Target-oriented management of public expenditure

Project description

Title: Target-oriented management of public expenditure
Commissioned by: Bundesministerium für wirtschaftliche und Entwicklung (BMZ)
Country: Jordan
Lead executing agency: Ministry of Finance
Overall term: 2000 to 2013

Context

Jordan is a small, resource-poor country with a comparatively high rate of population growth. Its financial situation is severely strained and its established areas public spending are inflexible, and allocating its scarce resources to priority areas is a major challenge. In view of this, the Government of Jordan has been carrying out a number of ambitious financial management reforms, such as the introduction of binding expenditure ceilings, both for the overall budget and the sector ministries, the adjustment of the budget preparation calendar and the reform of the budget classification.

While several processes have improved, there is still insufficient communication between different processes and actors. This is hampering overall performance in the management of public finances and the alignment of scarce resources with priorities.

Objective

The management of public finances in Jordan has been enhanced, with a stronger capacity to allocate scarce resources in line with stated priority areas.

Approach

GIZ has been supporting Jordan in its efforts to overcome the challenges to its financial management system, since 2007. In doing so, it is acting on behalf of the German Federal Ministry for Economic Cooperation and Development (BMZ). The ‘Management of public expenditure’ project, which builds on the experiences of its predecessor project ‘Reform of public finances in Jordan’, also receives additional funding from the Spanish Agency for International Development Cooperation (AECID).

The project is working with the Ministry of Finance and the General Budget Department to improve the coordination of the processes and actors involved. It is also strengthening the budget preparation procedures that contribute directly to the allocation of resources and their alignment with priority areas. Moreover, it also supports processes of budget execution. While it focuses its support on the central organs of the public financial management, the project also reaches out to other ministries, governorates and municipalities.

Results achieved so far

With the support of the project, the Jordanian financial administration has achieved the following results:

  • A new budget preparation process has been developed for inclusion in the 2008 Organic Budget law.
  • Revenue forecasting has become gradually more effective and the assessment process has been institutionalised.
  • The budget law has been thoroughly modernised and now includes results-oriented elements to improve transparency and accountability.
  • A so-called ‘Surplus law’ has been introduced, which has brought all state-owned institutions under the budgetary oversight of the Parliament. This generates around EUR 60 million in additional annual revenue.
  • A memorandum of understanding has been signed between the Ministry of Finance and the Audit Bureau, which opens the way for the development of a true supreme audit institution.
  • By-laws on Internal Control have been introduced, with corresponding regulations and standards as well as a road map for their execution.
  • Government definitions have been revised, creating a basis for the restructuring of salaries and pensions across government.
  • As one of four countries in the MENA Region, Jordan has signed up to the Special Data Dissemination Standard of the IMF; as such it now publishes extensive fiscal data in the monthly bulletin.
  • Each year’s final accounts are now published online, which has significantly improved the transparency of governance.
  • The Ministry of Finance won the King Abdullah Award for Excellence in Government.

Jordan has made use of the international financial markets for the first time, to borrow USD 750 million, which has reduced its financing costs and brought a new source for government financing.

      Further information


      Contact


      Jean Mulot
      Email: jean.mulot@giz.de