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TITLE:  JORDAN ECONOMIC POLICY AND TRADE PRACTICES
DATE:  FEBRUARY 1994
AUTHOR:  U.S. DEPARTMENT OF STATE

                              JORDAN

                     Key Economic Indicators
      (Millions of Jordanian Dinars unless otherwise noted)


                                  1991      1992      1993 /1
Income, Production,
 and Employment

Real GDP /2   (1985 prices)        1,939.5   2,159.0   2,288.5
Real GDP Growth (pct.)             1.8      11.3       6.0
GDP (at current prices) /2         2,779.4   3,257.0   3,582.7
By Sector:
  Agriculture                        174.3     204.0    n/a
  Energy and Water                    62.0      70.9    n.a
  Manufacturing                      343.7     426.0    n/a
  Construction                       125.4     152.4    n/a
  Rents                                5.3       7.4    n/a
  Financial Services                 456.1     518.7    n/a
  Other Services                      90.3      95.4    n/a
  Government, Health 
   and Education                     471.3     555.0    n/a
Net Exports of Goods 
 and Services                     -1,196.2  -1,399.9  -1,410.0
Real Per Capita GDP (85 bps)         498.8     538.1     650.0
Labor Force (000's)                  680       706       711  
Unemployment Rate (percent)           19        14        12


Money and Prices
 (annual percentage growth)

Money Supply (M2)                  16.9       9.40     11.0
Base Interest Rate /3               8.5       8.5       8.5
Personal Saving Rate               10.0      12.0      12.0
Retail Inflation                    8.2       4.0       5.0
Wholesale Inflation                 5.1       4.8       5.0
Consumer Price Index /4           168.1     174.8     181.0
Exchange Rate ($/JD) 
  Official /5                       1.5       1.5       1.45


Balance of Payments and Trade

Total Exports FOB /6                 770.7     829.3     800.0
  Exports to U.S.                      2.3       4.2       5.6
Total Imports CIF /6               1,710.5   2,214.0   2,000.0
  Imports from U.S.                  178.2     246.2     230.0
Aid from U.S.                         57.0      50.0     116.0
Aid from Other Countries             225.2     198.2     210.0
External Public Debt               5,516.8   5,203.1   4,700.0
Debt Service Payments (paid)         314.8     329.5     328.0
Gold and FOREX Reserves              949.1   1,001.1     915.0
Trade Balance                       -939.8  -1,384.7  -1,200.0
  Balance with U.S.                 -175.9    -242.0    -224.0


Notes:

1/  1993 Figures are all estimates.
2/  GDP at Producers' Prices.
3/  Average re-discount rate.
4/  Actual index, not changes in the index.
5/  Actual exchange rate.
6/  Merchandise trade.



1.  General Policy Framework

    The Jordanian economy achieved an unprecedented growth
record of nine percent in 1992.  GDP growth was approximately
11 percent in real terms and about 17 percent at current
prices.  During 1992, the rate of investments to GDP reached a
peak level of 29 percent.  This was due to a boom in the
construction sector which continued until the first quarter of
1993.  The Government of Jordan's targets for this year include
achieving six percent growth of GDP, three percent higher than
the IMF's targets.  Jordan and the IMF reached an agreement in
July this year to extend the 18-month, January '92-June '93,
economic adjustment program for a six-month period ending in
February, 1994.  By this latter date, the Jordanian government
is expected to submit a proposal for a new economic
restructuring program that would enable Jordan to resume debt
rescheduling negotiations with the creditors of the Paris
Club.  Jordan would also be able to draw on a new stand-by
credit arrangement for an additional 18-month period.

    The Jordanian government's future policy decisions are
expected to adapt to regional political and economic
developments.  Jordan may implement the new economic and social
development plan for the period 1993-1997 which was officially
released on September 18, 1993.  The plan's targets draw on the
letter of intent the Government of Jordan signed with the IMF
in 1992 for the period ending in 1998.  Successful
implementation of the $7.8 billion investment plan will rely on
the Jordanian private sector which is expected to contribute
between 61 percent and 67 percent of the required funding
throughout the five-year period.  The Government of Jordan
expects to receive external aid and financing in order to pay
for its share of the plan's projects.  This five-year plan is
to be treated as an annual policy framework that may be
adjusted based on annual budgetary performance.

    By 1997, Jordan plans to:  1) achieve an annual GDP real
growth rate of six percent; 2) reduce the budget deficit
(before financing) to three percent of GDP; 3) achieve a
current account equilibrium in the balance of payments; 4)
reduce Jordan's external debts to 100 percent of GDP; 5) reduce
external debt service payments (principal plus interests) to 25
percent of exports; 6) maintain the rate of inflation between
four percent and five percent; 7) reduce unemployment to 9.6
percent; 8) raise gross consumption per capita to JD 776; and
9) raise per capita GDP to JD 894.

    Jordan's priorities are to:  combat unemployment, reduce
subsidies for government services, reduce the budget deficit,
broaden the tax base, reform tax policies, reduce public 
investments as a percentage of GDP, reduce the government
consumption rate as a proportion of gross national consumption
and increase domestic savings to stimulate local investments. 
Furthermore, the Jordanian government intends to:  increase
domestic revenues to cover a greater portion of budget
expenditures, and implement budgets-by-governorates as of 1994
and amend the Customs Law.

    The Central Bank of Jordan's (CBJ) continues to adopt
restrictive policies to enhance the country's monetary
stability, ensure the stability of the Jordanian dinar and its
purchasing power, control credit expansion, increase the
country's foreign exchange revenues by enhancing national
exports, encourage banking mergers and investment banking, and
strengthen capital formation of the banking system by applying
new capital sufficiency requirements.


2.  Exchange Rate Policies

    The Central Bank of Jordan regulates dealing in foreign
currencies in Jordan and sets the Jordanian Banking System
Exchange Rate.  Money-changers, who were licensed in 1992 are
restricted to dealing within a range for a dollar-dinar buying
and selling rate.  The exchange rate for moneychangers will be
another official, but parallel rate.  The dollar/dinar average
(between buying and selling) exchange rate, on October 19, 1993
was one dinar equals $1.44, or alternatively $1.00 equals 696
fils.  There are 1000 fils to the dinar.  The current rate is
three points lower than the annual average rate ($1.47) which
prevailed during 1991 and 1992.

    In accordance with Foreign Exchange Control Law No. 95 and
other instructions, the Central Bank of Jordan is the ultimate
authority in enforcing foreign exchange controls in Jordan. 
Its foreign exchange controls cover all fields of transactions
in the Kingdom including:  inflow and outflow of Jordanian and
foreign means of payment, dealing in foreign currencies,
resident and non-resident accounts in dinars and foreign
currencies, lending in foreign currencies, commercial payments,
free trade zone payments, invisible payments and capital
transfers, guarantees, export earnings repatriation,
commissions on foreign exchange permits, reporting
requirements, and auditing and statement of account
regulations.  The Central Bank of Jordan recently announced
that it is considering making the dinar fully convertible.  To
support its capital and reserve base, the Central Bank of
Jordan has received government approval to raise its capital to
JD 18 million, up from the present JD six million level.  The
additional JD 12 million will be transferred from the Central
Bank of Jordan statutory reserve account, and the central bank
will start building its general reserves position from a zero
position as of January, 1994.


3.  Structural Policies

    Market forces are generally allowed to set prices.  The
government imports and subsidizes the prices of basic
foodstuffs such as cereals, sugar, milk and frozen meat.  The
government also sets and controls the prices of other 
non-strategic food commodities and non-food commodities.  Under
the supply law, the Ministry of Supply maintains the right to
intervene in the market and set a maximum price ceiling on any
consumer commodity.  The ration card system for consumer
purchases of sugar, rice and milk remains in force.  Subsidized
prices and controls have no impact on U.S. exports to Jordan
with respect to food staples.  A gradual elimination of price
controls on non-subsidized, non-strategic commodities would
encourage more U.S. exports into Jordan.

    Taxes on imports are the chief source of domestic revenue. 
The government collects import taxes and custom duties on all
imports, excluding industrial raw materials and machinery.  A
high tariff rate is imposed on luxury items.  Import tariffs
and other taxes imposed on U.S. automobiles represent a
historical impediment to the sale of U.S.-made automobiles in
Jordan.  The consumption tax is an additional tax imposed on
imported and locally-made products.  It will be replaced by a
general sales tax in 1994, paving the way for a VAT, scheduled
for 1996.

    The maximum marginal income tax rate for all businesses
except banks is 40 percent, while the marginal tax rate on
individual income is capped at 55 percent, with large personal,
educational and medical deductions permitted.  Except for
financial institutions, interest, dividend and capital gains
earnings are exempt from taxation; in addition, income derived
from agriculture is exempt.


4.  Debt Management Policies

    Following successful negotiations with the Paris Club in
July 1993, Jordan was able to postpone a $200 million payment
due in July 1993, reschedule a $450 million payment due in
December 1993 and qualify for an $85 million energy loan
disbursible before the end of 1993.  This flexible arrangement
came after the Jordanian government complied with IMF
requirements by increasing the coverage of the consumption tax
system, amending energy rates and gasoline prices early in
1993, increasing civil servants' salaries and wages and
decreasing current expenditures by five percent.  A new
agreement was postponed, thus allowing Jordan an additional
six-month period on the old 18-month agreement which was to
expire in June, 1993.  Jordan and the Paris Club should resume
discussions on new debt rescheduling arrangement after February
1994, if Jordan and the IMF successfully conclude a follow-on
program.  However, Jordan is actively seeking debt relief from
the international community, particularly from the United
States, before it goes to the Paris Club at that time.

    The Government of Jordan finalized negotiations with
commercial creditors of the London Club in December, 1993. 
Jordan and the 80 members of the London Club reached an
agreement to re-schedule $895 million, including $750 million
in capital and $150 million in interest.  London Club creditors
had a choice of selling up to 35 percent of the principal with
a discount of 35 percent and collecting  50 percent of the
outstanding interest.  The rest of the principal (65 percent)
would be converted into 30-year par-value bonds guaranteed by
30-year U.S. zero bonds option coupons.  Under this option, ten
percent of the outstanding interest would be paid immediately
and the rest would be converted into 12-year dollar bonds
payable in 19 semi-annual installments after a three-year grace
period.

    Jordan's external debts as of July, 1993 stood at 5.203
billion dinars (Approximately $7.6 billion).  Out of this
total, the share of debts owed to major industrial countries is
51 percent, broken down as follows:  Japan (17.4 percent),
United States (9 percent), France (eight percent), United
Kingdom (7.3 percent) and Germany (4.8 percent).


5.  Significant Barriers to U.S. Exports

    Investment Barriers:  There are no restriction on the
degree of foreign ownership in manufacturing, hotels and
restaurants, and banking.  However, foreigners may not own more
than 49 percent of enterprises engaged in other commercial
activities, such as trading and transportation.  The government
officially encourages foreign and private investment.  However,
foreign investments require prior approval by the Council of
Ministers.

    Government Procurement Practices:  The General Supplies
Department's regulations were amended in 1993 allowing more
decentralization of purchasing procedures within the
department.  Foreign bidders are permitted to compete directly
with local counterparts in international tenders financed by
the World Bank.  However, local tenders are not directly open
to foreign bidders and suppliers.  By law, foreign companies
must bid through their agents.  There are no legal statutes in
Jordan's procurement law which support non-competitive
bidding.  However, the law does not prohibit a government or
semi-government agency from pursuing a selective tendering
process.  The law gives the tender issuing department, in
addition to the review committees at the Central Tenders and
the General Supplies Departments, the ultimate right to accept
or reject any bid and withhold information on rejection
decisions.  There is a process for appeal in Jordan, but the
foreign bidder or supplier must conduct a protest within the
domain of the Jordanian legal system.

    Customs Procedures:  Customs procedures in Jordan have
historically been a major impediment to free trade. 
Overlapping areas of authority and excessive signature
clearances on paperwork of shipments remain unchanged.  Actual
commodity appraisal and tariff assessment practices differ from
the written regulations.  Customs officers make discretionary
decisions about certain cases which are subject to conflicting
instructions and regulations.

    Jordan's customs law will be amended in 1994 for the first
time since its issuance in 1983.  The amendment provides the
Customs Department with more powers on violations and
confiscations and delegates part of the Minister of Finance's
powers to the director general of the Customs Department. 
Under the prevailing Import Tariff Schedules, enforced since
1989, a high tariff rate is imposed on luxury goods and on
major categories of consumer goods.  On automobiles, the tariff
rate ranges from 110 percent to 310 percent.  To stimulate 
export production, import tariffs are low on many raw
materials, machinery and semi-finished goods.  To secure tariff
exemptions, businessmen must document that the raw materials to
be imported will be used in export production, maintaining at
least 40 percent Jordanian value-added content.  The Director
General of Customs may grant temporary admission status to
certain goods such as heavy machinery and equipment used for
executing of government projects or important projects which
have government approval.  Foreign construction companies
operating alone or with a Jordanian partner can apply for this
temporary admission status.


6.  Export Subsidies Policies

    A recent government measure exempted 70 percent of the
profits earned from export income from corporate income tax,
with a maximum exemption of 30 percent of total income. 
Excluded are exports under bilateral trade protocols and
phosphate, potash and fertilizer exports.  Jordan's Finance
Minister announced that this measure is intended to combat
unemployment by encouraging industrial project expansion and
new industrial export investments.

    In March 1993, the Governor of Jordan's central bank
announced new export financing measures, including the
following:  1) Interest rates on advances were reduced to 6
percent, down from 11 percent;  2) The value-added criteria on
local content, as a requirement for financing, was reduced from
40 percent to 25 percent;  3) Export advances were excluded
from the credit facilities accounts;  4) Long-term export
financing will be offered by the Central Bank of Jordan for up
to five years; and 5) The Industrial Development Bank (IDB)
will offer export financing loans on machinery imports up to
five years at no more than 8.5 percent interest.


7.  Protection of U.S. Intellectual Property

    Jordan is a member of the World Intellectual Property
Organization and is party to the Paris Convention for the
Protection of Industrial Property.  Jordan's copyright law,
passed by Parliament in 1992, is the only up-to-date law or
regulation dealing with the protection of foreign intellectual
property.  The Trademarks Law and Patents and Designs Law have
not been amended since the early 1960's.  Only the intellectual
property of Jordanian authors and foreign authors who register
their works inside the Kingdom are protected by the Copyright
Law.  Infringement of U.S. intellectual property rights is not
subject to any penalties, particularly if these rights are not
registered in Jordan and do not fall under any reciprocity
agreement on copyright protection that binds the Kingdom as a
signatory.

    The Jordanian Copyrights law deals with all aspects
relating to the exclusive rights to 1) copy or reproduce works,
2) translate, revise, or otherwise adapt or prepare program
derivatives work, and 3) distribute or publicly communicate
copies of the work.  Royalties may be remitted under licensing
agreements approved by the Ministry of Industry and Trade.

    Patents (product and process) must be registered at the 
Ministry of Industry and Trade to receive protection.  A
foreign company may register patents by sending a power of
attorney to a patent agent or to a lawyer.  Registration may be
renewed once for a period of 14 years.  The law, however,
applies more to domestic patents and un-registered foreign
patents which are not already protected.  Infringement of a
foreign patent, such as manufacturing of chemical compounds, is
observed as a violation by Jordanian courts if it proves to be
an infringement of the exact manufacturing process.

    Copyright:  Piracy of audio and video tapes for commercial
purposes is a widespread practice, over which the government
exercises no control.  For a small fee, a customer can rent or
buy copies of a wide selection of popular U.S. films.  Pirated
books are also sold in Jordan, but there is no indication that
the books are actually being reproduced within the country. 
The government announced that strict regulations on copyright
protection will be issued in January 1994.

    New Technologies.  There are many vendors in Jordan
engaging in technological fields, such as software, integrated
circuits, semiconductor chips, broadcast satellite signals, and
biotechnology.  Computer software piracy is rampant in Jordan's
small, but growing computer market.  Jordan has announced that
it will give priority to protecting computer software.

    There is no agreement between the United States and Jordan
concerning the protection of U.S. intellectual property. 
Although the impact of this lack of protection cannot be
estimated, it is probably not severe enough to cause lost
export or investment opportunities to U.S. firms.


8.  Worker Rights

    a.   Right of Association

    While Jordanians are free to join labor unions, only about
10 percent of the work force is unionized.  Unions represent
their membership in such areas as wages, working conditions and
worker layoffs.  Nineteen unions comprise the Jordan Federation
of trade Unions (JFTU).  The JFTU actively participates in
international organizations such as the International Labor
Organization.

    b.   Right to Organize and Bargain Collectively

    JFTU member unions regularly engage in collective
bargaining with employers.  Negotiations cover a wide range of
issues, including salaries, safety standards, working
conditions and health and life insurance.  If a union is unable
to reach agreement with an employer, the issue is referred to
the Ministry of Labor for arbitration.  If the Ministry fails
to act within two weeks after receiving a union complaint, the
union may strike.  Union-employer-government relations are
generally tranquil, so arbitration is rarely required.

    c.   Prohibition of Forced or Compulsory Labor

    Compulsory labor is forbidden by the Jordanian constitution
and is not practiced.

    d.   Minimum Age of Employment of Children

    Children under age 16 are not permitted to work except in
the case of professional apprentices, who may leave the
standard educational track and begin part-time (up to 6 hours a
day) training at age 13.

    e.   Acceptable Conditions of Work

    Jordan's workers are protected by a comprehensive labor
code, enforced by 30 full-time Ministry of Labor inspectors. 
The government prepares and adjusts periodically a minimum wage
schedule of various trades, based on recommendations of an
advisory panel composed of representatives of workers,
employers and the government.  Maximum working hours are 48 per
week, with the exception of hotel, bar, restaurant and movie
theater employees, who can work up to 54 hours.  Jordan also
has a workers' compensation law and social security which cover
companies with more than five employees.

    f.   Rights in Sectors with U.S. Investment

    Workers' rights in sectors with U.S. investment do not
differ from those in other sectors of the Jordanian economy. 
Additionally, Jordanian workers hired as employees within
Jordan's free trade zones, key areas for potential U.S.
investment, enjoy the same rights and privileges as Jordanian
workers in any other sector of the economy.


         Extent of U.S. Investment in Selected Industries

              U.S. Direct Investment Position Abroad
                on an Historical Cost Basis - 1992
                    (millions of U.S. dollars)

Category                                    Amount

Petroleum                                                 5
Total Manufacturing                                       0
    Food & Kindred Products                     0
    Chemicals and Allied Products               0
    Metals, Primary & Fabricated                0
    Machinery, except Electrical                0
    Electric & Electronic Equipment             0
    Transportation Equipment                    0
    Other Manufacturing                         0
Wholesale Trade                                           0
Banking                                                   D
Finance and Insurance                                     0
Services                                                  0
Other Industries                                          0

TOTAL ALL INDUSTRIES                                      D


(D)-Suppressed to avoid disclosing data of individual companies

Source:  U.S. Department of Commerce, Bureau of Economic
Analysis.

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