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         Agriculture Sector Adjustment

The Hashemite Kingdom of Jordan—Agriculture Sector Adjustment Loan (Ln. 3817-JO)

The Jordan Agriculture Sector Adjustment Project, supported by Loan 3817-JO for US$60 million, was approved in FY94. Fully disbursed, the project closed six months behind schedule in FY97. Germany’s GfW provided cofinancing (US$20 million equivalent). The Middle East regional office prepared the Implementation Completion Report (ICR). The Government reviewed the draft ICR in a formal meeting with the Bank. The minutes of the meeting are appended to the ICR.

The overriding objective of the project was more efficient use of agricultural resources. Reforms included measures to reallocate Jordan’s very limited water resources to higher value uses (increased urban consumption; increased production of higher value more water-efficient crops) by increasing water charges, establishing better regulatory control over groundwater, and prioritizing public investments in water. Agricultural market liberalization was designed to remove the many constraints on prices and the distribution of agricultural goods. Actions include removal of subsidies, lifting of price controls, liberalization of the external trade regime; and deregulation of the land market. Institutional changes were geared to promoting private sector comparative advantage and institutional development of agricultural research, extension, rural credit and cooperatives.

The project achieved most of its objectives. Government has greatly improved policy and practice for water resource management. As a result, Jordan has also significantly improved water allocation among competing uses. Agricultural market liberalization is a reality. Distortions between internal and world market prices have been largely eliminated; cereals trade has been opened to the private sector; producer subsidies in agriculture have been eliminated and trade monopolies and other controls dismantled. But the institutional development program has yet to pay off. As the ICR states, “Within the Ministry of Agriculture, while the organization chart has been changed there is no apparent improvement in performance or cost.”

The Operations Evaluation Department (OED) endorses the ICR’s ratings: satisfactory outcome, likely sustainability, modest institutional development, satisfactory borrower and Bank performance.

Key lessons: i) The long and intensive preparation of the project (255 staff-weeks through appraisal) involving substantial collaborative analytical work paid off in smooth and low-cost implementation. Through this long gestation, government ownership of the operation also became manifest. Thorough preparation is a good investment. (The Operations Policy Department reached a similar conclusion in its recent report, Economic Sector Work and Results on the Ground.) ii) The institutional development component-- grafted to the project late in the preparation process--because of its complexity and time-consuming nature would have been better supported through a project rather than a policy based loan. (OED reached a similar conclusion in its recent publication, Reforming Agriculture, the World Bank Goes to Market.) iii) Monitoring and evaluation of adjustment is a long-term affair, and it is a mistake to expect indicators to show quick results as was the case during appraisal.

The ICR is satisfactory.

No audit is planned.

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