THIRD QUARTER 2005 · World Bank Contacts .....................................................................................................................................................................................2 · Pensions in Jordan: The Risks of Complacency .................................................................................. 3 ·Recent Economic Developments .............................................................................................................................................. 8 · Bank Group Operations ......................................................................................................................................................................................12 · News, Recent and Upcoming Activities ............................................................................................................................. 17 ·Recent World Bank Publications ............................................................................................................................................................ 20 Joseph Saba, Country Director World Bank InternetAddress: Tel. (202) 473 2992 www.worldbank.org Fax (202) 477 1482 Email: Jsaba@worldbank.org To view and order World Bank Publications: http://publications.worldbank.org/ecommerce/ OsmanAhmed, Lead Country Officer Tel. (202) 473 7063 For more information on World Bank Fax (202) 477 1482 programs in Jordan: Email: Oahmed@worldbank.org www.worldbank.org/mena SebnemAkkaya, Senior Country Economist To locate research papers, best practices, Beirut Country Office terms of reference, presentations, key policies, Tel. (961 1) 987 800 communities of practice, project information Fax (961 1) 986 800 and useful links from the World Bank and Email: Sakkaya@worldbank.org other sites: Email: askMNA@worldbank.org Sophie Warlop, OperationsAnalyst Tel. (202) 473 7255 Fax (202) 477 1482 Email: Swarlop@worldbank.org Loraine James, ProgramAssistan Tel: (202) 473 5621 Fax: (202) 477 1482 Email: Ljames@worldbank.org World BankAddress: 1818 H Street, NW Washington, DC 20433 Editorial Team: SebnemAkkaya AhmedAttiga Chadi Bou Habib David Robalino Sophie Warlop With special thanks to Mary Saba 2 Third Quarter 2005 PENSIONS IN JORDAN: THE RISKS OF COMPLACENCY Jordan Social Security Corporation (SSC) is one cent of GDP. Projections under conservative as- of the best pension systems in the Middle East sumptions suggest that within the next 10 to 15 and North Africa region. The SSC is an integrat- years expenditures will surpass revenues and that ed scheme for all categories of workers, including reserves could be depleted before year 2035 (see new generations of civil servants and the military. Figure 1). Its fund remains in a comfortable financial situa- tion. With 470 thousand contributors, its revenues The problem is not the aging of the population. amount to JD151 million (2.4 percent of GDP), Rapid aging in Jordan will only start two decades while the pensionspaid to58thousandbeneficiaries from now. But the rules determining eligibility remain below JD67 million (1.4 percent of GDP). conditions for a pension, the level of this pension, The SSC has important reserves that represent over and the contribution rate are badly designed. In a quarter of the Jordanian economy. general, the replacement rates (the ratio between the pension and the last salary) that individuals After the recent creation of the Investment Unit, receive upon retirement at different ages are too governance and investment policies have im- high, relative to the contribution rate. Similar proved dramatically. The funds are managed by a problems also apply to disability and survivor- team of professionals with extensive experience in ship pensions, although these are not discussed the field and clear targets for rates of return, risks, in this article. and benchmarks to assess performance. Most im- portantly, under the current SSC management team, several initiatives are currently under implementa- In a way, the system has been designed with the tion to strengthen the administration and informa- implicit assumption that, from time to time, when tion systems, and the human resources, aiming to things start to deteriorate, the rules would be ad- improve the quality of the services provided. justed. For instance, the contribution rate and/or the retirement age could be increased down the Several structural problems are affecting the road; the replacement rate could be reduced in or- SSC. The manifestation of these problems is not der to make things better. However, there are two problems with this approach. First, plan mem- yet evident, but will become evident over the me- bers face uncertainty about what these future ad- dium and long term. Hence, the risk that the current justments will be. Indeed, these depend solely on structural weaknesses could go unnoticed and that the decisions of future managers, members of the the SSC will fail to introduce the reforms necessary SSC Board, and policymakers. The decisions are to ensure its ability to provide adequate and secure discretionary and, chances are, they will also be pensions to current and future generations. This ad hoc, meaning not the product of an objective short article reviews some of the main problems and rigorous analysis of the causes of the finan- that need attention, the possible solutions, and what cial problem. Second, adjustments might simply it would take to move forward with implementa- not be implemented until it is too late. In this tion. case, future generations will have to face abrupt increases in taxes or reductions in benefits. Benefits That Are Not Secure This problem relates to the security of ben- efit promises. As the system currently stands, the SSC will simply not be able to deliver on its promises to its plan members. The SSC has reserves worth 25 percent of GDP, but the pen- sion promises to plan members--the so-called implicit debt of the system--are worth 75 per- Third Quarter 2005 3 Figure 1: Medium and Long-Term Cash and Net Balances of the SSC Source: Calculatios by David Robalino. This discretionary and ad-hoc approach to ad- are not available or are too risky. It is good public justing the rules of the system was reinforced policy, therefore, to introduce mandatory systems by the amendments to the Social Security Law to ensure that individuals have access during old recently submitted to the Jordanian Cabinet by age to a pension that is sufficient to guarantee an the Board of the SSC. The amendments have the adequate standard of living. This does not imply, right intentions. For instance, as proposed, it is however, that the public pension system should be important to increase the penalties that individ- the only source of savings for retirement. On the uals have to pay for early retirement. The pro- contrary, individuals should have incentives to di- posal, however, is to transfer to the Board of the versify savings--and therefore risks--outside the SSC the power to decide on the level of these public system. penalties. Again, this creates uncertainties for plan members because there is no way to predict The SSC's mandate in terms of income replace- future behavior of policymakers, and it is also ment is average by international standards and ex- risky for the system, since its finances remain tends to all workers independently from their level vulnerable to adjustments. Similar issues occur of income. The targeted gross replacement rate for with current policies regarding the indexation of the average full career worker is 75 percent, which pensions. There are no transparent and automatic is close to the average for the sample of countries rules. Plan members are exposed to the risk of where information is available (see Figure 2). The inflation, while, again, the system is exposed to average itself, however, can be considered ambi- the high risk of adjustments. tious because some of the countries included in the sample have targets of over 100 percent. In addi- Inefficient Diversification Of tion, Jordan has no official ceiling on pensionable earnings. Therefore, the same replacement rate ap- Savings For Retirement plies to low and high income workers. Since pen- sions are tax exempted, the net replacement rate There are usually three reasons for introducing a for high income workers is even higher--above 80 mandatory public pension system. First, some in- percent of preretirement income. dividuals do not have the means to save enough to secure a minimum standard of living during The minimum pension is also quite high. At the old age. Second, individuals who have the means international level, the minimum pension guaran- to save might have problems planning for the fu- tees represent 30 percent of economy-wide average ture and under save when young. Third, in some earnings. In Jordan, the minimum pension is equal cases, individuals might not have access to the ap- to the minimum wage and represents 35 percent of propriate financial instruments, either because they the economy-wide average earnings, or 2.5 times 4 Third Quarter 2005 Figure 2: Gross Replacement Rates and Minimum PensionsAround the World Source: David Robalino, et al. the national poverty line. This is not only an expen- can be measured by the implicit rate of return sive minimum pension guarantee, but is also one that individuals receive on their contributions1 . It that can discourage work. Indeed, low income in- turns out that when benefit formulas and eligibil- dividuals would have little incentives to work and ity conditions are not properly designed, implicit earn the minimum wage, if they can receive the rates of return become a function of career and same level of income when retired. wage history, and enrollment/retirement strate- gies. This is what occurs in the case of the SSC. One problem with a large mandate, in terms of Individuals with flat wages--usually blue collar income replacement, is that it is costly to finance. workers--receive lower rates of return than indi- Since financing is done through taxes on labor, the viduals with fast growing wages. Also, individu- generosity of the system with insiders can have a als who retire early and enroll late receive higher negative impact on outsiders (e.g., the unemployed rates of return. Hence, redistribution is not trans- and workers in the informal sector). Another prob- parent and it is likely to be regressive--that is lem is that it leaves little room for the development from low to high income workers. Clearly, work- of voluntary private pension plans. This is regretta- ers benefiting from the minimum pension would ble, since international experience suggests that the receive the highest rates of return. This minimum development of these plans, by mobilizing long- pension, however, can also be received by middle term savings, can contribute to the development of income individuals with short careers. Low in- the financial sector. come individuals with long careers are unlikely to benefit. Regressive Redistribution And Low Coverage Another fundamental problem with the current system is the low level of coverage. Less than 35 percent of the labor force is currently enrolled, It is often mentioned that defined benefit pension systems financed on a pay-as-you-go basis redis- tribute income from high to low income work- 1 In a way, the pension system operates like a savings ac- ers. This, unfortunately, is not always true and count. Workers deposit contributions while active, and the SSC is a good example that the contrary can withdrawpensionswhentheyretire.Itis,therefore,possi- happen. Indeed, equity within the pension system ble to calculate the "interest rate" on these contributions. Third Quarter 2005 5 and only 17 percent of the elderly receive a pen- The second step in the discussion would be to sion. There are, of course, various factors that agree on the design of the system. Answers are influence coverage and many can be outside the easier in the case of Jordan where, as previously control of the SSC. For instance, economies with discussed, the SSC is already a model institu- large agricultural sectors and/or informal sectors tion. No fundamental changes are needed that tend to have lower coverage rates. Nonetheless, would modify the institutional arrangements or the design of the pension system can also make financing mechanisms. The focus should be on a difference. making sure that the benefit system currently de- fined--which is essentially financed on a pay-as- In the case of the SSC, factors that can preclude you-go basis--adopts basic standards in terms of higher coverage rates include: (i) weak linkages design that ensure three things: (i) that the system between contributions and pension benefits that is financially self-sustainable and secure; (ii) that reduce incentives to enroll and contribute, since economic distortions are kept to a minimum; and the pension is based only on part of individual (iii) that redistribution becomes transparent and salaries; (ii) the absence of voluntary arrange- progressive. As these reforms are adopted, poli- ments within the system to enroll individuals cies to expand coverage, including the setup of a with limited savings capacity (e.g., agricultural non-contributory scheme, should be considered. workers, casual workers, low income self-em- ployed); and (iii) the absence of schemes to cover In terms of standards for the defined benefit "pay- the long-term poor. This being said, policies to as-you-go" system, the following policies must expand coverage should only be considered af- be considered: ter the issue of financial sustainability has been resolved. · Including all salaries, appropriately revalo- rized, in the calculation of the pension. The proper revalorization factor should be the sus- What Can Be Done? tainable rate of return that the system can afford to pay on contributions. In the case of a system Reforms within the SSC concern all citizens and financed on a pay-as-you-go basis, this rate is should be the subject of public debate because, a function of the growth rate of reserves, the ultimately, the Government is the guarantor of growth rate of the implicit pension debt, and the the liabilities of the system. Hence all workers, growth rate of contributions net of future pen- young and old, within and outside the system, are sion payments. In general, a rate of return above concerned. 3 percent per year is unlikely to be sustainable. It is important to emphasize that this policy is in- A first step in the discussion should be to decide troduced not to reduce pensions, but to improve on the objectives and the mandate of the system: incentives to enroll and contribute, and equity. what should be the minimum pension guarantee; the replacement rate for the average full-career · Align the replacement rate with the contribu- workers; and the ceiling on pensionable earnings. tion rate, and the retirement age. Policymak- Evidently, these are social choices that ultimately ers can only choose two of these three param- reflect social preferences, as with respect to the eters. The third parameter is determined by the respective roles of the Government and the indi- othertwogivenlifeexpectancyatretirementand vidual in securing sufficient income during old the sustainable rate of return on contributions. age. Nonetheless, the financial and economic im- The rule is transparent and devoid of discretion. plications of these choices need to be understood. Once the targeted replacement rate and the con- Targeted replacement rates requiring over time a tribution rate have been chosen, the necessary 30 percent contribution rate to be financed are not retirement age is no longer an issue of political affordable. High minimum pensions and/or high negotiations, it is the result of a mathematical ceilings on pensionable earnings (e.g., above 2.5 formula. If this rule is not respected, then the times economy-wide average earnings) also bring system cannot be financially self-sustainable. incentives problems that can discourage work or The calculation of the retirement age should be preclude the development of other forms of long- made on a periodic basis, to be able to capture term savings that can benefit the economy as a changes in life expectancy and the sustainable whole. rate of return of the system. 6 Third Quarter 2005 · Introduce automatic penalties for early re- Finally, the Government should not forget that tirement that depend on life expectancies. there are still pending issues with the closed Penalties for early retirement the case of the re- schemes for civil servants and the military. The tirement age, should be done every three to five reform of the two schemes saved the country years to capture changes in life expectancies. billions of Jordanian Dinars. However, they are still not complete and further savings could be · Pensions should be indexed automatically to achieved. For instance, the reform of the military the Consumer Price Index. Again, automatic system which closed the scheme to new entrants indexation implies no discretion by policymak- in January 2003, also included measures to elimi- ers.Everycalendaryearthedepartmentincharge nate unjustified and very generous provisions, of computing and paying benefits should simply which are not yet fully implemented. These could increase pensions by the estimated inflation rate. save the budget 1 percent of GDP per year. This will ensure that pensioners preserve their purchasing power. This policy, however, can In summary, policymakers in Jordan should not only be implemented if the other policies have be complacent and rest on the success of the past. been adopted. Otherwise, the financial sustain- Important policy changes are still required, and ability of the system would be compromised. delaying action will be costly. The reform agenda needs to be completed to ensure that current and In parallel, the country needs to work on setting future generations of workers have access to ade- up the necessary legal, regulatory, and supervi- quate and secure pension benefits during old age, sory framework to support the development of and that the pension system supports growth and voluntary private pension plans. These already economic development. exist in Jordan in the form of occupational plans or professional associations. Unfortunately, they are operating in a regulatory vacuum creating concern regarding their financial sustainability and the security of workers' savings. Third Quarter 2005 7 RECENT ECONOMIC DEVELOPMENTS Overview dynamic of the manufacturing sector so far in 2005 compared to 2004. The activity with Iraq contin- Jordan achieved exceptional economic growth ued to stimulate growth in the transport and com- in the First Half of 2005, despite the end of the munications sector, which grew by 9.4 percent in rebound effect that followed the war in Iraq. the First Half of 2005 compared to 12.4 percent in Real GDP growth is estimated to have reached 7.5 2004. The construction sector continued to benefit percent in the First Half of 2005. The economy also from transfers linked to the oil price cycle and in- showed signs of overheating, with the Trade Defi- vestments of large numbers of Iraqis who relocated cit soaring by 47 percent, inflation reaching over 4 to Jordan, growing by 7.5 percent in the First Half percent, and a 17 percent increase in credit to the of 2005, compared to 11.5 percent in the First Half private sector. Larger remittances and public trans- of 2004. fers from abroad fell short of balancing the large Trade Deficit. Figure 1. GDPand Manufactures On the fiscal side, although increasing, revenues did not compensate the rise in expenditures, mainly linked to the rising cost of oil subsidies, which the Government has recently reduced. The budget bal- ance reached a negative 18 percent of expenditures in the First Half of 2005. Real Sector Evolution Economic growth sustained the high levels ob- served in 2004. Figures for the First Half of 2005 demonstrate a 7.5 percent real growth rate, similar to the economic performance in the First Half of 2004. The leading sectors remain the non-tradable sectors, including services which benefited from Source: JordanianAuthorities and World Bank Staff Estimates higher external financial flows. The finance and insurance services grew by 18.7 percent, against External Sector 5.3 percent a year earlier. The wholesale and re- tail trade sector growth reached 9 percent against Jordan registered a large Trade Deficit in the 4.8 percent a year earlier. The community, social First Half of 2005 (JD2 billion), which grew by and personal services sector grew by 7.6 percent 47 percent between the First Half of 2004 and compared to 6.2 percent in the First Half of 2004. the First Half of 2005. The increase is the result Manufacturing,constructionandtransportationper- of a 31.3 percent increase in imports, partially off- formed well, but at lower levels than in 2004. The set by a 14.3 percent increase in total exports. Do- manufacturing sector grew by 11.8 percent in the mestic exports increased by 14.4 percent, while re- First Half of 2005 against 14.5 percent in the First exports rose by 13.7 percent. Over 33 percent of Half of 2004. The manufacturing sector continued the increase in imports is linked to the increase in to benefit from the recovery in the exports to Iraq, both oil prices (33.4 percent) and volume (15.7 per- the increase in the Qualified Industrialized Zones' cent). (QIZs) exports to the United States and from the rise in the demand of Jordan's products from the oil The clothing industries located in the QIZs re- exporting countries. However, exports to Iraq are main the main exporters of manufactured goods. increasing at a lower pace. This explains the lower So far in 2005, the leading export sectors include 8 Third Quarter 2005 the clothing, chemical, and manufacturing indus- covered 48 percent of the Trade Deficit in the First tries (other than clothes). Clothes exports increased Half of 2005 against 67 percent in the First Half by 17 percent against 52 percent a year earlier and of 2004. The Current Account Deficit was com- account for 28 percent of total exports in the First pensated by Foreign Direct Investment (US$ 448 Half of 2005, against 27 percent in the First Half of million), and by a positive capital inflow under the 2004. Clothes exports to the United States account- item Errors and Omissions3 (US$778 million). ed for 89 percent of total clothes exports. The per- formance of clothes exports might be questioned by Figure 2. Transfers and Trade Deficit the implementation of the Multi-Fiber Agreement. As percent of GDP Exports of chemicals and manufactured goods oth- er than clothes rose by 20 percent and now account for 30 percent of total exports against 28 percent in the First Half of 2004. These exports are directed to the European Union (EU) and the Arab countries. For trade with the EU, Jordan continues to benefit from the appreciation of the Euro against the US Dollar, a currency to which the Jordanian Dinar is pegged. Exports to the EU increased by 47 percent between the First Half of 2005 and the First Half of 2004. The propensity to import from Arab coun- tries has also been increasing over the past months with the rise in oil prices. The breakdown of the increase of imports shows that the rise in oil imports contributed to 33 per- cent of the total increase in imports and to 43 Source: JordanianAuthorities and World Bank Staff Estimates. percent of the increase in Trade Deficit. Also, the Note: H1 means First Half of the year. rise in imports reflects higher imports of inputs and equipments, with the high dependence of the econ- The foreign currency reserves of the Cen- omy on intermediary goods and the recovery of re- tral Bank increased by US$0.4 billion between export activity with Iraq. For example, the rise by June 2004 and June 2005, from US$4.8 billion 48 percent in the imports of machinery and trans- to US$5.2 billion. The reserves decreased by only port equipment accounts for 34 percent of the total US$83 million since December 2004, despite the increase in imports, of which 26 percent is due to rising Trade Deficit translating into a substantial volume increase and 8 percent to price increase. A Current Account Deficit. Jordan reserves have large part of these imports are re-exported to Iraq. benefited from a substantial rise in capital inflows, The increase in the imports of manufactured goods, mainly from expatriates and other Arab nationals, including intermediary goods reached 24 percent especially under the item Errors and Omissions. and represents 15 percent of the total increase in imports. Fiscal Situation The Current Account Deficit reached US$991 million in the First Half of 2005 against a deficit Government revenues increased dramatically of US$57 million a year earlier. The large Trade thus far in 2005. Revenues increased by 28 per- cent compared to the actual figures of the First Half Deficit is exerting pressure on external accounts, of 2004. The strong economic dynamic is largely despite continuous transfers from abroad. Net Pub- responsible for this satisfactory performance of lic Transfers1 and Net Workers Remittances and revenue collection. The rise in revenues is due for Compensations2 reached respectively US$376 mil- more than 20 percent to a 39 percent increase in lion and US$1.1 billion. Net Workers Remittances the tax on income and profits collections. Fees in- 1 Mostly, but not exclusively, grants and rescheduled in- terest accounted for in the Central Government budget. 3Errors and Omissions are all flows of capital not else- 2Including UN compensations to Jordanian nationals for where defined, including some short term capital and the their losses during the 1990 Gulf War. transfers of Iraqi nationals that cannot be easily classified. Third Quarter 2005 9 creased by 37 percent, due mainly to a 110 percent Due to the sharp rise in expenditures in the Sec- increase in the collection of land registration fees. ond Quarter of 2005, the positive budget balance The sales tax receipts represented 39 percent of the of First Quarter 2005 turned negative in cumu- total revenue increase and rose by 30 percent. The lated terms over the First Half of 2005. The bud- substantial rise in imports had a considerable im- get balance to expenditures ratio stood at a negative pact on both sales tax and customs revenues, with 18 percent in the First Half of 2005, representing a the latter also rising by 16 percent. relative improvement over a negative 24 percent in the First Half of 2004. The primary balance regis- Table 1. Fiscal Balance tered a deficit of JD 201 million against a deficit of Jordanian Dinar Millions JD 246 million a year ago. 2004 2005 Domestic Revenues 503 650 The debt stock decreased by JD381 million be- Tax Revenues 357 474 tween December 2004 and June 2005. This de- Income and Profits 108 160 crease reflects the combined impact of higher Sales Tax 170 215 revenue, debt service rescheduling and inflow of Customs 58 69 foreign grants. Between March and June 2005, the structure of the public debt changed toward a Other 21 30 substitution of the external debt by domestic debt. Non Tax Revenues 114 169 The latter recovered the level of December 2004 Repayment 33 7 and represented 27 percent of the total debt in June Total Expenditures 578 638 2005 against 25 percent in March 2005. The out- Current Expenditures 507 594 standing external debt decreased by JD281 million Excl. Debt Service 475 561 over the same period. o/w Oil Subsides 137 159 o/w Defense and Security 65 65 Prices, Money and Banking Debt Service 32 33 External 21 20 The Consumer Price Index (CPI) inflation re- Internal 11 13 mained stable in the First Half of 2005. The CPI Capital Expenditures 71 44 rose by 2.1 percent on average between the First Surplus/Deficit ­75 Half of 2004 and the First Half of 2005, against 12 3.6 percent registered a year earlier. The evolution as percentage of GDP ­12.9% 1.9% of the CPI is marked by the combination of a 3.1 Primary Balance ­43 46 percent increase in the First Quarter of 2005 com- Balance Including Grants pared to the First Quarter of 2004, and a 1.2 percent Surplus/Deficit ­8 120 increase in the Second Quarter of 2005 compared as percentage of GDP ­1.3% 18.7% to the same period of the past year. The favorable Primary Balance 24 153 performance of the CPI during the Second Quar- ter of 2005 reflects the low progress in prices in Source: Jordanian Authorities and World Bank Staff Estimates. the Housing and Other Goods and Services items The increase in oil prices exerted important and the decrease in the prices of the Clothing cat- pressures on expenditures during the First Half egory. The declining prices in the clothing sector of 2005. Expenditures soared by 26 percent in the might reflect the effect of the Multi-Fiber Agree- Second Quarter of 2005, against a much more mod- ment, which opens the local market to foreign im- erate 10 percent increase in the First Quarter of the ports and exposes Jordan's exports to further com- year. Consequently, expenditures increased by 19 petition. It is notable that the increase in oil prices percent between the First Half of 2004 and the First has not impacted the CPI significantly, as it was Half of 2005. The rise in oil subsidies by 87 percent largely absorbed by the rise in oil subsidies. The represents 41 percent of the total increase in ex- recent decrease in oil subsidies is, however, likely penditures. The defense and security expenditures, to result in an accelerated CPI inflation in the com- which increased by 9 percent, represent 10 percent ing months. The GDP deflator experienced a more of the total expenditures increase. Capital expendi- substantial rise by 4 percent, reflecting the price tures increased by 9 percent, representing another dynamic of the non-tradable sectors. The inflows 10 percent of total expenditures. of oil money and the immigration from Iraq contin- 10 Third Quarter 2005 ued to inflate land prices among other non-tradable Claims on private sector (resident) increased by goods and services. 17.2 percent over the First Half of 2005, and their share in the commercial banks' assets rose to 35 The broad money supply (M2) increased by 6.4 percent from 33 percent in December and June percent since March 2005 and by 8.9 percent 2004. In value, this corresponds to an increase by since December 2004, compared to respectively JD1 billion over the First Half of 2005. The break- 3.9 percent and 4.1 percent a year earlier. Time down of lending by sector shows that lending to deposits in Jordanian Dinars increased by 6.6 per- the agriculture, industry, construction, and trade cent over the First Half of 2005, while time depos- sectors increased by 6 percent. The lending to the its in foreign currencies remained stable. Demand tourism sector decreased by 1 percent and reflects deposits in Jordanian Dinars remained the most dy- the difficulties encountered by this sector. Consum- namic aggregates of the money supply with a 24 ers and stock market investors remained the most percent increase, while demand deposits in foreign dynamic borrowers with a 27 percent increase in currencies rose by 3 percent. the lending to these two categories since the end of 2004. Claims on public sector remained stable, Deposits at the commercial banks increased in while deposits with the Central Bank increased by line with the inflow of capital triggered by the 5.5 percent. soaring cost of oil. Resident deposits increased by 7 percent since March 2005 and by 9.6 percent The restrictive monetary policy followed by the since year-end 2004. The dollarization of resident Authorities had a clear impact on the interest deposits slightly decreased to 24 percent from 25 rates in the Second Quarter of 2005. The dis- percent in March 2005 and December 2004. This count rate of the Central Bank is now 75 bpt higher reflects the increase of real interest rates on JD de- than that of year-end 2004. The Authorities also posits by 144 basis points (bpt) between end 2004 raised the nominal interest rates on the Certificate and June 2005. However, the spread between the of Deposits by 160 bpt and managed to absorb part nominal interest rate on JD denominated deposits of the market liquidity. Consequently, the inflation- and the Libor continued to widen reaching a nega- ary pressures loosened, and the re-financing cost tive 76 bpt in June 2005 against a slightly positive for the banks rose by 193 bpt in real terms, while 4 bpt in December 2004, and 81 bpt in June 2004 the real interest rate on Certificate of Deposits in- making deposits in JD relatively less attractive. creased by 275 bpt during the First Half of 2005. The upward pressure on the banks' real re-financ- Figure 3. Deposits and Claims ing interest rates materialized into higher real inter- JD Million est rates on both short-term treasury bills and loans to the private sector. However, the private lending remained on an upward path reflecting strong posi- tive expectations with regard to the regional eco- nomic context. Source: JordanianAuthorities and World Bank Staff Estimates Lending to the private sector continued to in- crease, in line with the strong GDP growth. Third Quarter 2005 11 BANK GROUP OPERATIONS The Bank is preparing a Country Assistance Strat- Amman Water and Sanitation Management egy (CAS) for Jordan, which is the Bank's roadmap Project (AWSMP). (US$55 million.) The Project for assistance covering Bank fiscal years 2006- aims at: (i) improving the efficiency, management, 2009. The CAS will be discussed at the Bank's operation and delivery of water and wastewater ser- Board of Executive Directors in 2006. The CAS vices for the Amman Service Area; and (ii) laying takes as its starting point Jordan's National Agen- the groundwork for the sustainable involvement da. In accordance with Jordan's development plan, of the private sector in the overall management of the main objectives of the CAS will be poverty re- these services. duction and job creation. The CAS will include a mix of instruments ranging from lending, grants, Higher Education Development Project analytical and advisory services and learning and (HEDP). (US$34.7 million.) The objective of the capacity building activities. Project is to initiate improvements in the quality, relevance, and efficiency of Jordan's higher edu- IBRD Projects In The Pipeline cation, and to support Jordan's program to reform sector governance. Regional and Municipal Development Project (US$35 million). The objectives of the Project are Horticultural Exports Promotion Learning to: (i) strengthen the intergovernmental finance sys- and Innovation Loan (US$5 million). The Loan tem; (ii) upgrade financial management, technical will initiate the process of establishing Jordan as a and administrative capacities at the local level; and reliable supplier of non-traditional, high-value ex- (iii) increase the coverage and quality of municipal port crops to niche markets in the European Union service provision, with particular emphasis on un- and Gulf countries. der-served areas. Education Reform for the Knowledge Econo- my (US$120 million). The Project supports system- IBRD Ongoing Projects ic educational reform in Jordan that extends from Early Childhood Education through Secondary The current portfolio in Jordan consists of six proj- Education. The Project will contribute to the devel- ects for a total commitment amount of US$268 mil- opment of human capital with the skills and compe- lion, of which US$116 million has been disbursed tencies required by the Knowledge Economy. to-date. Undisbur- Loan sed Approval Amount Amount Closing Active Portfolio Date US$ M US$ M Primary Sector Date Amman Water and Sanitation Management Mar-99 55.0 2.2 Water Supply/Sanitation Jan-06 Higher Education Development Feb-00 34.7 13.0 Education Jun-07 Horticultural Exports Promotion Agriculture Markets and Learning and Innovation Jun-02 5.0 3.1 Trade Dec-06 Education Reform for Knowledge Economy May-03 120.0 88.2 Education Dec-08 Amman Development Corridor Jun-04 38.0 35.9 Transport Jun-09 Public Sector Capacity Building Mar-05 15.0 14.4 Public Sector Mar-09 Total 267.7 156.8 12 Third Quarter 2005 Amman Development Corridor (US$30 mil- future development of a commercial size wind en- lion). The Project aims at: (i) assisting Jordan's ergy project with private sector involvement. growth strategy by providing needed infrastructure to support Amman's role as a regional center for Conservation of Medicinal/Herbal Plants trade and services; and (ii) helping ensure that Jor- Project (US$5 million Global Environment Facil- dan's road assets are managed in a cost-effective ity). The Project supports the conservation, man- and sustainable manner. agement and sustainable utilization of medicinal and herbal plants in Jordan through ensuring ef- Public Sector Capacity Building Project fective in-situ protection of threatened habitats and (US$15 million). The objective of the Project is to ecosystems and ex-situ sustainable use. The main support the ongoing implementation of the Gov- components are: (i) institutional strengthening; (ii) ernment's public sector reform strategy by ensur- pilot sites conservation; (iii) public awareness and ing that the required institutional infrastructure is education; and (iv) income generation activities. in place and functioning. It also seeks to support an important set of cross-cutting reforms in areas rang- ing from policy coordination to improved financial and human resource practices. Further information on ongoing and pipeline projects can be found at: Ongoing Grants http://www4.worldbank.org/sprojects/ Institutional Development Fund Grant to Support the Development of a Monitoring and IFC Ongoing Projects Evaluation System (US$395,000). The Grant will contribute to the design and implementation of a Al-Hikma Pharmaceuticals Limited. The sound monitoring and evaluation framework for Project is designed to help Al-Hikma Pharmaceu- the Government to: (i) adequately monitor input re- ticals upgrade and expand its existing pharmaceuti- quirements of large scale reform projects, and (ii) cal and chemical plants, and build a new plant. A follow implementation of large-scale, multi-sec- new project involves the extension of a corporate toral reform projects through various activities loan to finance the company's modernization and expansion plans. This program of investments is Integrated Ecosystems/Rift Valley Grant being planned to help prepare the company for a (US$350,000). The objective of the Grant is to as- future United States' initial public offering, and sist in the preparation of the Integrated Ecosystem will include an IFC corporate governance compo- Management in the Jordan Rift Valley Project, nent to help the company satisfy the recent Corpo- whose main objective is to secure the ecological rate Governance and Securities Law Reform in the integrity of the Jordan Rift Valley as a globally United States (the Sarbanes-Oxley Act of 2002), important ecological corridor and migrator flyway, which institutes new rules regarding the corporate through a combination of site protection and man- governance of publicly held corporations listed in agement, nature-based socio-economic develop- the United States, including American Depository ment and land use planning. Receipts. The IFC loan will help the company ex- pand its operations, enhance its research and devel- Sustainable Development of Renewable Ener- opment facilities and refinance short-term loans in gy Resources and Promotion of Energy Efficiency the MENA region, Europe and Asia. Grant (US$1 million). The objectives of the Grant are to: (i) contribute to the Government's efforts to Zara Investment Holding Company. The Proj- integrate climate change concerns in its economic ect consists of the construction and operation of an development strategy by removing the barriers to international standard 312-room hotel and complex promoting the development of Jordan's renewable comprising 44 apartments, partially serviced by the energy resources (wind, solar and geothermal), and hotel; well-equipped exhibition/conference facili- in enhancing the efficiency of energy use in line ties;anauditorium;ahealthclub,managedbyHyatt with the policy to meet the energy needs of Jordan International; and a Wellness Center and 231-room in an economic and environmentally sustainable hotel complex on the Dead Sea, combining medical manner; and (ii) support a feasibility study for the and recreational facilities, managed by Mövenpick. Third Quarter 2005 13 Economic benefits accruing to Jordan include for- Intercontinental Hotels Corporation and JHTC has eign exchange generation and the creation of about recently been extended to 2007. IFC has approved 600 direct jobs. IFC's main role in this Project is to a rescheduling of its loan to JHTC and JHTC has provide long-term funding on terms and maturities prepaid IFC. not available in Jordan, and help the Zara Company mobilize local loans. IFC has approved a reschedul- Modern Agricultural Investment Company ing of its loan to Zara Company and Zara has pre- (MAICO). The overall objective of the company's paid IFC. operations is to act as a market and technology bea- con to help diversify and upgrade the range and Business Tourism Company. The Project combination of crops and irrigation methods which consists of building and operating the Jordan Val- would develop a modern export sector, thereby ley Marriott and Spa, a resort of international stan- maximizing the economic return on irrigation wa- dards which include: (i) a 216-room hotel; and (ii) ter, and ultimately rationalize its overall consump- a health/medical spa and beauty care facility. The tion. Dead Sea, due to its unique therapeutic character- istics and climate, has established itself as a world- Middle East Investment Bank (MEIB) Recap- class center for the treatment of various skin and italization. The Project involves both MEIB's (the muscular-joint ailments, such as psoriasis and rheu- smallest commercial bank in Jordan) recapitaliza- matism. The complex is managed by Marriott Inter- tion to meet the Central Bank of Jordan's minimum national and targets both health and leisure tourists. capital requirements, and its restructuring, man- aged by Société Générale Libano-Européenne de El-Zay. El-Zay specializes in the manufacture Banque. IFC investment is part of the larger recapi- of high quality men's suits. The Project consists of: talization and restructuring program for MEIB. It (i)anexpansionprogramtodiversifyEl-Zay'sprod- complements the Technical Assistance Program in uct line by manufacturing men's outerwear; and (ii) Jordan, provided by both IFC and the World Bank. a financial restructuring designed to strengthen El- Zay's balance sheet by replacing most of its short- Boscan Jordan (International Luggage Man- and medium-term debt with long-term debt. IFC's ufacturing Company). The Project is to expand investment is to help the company complete the operations of Boscan Jordan Group, a Jordanian Project's financial plan and improve its financial manufacturer of soft-side luggage products selling structure by providing funding on terms and ma- primarily to the United States market. The company turities not otherwise available in Jordan. has since switched its operations to textiles. Arab International Hotels Company (AIHC). Jordan Gateway Project. The Project is to The Project consists of the renovation and expan- develop, construct and operate an industrial estate sion of the Amman Marriott, a leading hotel located covering about 65 ha (of which about 50 ha would in the Shmeisani area of Amman. The work com- be in Jordan) at the Jordan/Israel border. prises: (i) the complete refurbishment of all the ho- tel's 294 rooms; and (ii) the addition of conference Al Tajamouat Industrial City (ATIC). The and banqueting facilities, a health club, retail space, Project will expand the existing integrated indus- movie theaters and an underground parking facility. trial estate, ATIC. The expansion commenced in The expansion and modernization of the Marriott late 2000 to keep up with the high demand for QIZ will boost the hotel to a 5-star international level, space in Jordan. allowing it to match the quality level provided by its competitors. Indo Jordan Chemical Company. The Com- pany owns and operates a 244,000 mt/year (as of JordanHotelsandTourismCompany(JHTC). 100 percent P205) phosphoric acid plant and ancil- The Project comprises an extensive refurbishment lary facilities adjacent to a phosphate rock mine in of most of the Intercontinental Hotel's existing 366 the south of Jordan, as well as storage facilities at rooms and the addition of 125 new rooms and fa- the Red Sea Port of Aqaba. P205 is used to produce cilities. The hotel will replace 15 of its elevators, DAP, a widely used fertilizer. The company has its boilers, and the kitchen, safety and telecom prepaid IFC. equipment. The Management Agreement between 14 Third Quarter 2005 Middle East Regional Development Enter- MIGA Ongoing Projects prise (MEREN) Silica Sand. The US$15.5 million Greenfield Project is to establish the MEREN Silica Jordan has been a member of MIGA since MIGA's Sand Plant, which will manufacture high quality inception in 1988. While MIGA does not have any silica sand to be mainly exported to European glass current exposure for guarantees in Jordan, the agen- manufacturers. cy was, until early 2005, covering an important fertilizer project in the Aqaba Special Economic Middle East Complex for Engineering, Zone. MIGA issued US$39.1 million in cover- Electronics and Heavy Industries (MEC). MEC age to Kemira Agro Oy of Finland in Fiscal Year is the leader in Jordan for electronics and household 2001 for this Project. This Project is significant in appliances. It is the premier appliance assembler in many ways: it involves international collaboration the country and is the sole distributor of products between the European Investment Bank and the Is- for the Korean companies LG Electronics, Inc. and lamic Development Bank, the Project's financiers; Daewoo. The Project aims to: (i) relocate MEC's as MIGA's first project in Jordan, it underscores the existing production facilities for modernizing its agency's intent to play a larger role in the region; assembly lines and increasing efficiencies; and and the Project is the first reinsurance of a MIGA (ii) expand by establishing a joint venture with the contract by Finnvera, Finland's investment insur- Haier Group of China. The expansion project will ance agency, resulting from an October 2000 agree- broaden MEC's product line while maintaining the ment between the two agencies to work together to focus on household goods to be sold primarily in coinsure and reinsure projects, with the goal of in- regional markets. creasing Finnish investment into emerging econo- mies. Further information on IFC ongoing and pipeline projects can be found at: MIGA's online investment promotion services http://www.ifc.org/projects/ (www.fdixchange.com and www.ipanet.net) feature 161 documents on investment opportuni- ties and the related legal and regulatory environ- ment in Jordan Third Quarter 2005 15 Bank Lending to Jordan ­ Fact Sheet Projects Approved by Net Flows and Net Transfer Disbursements Fiscal Year 16 Third Quarter 2005 NEWS, RECENT AND UPCOMING ACTIVITIES HIV/AIDS In The Middle East And North Africa: The Time to Act is Now For the countries of the Middle social values and insufficient access to information East and North Africa, the choice is in many countries. straightforward: it can choose to act now, and for a relatively small cost, to Two years ago, the number of people newly infect- curb the spread of HIV, or it can wait ed with HIV was 62,000. In 2005, 67,000 people for the epidemic to take hold, an option which will became infected in MENA, with 58,000 deaths oc- result in much higher economic and social costs. curring due to AIDS. The total number of persons living with HIV is 510,000 for 2005. The Middle East and North Africa region (MENA) is in a unique situation to halt the spread of HIV/ A Culture Of Silence AIDS. The regional prevalence rate now stands at about 0.2 percent, with the epidemic concentrated within certain groups at high risk, such as commer- Countries in the region must increase their advo- cial sex workers and their clients, and injecting drug cacy efforts and engage key political, religious and users.LowprevalenceofHIV/AIDSdoesnotequate other leaders in society to raise awareness about to low risk, and action now can prevent a probable HIV/AIDS. This is important in developing a na- epidemic. MENA is lagging in its defense against tional multisectoral strategy, involving key minis- this devastating epidemic, but it may also have the tries, civil society and the community. Taking such advantageoftime.Timingiscrucialandthewindow crucial action now has substantial future pay-offs. of opportunity that exists now must not be wasted. It is vital for political and social leaders to break the wall of silence, fear and stigma surrounding HIV/ MENA countries should act now because, unlike in AIDS. other regions where the action took too long to get organized and the prevalence rose to high levels, Improving Surveillance the prevalence rate in the region is still low. This is in addition to the fact that there is better under- Another key issue is improving surveillance sys- standing of the epidemic, knowledge of what works tems for better monitoring of the HIV epidemic. and many successful experiences to draw from. Most countries don't have good data on the nature and dynamics of their HIV epidemics. A well- A World Bank report, Preventing HIV/AIDS in the functioning surveillance system is central to any Middle East and North Africa, lays out a strategy preventive effort. Without adequate surveillance of how the governments in the region can step up systems, there will be no early warning systems prevention efforts and utilize Bank and other in- to alert public health officials to detect outbreaks ternational expertise to put these plans in place. among groups at risk. The report points out that MENA has all the core factors which make it vulnerable to an HIV/AIDS epidemic. These include inadequate surveillance systems, a large youth population and unemploy- Further information please visit: ment, significant migration, inadequate knowledge http://www.worldbank.org/aids/ of preventive measures, widespread stigma and fear, insufficient security and conflicts, cultural and Third Quarter 2005 17 Global Issues Seminar Series There are many development issues whose reso- In this context, the World Bank is offering a Glob- lution requires international action. Examples in- al Issues Seminar Series to promote better under- clude: global poverty, communicable diseases, edu- standing of the nature and significance of global is- cation for all, migration, climate change, access to sues, and to generate discussion on the actions that water, malnutrition and hunger, international trade, are already under way and what more needs to be international financial stability, conflicts, global done. This seminar series is open to everyone, and public goods and biodiversity. specifically to senior undergraduate and graduate students of the social sciences, international devel- The effects of these global issues are already be- opment, public policy and business. ing felt in our societies, economy, health, security and environment. These are expected to become Participation is free. even more acute, as in the next 50 years the global population will increase from 6 to 9 billion people and the global economy will double its current size. The mechanisms for addressing global issues are To know more about the schedule, please still evolving and will be challenged even more as visit: time passes and the world's population and econo- http://www.worldbank.org/ my expand. Jobs For A Globalizing World: Labor Market Policy "Jobs for a Globalizing World: Labor Market Pol- Teams and participants will have an opportunity to icy" is a two week course offering a unique learn- present a policy challenge they face in their own ing experience on how employment is being trans- countries and work toward solutions with other par- formed in today's rapidly changing, globalizing ticipants and experts. environment; it will identify the key labor market challenges within the context of overall poverty The course adopts a mix of learning methods, in- reduction and other economic and social develop- cluding presentations based on the latest Bank ment goals, and explore what policymakers and knowledge, case studies of country reforms, team- others can do about them. based exercises, role-playing and hands-on experi- ence with the latest modeling tools. The course is The course builds on research findings by the taught by experts from the World Bank, top aca- World Bank and other academic and research in- demic and research institutions and other leading stitutions, as well as practical lessons learned from agencies: it also features interventions from senior country experiences. The curriculum, with its glob- policymakers from countries that undertook re- al focus, is relevant for all countries but the empha- forms. sis is on developing and transition countries. This year, the course will be held from February 27 to March 10, 2006 and will feature opportunities for parallel sessions, one focusing on the challenges of For more information, please consult the low-income labor markets and the other on middle World Bank Catalog of Learning Program at: income countries; this will allow greater in-depth http://www.worldbank.org/ exploration of the policy options for each setting. 18 Third Quarter 2005 Sixth Annual Conference Of The Parliamentary Network On The World Bank The 6th Annual Conference of the Parliamentary Goals, and just ahead of the World Trade Orga- Network on the World Bank, jointly organized by nization ministerial meeting in Hong Kong on the the World Bank and the Parliamentary Network on Doha Development Agenda. The outcome of these the World Bank (PNoWB), took place in Helsinki summits--aid effectiveness, trade, climate change at the invitation of the Government and Parliament and other important issues--topped the agenda in of Finland on October 22-23, 2005. Helsinki. The conference identified specific contri- butions parliamentarians can make in each of these This gathering came four months after the G8 Lead- areas. ers' summit in Gleneagles, Scotland, which focused on Africa's development challenges and climate change, a few weeks after the United Nations sum- For further information, please visit: mit in New York on the Millennium Development http://www.PNoWB.org Dgroups ­ Development Through Dialogue Dgroups1 is an online home for · KariaNet - Knowledge Access for Rural groups and communities interested Interconnected Areas Network. in international development and of- fering the online tools and services · MENA Community Empowerment Com- needed to support the activities of a team, a group, a munity of Practice (CoP): The MENA CoP network, a partnership or a community. comprised of non-government, private sector, and local community activists and stakeholders Why Dgroups? focused on the promotion of local initiatives in development planning and sharing knowledge among themselves. The partners see support for Dgroups as a way to provide a platform for the entire development com- munity,providingavaluableservicetotheirrespec- · Project Understanding Diversity: This discus- tive stakeholders and networks, and an easy way sion group is part of the educational pilot project for individuals to find the groups and communities Understanding Diversity. of interest to them. · Stocktaking II: Conference on Palestinian Why create something new? Because until today, Refugee Research. no comparable service which is simple, non-com- mercial (no ads), respectful of privacy, and targeted The website also includes groups with sectoral or at low bandwidth users existed. country focus. Virtual Regional Networks have also emerged from E-Discussions. The MENA There are currently four groups focusing on the Region Water Resources and Wastewater Network Middle East: is a virtual Regional Network that emerged from the E-Discussion on "Using E-Discussions and Regional Networks for Dialog and Knowledge Ex- change in the MENA Region". 1The people leading Dgroups have formed the Dgroups Partnership. Current partners include Bellanet, DFID, Hi- vos,ICA,IICD,OneWorld,UNAIDSandtheWorldBank. MemberorganizationsincludeCIDA,CTA,Danida,FAO, For more information, please visit: IDRC, INASP, KIT, SNV, Sida, SDC, and UNECA. http://www.dgroups.org Third Quarter 2005 19 RECENT WORLD BANK PUBLICATIONS MENA Publications fined to a precise period of time, or preconceived, but rather was wide-ranging and open-ended to best capture the unique example of each. The results are Preventing HIV/AIDS in the Middle East and presented as individual case studies, each focused North Africa (ISBN: 0-8213-6264-X). The World around a particular strategy or initiative that char- Bank launched a regional strategy to help countries acterizes the agency's critical path, and helps to in MENA prevent a major surge in the HIV/AIDS highlight facilitative organizational qualities. infections in the region. The new strategy will help countries fight HIV/AIDS more effectively. Lebanon-Legal and Judicial Sector Assessment (Working Paper 32144). Lebanon has had an illus- 2005 Economic Developments and Prospects: trious legal and judicial history in the Middle East, Oil Booms and Revenue Management (Work- notably, having trained judges to serve throughout ing Paper 32994). The first in a series of annual theregionandhavingestablishedalegalframework reports, the 2005 MENA Economic Developments to support its previous preeminence as a financial and Prospects working paper sheds light on the re- center. Despite the end of the Civil War over ten cent key economic developments in the region and years ago, however, Lebanon has not regained its the forces underlying the region's diverse econom- footing in the legal and judicial sector. In part, this ic outcomes. It analyzes the region's short-term is an ongoing legacy of the war. The institutions growth prospects given global forecasts and current of the sector, by and large, did not function during structural features of the economies, as well as the this period and the rule of law suffered accordingly. region's prospects for longer-term growth based The institutional cost associated with the war and upon progress in implementing comprehensive its aftermath, such as the atrophying of skills and structural reforms. With economic headlines in- lack of institutional development, combined with creasingly devoted to the rise in oil prices and what Lebanon's continued economic difficulties, have this implies for the MENA region, this first issue created a long-standing need for investment in hu- devotes particular attention to this theme, analyz- man resource development. A backlog in cases is ing the impact of the oil price shock on the MENA one manifestation of this problem, as the Govern- region in terms of its relative size, its transmission ment has been unable to hire additional judges or channelsthroughoutthebroaderregionandtheman- train court staff. ner in which windfall revenues have been managed. Also available: Competing for FDI: Inside the Operations of Four National Investment Promotion Agencies Gender and Development in the Middle East (Working Paper 31916). The Paper explores the and North Africa: Women in the Public Sphere characteristics of four investment promotion agen- (ISBN: 0-8213-5676-3 SKU: 15676). cies (IPAs): the roles they assume, the challenges they face, their histories, mandates, leadership, Unlocking the Employment Potential in the structures, strategies, and activities. Their examples Middle East and North Africa: Toward a New are drawn from interviews conducted in the field at Social Contract (ISBN: 0-8213-5678-X SKU: national-level IPAs, each in a different developing 15678). region, and each selected based on its ample history and substantial FDI to help illustrate several years Better Governance for Development in the of operation. Researchers were commissioned to Middle East and North Africa (ISBN: 0-8213- visit and collect information from CzechInvest in 5635-6 SKU: 15635). the Czech Republic, Uganda Investment Authority (UIA) in Uganda, the Foreign Investment Promo- Trade, Investment, and Development in the tion Agency (FIPA) in Tunisia and PROESA in El Middle East and North Africa: Engaging with the Salvador. The information collected was not con- World (ISBN: 0-8213-5574-0 SKU: 15574). 20 Third Quarter 2005 Bank Publications ing ICT use. The Report assesses topics essential to building an information society, such as investment and access. Economic Development and Multilateral Trade Cooperation (ISBN: 0-8213-6375-1 SKU: 16375). International Migration, Remittances, and the How can international trade agreements promote Brain Drain (ISBN: 0-8213-6373-5 SKU: 16373). development and how can rules be designed to International migration, the movement of people benefit poor countries? Can multilateral trade co- across international boundaries, has enormous operation in the World Trade Organization (WTO) economic, social and cultural implications in both help developing countries create and strengthen in- origin and destination countries. Using original re- stitutions and regulatory regimes that will enhance search, this Report examines the determinants of the gains from trade and integration into the global migration, the impact of remittances and migra- economy? And should this even be done? These are tion on poverty, welfare, and investment decisions, questions that confront policymakers and citizens and the consequences of brain drain, brain gain and in both rich and poor countries, and they are the brain waste. subject of Economic Development and Multilateral Trade Cooperation. The Report analyzes how the Tools for Public Sector Evaluations (ISBN: 0- trading system could be made more supportive of 8213-6324-7 SKU: 16324). In the absence of a bot- economic development, without eroding the core tom-line, efficient and equitable delivery of public WTO functions. services which requires that public sector interven- tions must be subjected to rigorous pre- and post- Pension Reform: Issues and Prospects for Non- evaluations. The publication provides tools of anal- Financial Defined Contribution (NDC) Schemes ysis to conduct economic evaluation of projects, (ISBN: 0-8213-6038-8 SKU: 16038). The Book programs and policies. The evaluation techniques presents 25 state-of-the-art papers on the concep- reflect not just the costs and benefits of expendi- tual foundations and issues surrounding Non-fi- tures, but also how these expenditures are financed. nancial, or Notional, Defined Contribution (NDC), Conceptual and empirical guidance on capital bud- country implementation of NDC (Italy, Latvia, Po- geting, establishing priorities for sectoral spending land, and Sweden) and case studies for countries on an objective basis, pricing public services, and where NDC is figured in the reform debate. This measuring the fiscal burden on current and future Book is intended to be a handbook for academics generations (generational accounting) is presented. and policymakers who want to become informed about what NDC is, and to learn about the pros and Poverty and the WTO: Impacts of the Doha De- cons of this attractive reform proposal. velopment Agenda (ISBN: 0-8213-6314-X SKU: 16314). Poverty reduction is deemed to be a center- World Information and Communication for piece of the Doha Development Agenda currently Development Report 2006: Trends and Policies being negotiated under the auspices of the WTO. for the Information Society (ISBN: 0-8213-6346- Yet there is considerable debate about the poverty 8 SKU: 16346). Information and Communication impacts of such an agreement. Some are convinced Technology (ICT) is rapidly evolving, changing it will increase poverty, while others are equally rich and poor societies alike. It has become a pow- convinced that it will lead to poverty reduction. erful tool for participating in the global economy This publication brings the best scientific methods and offering new opportunities for development ef- to bear on this question, taking into account the forts. It has been 20 years since the first telephone specific characteristics embodied in the Doha De- operator was privatized and a little over 10 since velopment Agenda. the World Wide Web emerged. How have the ICT sector and its role in development evolved? What E-Development: From Excitement to Effective- have we learned? How can we move forward? ness (ISBN: 0-8213-6442-1 SKU: 16442). In- formation and communication technologies are The Report contains lessons learned from both de- increasingly recognized as essential tools of de- veloped and developing countries. It examines the velopment--tools that can empower poor people, roles of the public and private sectors, identifying enhance skills, increase productivity and improve the challenges and benefits of adopting and expand- governance at all levels. The success of ICT-en- Third Quarter 2005 21 abled development (or e-development) will, thus, civil society, workers and poor populations in the not be measured by the diffusion of technology, developing countries need more affordable access. but by advances in development itself: economic growth and, ultimately, achievement of the Millen- This Report proposes strategies that governments nium Development Goals. The Report examines a can carry out to attract private investment and en- wide range of issues related to e-development, with sure the continued evolution and spread of informa- a focus on the requirements and realities of using tion and communication infrastructure. These strat- ICTs to advance development goals. The Report egies encompass more than sector policy alone, for does not attempt to present a comprehensive over- investment decisions are based on a wide range of view of e-development. Rather, it highlights key factors including, for example, the roles played by issues that have immediate relevance to policymak- financial sector development and the broader in- ers in developing nations who make decisions on vestment environment. The strategies also include investments and development goals. It highlights potentialpublicsectorinvestmentsthatcancatalyze two issues in particular, e-government and e-edu- ICI rollout in sub-sectors where the private sector is cation, because ICT applications in these areas can not prepared to intervene on its own. lead to significant development outcomes and can also be successfully deployed through public/pri- vate partnerships, leveraging limited Government funding to achieve greater impact. To order by phone or fax: Phone: 1-800-645-7247 or 703-661-1580; Financing Information and Communication Fax: 703-661-1501 Infrastructure Needs in the Developing World: To order on-line: Public and Private Roles (ISBN: 0-8213-6358-1 http://publications.worldbank.org/ecommerce/ SKU: 16358). Over the past ten years, private sec- E-mail: books@worldbank.org tor-led growth has revolutionized access to tele- Research and working papers are also avail- communications. Every region of the developing able in electronic format free- of-charge at: world benefited in terms of investment and rollout. http://econ.worldbank.org/ This revolution would have been impossible with- To access the World Bank e-Library, an on- out government reform and oversight. Advanced line, fully cross-searchable portal of over 3,000 Information and Communication Infrastructure World Bank documents, please visit: (ICI) are increasingly important to doing business http://www.worldbank.org/elibrary in a globalizing world. Governments, enterprises, 22 Third Quarter 2005