage; begin a publicity campaign to acquaint more potential Jordanian importers with the program"s adjusted (more favorable) terms; and hire additional personnel to check the growing arrivals ordered under the program and to undertake further operational refinements aimed at hastening public sector disbursement.