Jordan achieves low overall compliance with international standards and codes, with a score of 27.5 out of 100 in our Standards Compliance Index. Jordan's compliance under all three categories -- macroeconomic fundamentals, market infrastructure and financial supervision -- is low. Standards most in line with international requirements have earned an "enacted" rating. These include monetary transparency and corporate governance. While corporate law is well established, it lacks enforcement and there is no corporate governance code. Jordan's compliance rating is further marred by three standards -- the insolvency framework, money laundering and payment systems -- all of which lack independent assessments. However, its compliance with financial standards is showing signs of reform. Jordan intends to subscribe to the International Monetary Fund's Special Data Dissemination Standard by the middle of 2007, is taking positive steps to meet international standards in the areas of accounting and auditing, passed a new anti-money laundering law in 2007. It has also made substantive progress in aligning its banking, securities, insurance regulatory framework, and real-time gross settlement system with international best practices.

Macroeconomic Policy and Data Transparency

According to information provided by the International Monetary Fund (IMF) on its Dissemination Standards Bulletin Board (DSBB) website, Jordan is not a subscriber to the IMF's Special Data Dissemination Standard (SDDS). However, a 2007 report by the IMF indicates that Jordan intends to subscribe to SDDS by the middle of 2007. Presently the IMF's DSBB website indicates that Jordan does participate in the IMF's General Data Dissemination System (GDDS). More »

The Central Bank of Jordan (CBJ) was established in 1964. Its main objectives are to maintain price stability, the convertibility of the Dinar and the sustained growth of the economy. Oxford Analytica, in its 2006 Report on Monetary Policy Transparency in Jordan, rates Jordan's compliance with the International Monetary Fund's (IMF) Monetary Policy Transparency standard as "Enacted" and asserts that Jordan continues to improve monetary policy transparency. These improvements include the availability and quality of information available, as well as communication with relevant stakeholders. Jordan is expected to subscribe to the IMF's Special Data Dissemination Standard (SDDS) by mid-2007. This commitment would ensure the quality of monetary statistics and should reduce the lag on monetary data from one month to two weeks. More »

In January 2006, the International Monetary Fund (IMF) published a Report on the Observance of Standards and Codes (ROSC) on Fiscal Transparency in Jordan. The report acknowledges that Jordan has made significant progress over recent years, but fails to meet various requirements of the IMF's Code of Fiscal Transparency. In order to approach international good practices for fiscal transparency, Jordan will have to embark on a broad and sustained effort. This effort seems to be on the way. Oxford Analytica asserts that the government is now more committed to reform than in the past, when it preferred to suggest change rather than implement it. Jordan intends to subscribe to the IMF's Special Data Dissemination Standard (SDDS) by the middle of 2007 and is already a participant in the IMF's General Data Dissemination System. Further, according to the IMF, the government has initiated a number of reform processes, such as an improved medium-term framework and revised budget classifications during recent years that are likely to have major implications for fiscal transparency when they are successfully implemented. More »

Institutional and market infrastructure

As stated in the 2004 Country Commercial Guide prepared by the U.S. Department of Commerce, bankruptcy and insolvency proceedings in Jordan are regulated by the Commercial Code, the Civil Code, and the Companies Act. In 2002, a bankruptcy law came into force. However, there is no publicly available information regarding Jordan's compliance with the Principles and Guidelines for Effective Insolvency and Creditor Rights Systems developed by the World Bank. More »

In its 2004 assessment of accounting and auditing practices in Jordan, the World Bank said that Jordanian authorities expressed their intention to bring accounting standards in line with International Financial Reporting Standards (IFRSs) and have achieved significant results; however, major challenges remained. There is no legally established accounting and auditing standard setting body in Jordan and unregulated entities are not required to follow any specific accounting standards. For regulated entities, accounting and auditing requirements are set by the respective regulator - Jordan Securities Commission (JSC), Central Bank of Jordan (CBJ), and the Insurance Commission (IC) - which mandate the use of IFRSs. The lack of guidance on the implementation of IFRSs results in divergent actual practices as preparers of financial statements and auditors interpret the standards based on their understanding of the standards. In the case of the JSC, the applicable laws and directives state that if IFRSs contradict national legislation, the latter shall supersede. The World Bank also noted that the function of enforcing compliance with accounting requirements is not well coordinated between the regulatory bodies and recommended to focus on strengthening enforcement mechanisms to ensure compliance with the established accounting requirements. More »

Jordan has made much progress in the regulatory environment in the 1990s, since the creation of the Jordan Securities Commission (JSC), the Amman Stock Exchange (ASE), and the Securities Depository Center (SDC), according to a 2004 assessment by the World Bank. In general, the assessment found relatively good disclosure practices but the report also indicated that the development of modern board practices is at an early stage and identified a number of areas where basic shareholder rights can be improved. Despite these weaknesses the assessment of the individual Organization for Economic Cooperation and Development (OECD) Principles of corporate governance found a satisfactory level of compliance. The World Bank's key recommendations focused on implementation. The disclosure provisions should be enforced with a focus on the actual review of content; the Company Law should be revised in order for the policy framework to be in greater compliance with the OECD Principles; and the regulatory areas of responsibilities of the three main regulatory bodies relevant for corporate governance monitoring should be reviewed. A national Code of Corporate Governance with a potential focus on the role, duties, and functions of the board of directors has yet to be developed. More »

According to the World Bank's 2004 assessment of accounting and auditing practices in Jordan, the Jordanian authorities expressed their intention to bring auditing standards in line with International Standards on Auditing (ISAs) and have achieved significant results. Although application of ISAs is required for all listed companies, and many audit firms claim to be using ISAs, the applicable auditing standards are not specified. In 2003, a new Accountancy Profession Law 73/2003 established the High Council for Accounting and Auditing, which is responsible for the oversight of auditing profession and for approval of accounting and auditing standards. However, the World Bank noted that the Act fails to address a number of important issues, including auditor independence and enforcement mechanisms for compliance with applicable auditing standards and the code of ethics. Overall, the World Bank concluded that inadequate coordination between the regulatory bodies in regards of enforcement, the lack of sufficient knowledge of ISAs and availability of translations of ISAs result in partial compliance with existing auditing requirements. It was recommended to focus on strengthening enforcement mechanisms to improve the quality of information provided in the financial statements. More »

Based on information provided by the International Monetary Fund (IMF) in its 2004 Article IV Consultation report, once the draft law on anti-money laundering (AML) is passed by Jordan, the country will be brought into full compliance with international standards. As of May 2007, Jordan's Parliament endorsed this law on anti-money laundering. However, due to the relative newness of the law, there is little information publicly available that addresses the comprehensiveness of this law. Moreover, a 2007 report by the IMF stressed Jordan's need too improve its AML legislative and institutional framework. According to a 2007 U.S. Department of State (DoS) report (released prior to the May 2007 endorsement of the AML law), Jordan lacks laws regarding confiscation and freezing of funds and has not established a Financial Intelligence Unit and is not party to the United Nations (UN) Convention against Transnational Organized Crime. The DoS report indicates that the Central Bank of Jordan has, however, issued instructions to banks to comply with international best practices in the areas of customer due diligence, politically exposed persons, wire transfers, record keeping, suspicious transactions reporting, and internal controls of banks. Nonetheless, there is insufficient information publicly available as to Jordan's compliance with the forty Recommendations and nine Special Recommendations of the Financial Action Task Force. More »

Jordan's payment system generally follows international standards and codes with regard to its regulatory and supervisory framework according to information provided by the International Monetary Fund (IMF) in its 2004 Article IV Consultation report. According to a 2005 report by the Independent Evaluation Office (IEO) of the International Monetary Fund, the IMF did conduct a Financial System Stability Assessment (FSSA), which the Jordanian authorities declined to publish. However, based on information provided by the 2005 IEO report, the FSSA indicated that Jordanian payment system is a well-functioning and advanced system that exhibited a high level of compliance with international best practices. Furthermore, information provided on the Central Bank of Jordan website indicates that Jordan's Real Time Gross Settlement System (RTGS) is based on the recommendations set forth by the Bank for International Settlements (BIS) Committee on Payments and Settlement Systems (CPSS). The most recent (2007) IMF Article IV report mentions that the Central Bank of Jordan welcomed an FSAP update in 2007 once the authorities have fully implemented its payment system reforms. However, as of 2007 there is insufficient information publicly available as to Jordan's compliance with CPSS's Core Principles for Systemically Important Payment Systems. More »

Financial Regulation and Supervision

A 2005 report by the Independent Evaluation Office (IEO) of the International Monetary Fund (IMF) notes that the IMF did conduct a Financial Sector Assessment Program (FSAP) for Jordan and reported its finding in a Financial System Stability Assessment (FSSA) report, which the Jordanian authorities declined to publish. However, the IEO report indicates that the FSSA concluded that Jordan has achieved a high degree of compliance with international standards with regards to prudential regulations. The report also noted that the Jordanian reform process is motivated by the authorities desire to align its banking supervision practices with international standards. Furthermore, a more recent (2006) report by the Commission of the European Communities states that Jordan has been making progress in its financial supervision and intends to become compliant with the Basle Core Principles (BCPs) for Effective Banking Supervision in 2008. The IMF in its 2004 Article IV commends Jordan on its supervisory framework and states that the framework in general is in line with international standards and codes. However, apart from this statement, there has been little subsequent information publicly available to indicate that Jordan has enacted or implemented the BCPs. More »

According to the International Monetary Fund (IMF), Jordan's regulatory and supervisory framework generally observes international standards and codes in securities, reflecting the country's efforts to strengthen supervision in recent years. However, the underlying assessment on which this statement was based was - upon the request of Jordanian authorities - never published, and therefore the compliance statement cannot be verified. Nonetheless, the Jordanian Securities Commission (JSC) stated in its 2005 Annual Report that it is working to upgrade the Jordanian capital market towards international standards. To achieve this goal, the annual report lists a number of measures, such as enhancing the JSC's supervisory role and increasing disclosure and transparency in the market. More »

In 2004, the International Monetary Fund (IMF) concluded the Financial System Stability Assessment (FSSA) of Jordan which aimed at identifying strengths and vulnerabilities of the Jordan's financial system and determining policy responses and technical assistance strategies. The circulation of the final FSSA report was highly limited and it has never been published. However, as stated in the report by the Independent Evaluation Office of the IMF and other publications by the Fund, the FSSA noted that regulation of the insurance sector in Jordan generally followed international standards in insurance supervision, although some legal and regulatory challenges existed. It was recommended to increase the independence of the Insurance Commission of Jordan (IC) from government, and to ensure that companies maintain adequate reserves. Other sources also confirm these findings. Realizing the need for changes, in 2004 the IC announced its plan to revise the existing Insurance Regulatory Act of 1999 with the aim of laying down foundations and principles governing legal relationships between the insurance sector participants. More »

Legend:

Credit Ratings

Moody's Ba2/Stable

Fitch Not rated

Standard & Poor's BB/Stable

Macroeconomic Data

2007 GDP (Current Prices): 16.011 billion USD (IMF)

2007 GDP (Per Capita): 2,795 USD (IMF)

2008 GDP (Growth Forecast): 5.5% (IMF)

2008 Inflation (CPI): 10.9% (IMF)

2007 Unemployment: 13.5% (CIA)

2006 Foreign Direct Investment

FDI (Inward): 3.121 billion USD (UNCTAD)

FDI (Outward): N/A billion USD (UNCTAD)

2006 Official Development Assistance

ODA (Received): 580 million USD (OECD)

ODA (Disbursed): N/A million USD (OECD)