Transcript Slide 1

The World Bank
International Conference on
FINANCING MUNICIPALITIES & SUB-NATIONAL GOVERNMENTS
The Role of Specialized Local Funds and Financial Intermediaries
Washington DC, September 30 and October 1, 2004
Khaled Tarawneh
Director of Local Development Department.
Ministry of Planning and International Cooperation
Jordan
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Jordan's Spatial Administration System –Governorates
Irbid
Ajlun
Jerash
Mafraq
Balqa
Madaba
Amman
Zarqa
Dead Sea
Karak
Tafieleh
Ma’an
Aqaba
Gulf of Aqaba on
the Red Sea
2
Current Development Management Levels
National Level
Cabinet
Ministries
Gov. Institutions
Intermediate
Level:
Regional Units:
1- (12)Governorates
Governor/
Chairman of Councils:
Executive
Council
Sectoral
Department s
Consultative
Council
Provincial Governor/
Chairman of Councils:
2– Provincial
Level
(Districts)
Sectoral
Department s
local Level:
(99)
Municipalities
*
Municipal
Council
*
Executive
Council
* *
Consultative
Council
* *
Technical
Committees
and Consultative councils, and administrative units the formation of which is
* Explanation: Executive
still incomplete at the provincial level even though those formed are not in force as
stipulated in the administrative formations by-law No. (47) for 2000.
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System of Government of Jordan Administration


There are two types of structures in local government
systems, one is the representative of the central
government i.e. departments of line ministries. The
second is the self-government units i.e. municipalities.
Since the centers of the line ministries still having the
pivotal role in intergovernmental relations; the current
system of Jordan public administration characterized as a
form of deconcentration rather than one of developed
local self-government.
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Classification of Municipalities:

The 99 municipalities (excluding the Municipality of Grater Amman),
based on their number of population, are grouped into four categories
A,B,C and D, as follows:
Category
Administrative definition
Population Scale
A
Capitals of Governorates.
More than 100,000.
B
District capitals.
More than 15,000 and
less than 100,000.
C
Administrative centers of the sub-districts.
More than 5,000 and
less than 15,000.
D
All other municipalities not included in Less than 5,000
above categories (A, B and C)
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Municipalities by Governorates:
Governorate
Number of
municipalities
% of total number
of municipalities in
the kingdom
Governorate %
of kingdom’s
total No. of pop.
Irbid
18
18.2
17.8
Mafraq
18
18.2
4.6
Ajlun
5
5.1
2.2
Jarash
5
5.1
3
Amman *
8
8.1
38.1
Madaba
7
7.1
2.5
Balqa
9
9.1
6.6
Zarqa
4
4
15.7
Karak
10
10.1
4
Tafileh
4
4
2
Ma’an
7
7.1
1.5
Aqaba
4
4
2
Total
99
100
100
* excluding Municipality of Grater Amman
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Municipalities by Categories:
Governorate
Category A
Category B
Category C
Category D
Total
Irbid
1
14
3
0
18
Mafraq
1
5
9
3
18
Ajlun
1
3
1
0
5
Jarash
1
2
2
0
5
Amman *
0
5
3
0
8
Madaba
2
2
3
0
7
Balqa
1
5
2
1
9
Zarqa
1
1
2
0
4
Karak
1
7
1
1
10
Tafileh
1
2
1
0
4
Ma’an
1
2
4
0
7
Aqaba
0
1
2
1
4
Total
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49
33
6
99
* excluding Municipality of Grater Amman
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Municipalities by Governorates, Categories
and % of Jordan population
14
14
12
A
B
C
D
10
9
8
7
6
5
5
5
4
4
3
3
3
3
2 2
2
1
0
3
1
1
1
0
Irbid
22
2
1
1
0
0
Mafrag
Ajlun
Jarash
0
0
2
1
11
2
1
1
11
1
2
1
0
Amman Madaba
Balqa
Zarqa
2
1
1
1
0
0
0
Karak
Tafileh
Ma'an
Aqaba
No.
18
18
5
5
8
7
9
4
10
4
7
4
pop. %
17.8
4.6
2.2
3
38.1
2.5
6.6
15.7
4
2
1.5
2
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Municipal Financial Status:
Subject
2002
2003
2004
Total Revenues
72.166
79.756
90.201
Total Expenditures
83.720
92.510
102.798
Gap
11.554
12.754
12.597
Year
Municipal Revenues & Expenditures
2002-2004 (JD'000)
250
200
150
100
50
0
2002
2003
Total Revenues
2004
Total Expenditures
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Municipal Expenditures:
Subject
Year
Wages &
Salaries
General
Expenses
Interest &
Principal
Capital
Expenditure
Total
Expenses
2002
36.937
15.023
7.831
23.929
83.720
2003
40.617
13.830
10.910
27.153
92.510
2004
44.070
13.963
15.901
28.864
102.798
Municipal Expenditures 2002-2004 (JD'000)
120
100
80
60
40
20
0
2002
Wages & Salries
Interest & Principal
2003
2004
General Expenses
Capital Expendituer
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Municipal Revenues:
Subject
Transfers from
Central Gov.
Total own
Revenues
Borrowing
from CVDB
Total
Revenues
2002
39.401
32.765
13.500
72.166
2003
36.930
35.526
7.300
79.756
2004
46.300
36.601
7.300
90.201
Year
Municipalities have limited independent sources of revenues, most of local
revenues are tightly controlled by the center. Therefore, municipalities are
facing financial stress which hinders their efforts to meet the basic needs
of local citizens.
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Regional and Municipal
Development Project
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Background of Project:
The project stems from the studies carried out by the Government of
Jordan as part of the World Bank assistance program “Country’s
Assistance Program CAS 2002”. The studies research includes Public
Sector Management reform at local governments, the general findings
to which this project is dedicated in this sector can be summarized in
the following:
•
•
•
•
Lack of Accountability mechanisms
Lack of data at the municipal level
Local capacity is weak
Absence of a transfer instrument to deal with horizontal imbalance
(i.e. on that takes into account the major disparities between
municipalities in terms of their ability to raise revenues and their
expenditure needs).
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• Lack of commitment to hard-budget constraint manifested by the
Cities and Villages Development Bank CVDB financing of operating
deficits; extension of grace periods; and forgiveness of interest
payments.
• Delay in the approval of municipal budgets.
• Limited decision-making power attributed to local governments.
• Lack of cooperation/association among the small municipalities and
insufficient outsourcing to improve efficiency.
• Weak coordination and cooperation among different types and
levels of government.
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• Need for strengthening of local government budget execution
monitoring and developing a system of service delivery
performance measurements.
• Variation in the distribution and composition of revenues across
municipalities.
• Ad hoc nature of determination
intergovernmental transfer pool.
and
distribution
of
• CVDB has no capacity to mobilize long term credit from private
sources.
• Uniform treatment of municipalities leads to large inefficiencies
and inequities.
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• Current expenditure assignment does not conform to general
principles.
• Lack of revenue autonomy.
• Absence of an effective incentive mechanism to encourage
revenue effort.
• Review of various elements of comprehensive local government
laws/rule of law.
• Enhance municipalities’ (especially large ones with sufficient and
stable resources) ability to access long-term financing.
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Goal:
Improving
the
public
sector
management,
infrastructure, and service delivery at the local
levels with special focus on the underserved
economically depressed regions of the country.
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Objectives :
The
project would focus on municipalities as a basic unit for local
development by strengthening their capacity to deliver services and
infrastructure in a sustainable, transparent, efficient and equitable
manner. Specifically, the project would result in:
1. Increased coverage and quality of municipal service provision, with
particular emphasis on addressing deficiencies in under-served areas.
2. Improved local government access to short- and long-term investment
financing and increased central resource transfers, based on a more
equitable inter-governmental transfer system, and a wider range of
financial products and services offered by CVDB.
3. Strengthened municipal capacities to manage municipal financial
resources and deliver services efficiently, equitably and in a prioritized,
planned and participatory manner.
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Project Components:
1. Municipal Services and Infrastructure Investments
2. Municipal Finance Institutions and Instruments
3. Regional Strategy Development
4. Capacity Building and Project Management
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1. Municipal Services and Infrastructure Investments
Objective:
Improve the provision of municipal infrastructure services through
investments in infrastructure and equipment to strengthen service
delivery, with a particular focus on under-served/poor areas to be
selected on the basis of agreed priority criteria.
These criteria will be identified by reviewing the current municipal
classification
system,
which
is
mainly
based
on
administrative/population considerations, and introducing new
physical and socio-economic dimensions.
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1. Municipal Services and Infrastructure Investments
Through this component, the use of municipal asset management
strategies/plans will be introduced, together with methodologies for
participatory planning, budgeting and implementation at local level.
Whenever feasible, public-private partnerships for the provision of
municipal services will be supported, depending on the capacity
and readiness of the individual municipalities.
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2. Municipal Finance Institutions and Instruments
Objective:
Increase and improve the availability of and access to equitable
inter-governmental transfers and provide for a range of financial
products and services through the City and Village Development
Bank (CVDB) to support sustainable municipal development.
In particular, this component will build on the new classification of
municipalities as described under Component 1 and would aim to:
(1) develop new financial products tailored to the diversified needs of
municipalities, which will allow them to borrow within clear
economic, financial, technical, environmental and social
frameworks;
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2. Municipal Finance Institutions and Instruments
(2) strengthen the current inter-governmental transfer system in order
to enhance equity and efficiency within the circumstances of the
new reality of the amalgamated municipal structures, and
(3) support CVDB in fulfilling its mandate through strategy
development, realignment of its governance structure, and other
measures to ensure it can continue to operate sustainable on a
sound financial footing.
Three institutions will play a critical role in achieving the above-stated
objectives and targets, namely the Ministry of Municipal Affairs
(MOMA), the Ministry of Finance (MOF) and CVDB.
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3. Regional Strategy Development
• This component would include financing for studies, workshops,
preparation of discussion papers and other learning exercises
intended to strengthen regional planning and ensure effective
linkage and coordination among municipalities in their development
planning efforts.
• It would support and expand upon ongoing work of the Local
Development Department of Ministry of Planning and International
Cooperation (MOPIC) and would explore current institutional
arrangements, including legal frameworks and regulatory
assignments regarding regional planning, and develop options for
consideration to realign and improve regional and local government
coordination.
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3. Regional Strategy Development
• It will also explore potential rural-urban linkages with the aim of
identifying pilot activities to foster local development, including
projects of a small-scale nature that could be scaled-up and
supported in a future lending operation. This component would be
designed to provide technical assistance primarily to support the
strengthening of regional-municipal and urban-rural linkages.
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4. Capacity Building and Project Management
Objective:
Build /strengthen the capacities of key stakeholders that play a
critical role in the achievement of the project objectives (Local
Governments, MOMA, CVDB) and would support the Project
Management Unit.
At the municipal level, support could be provided to:
- Further strengthen municipal budgeting; Asset management;
- Revenue generation;
- Human resource capacity development;
- Investment project analysis and feasibility study preparation;
- Fostering private-public partnerships;
- Developing and piloting mechanism for participatory governance;
- Integrated spatial and strategic municipal planning;
- Data collection and analysis.
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4. Capacity Building and Project Management
At MOMA, support would be considered to:
strengthen sector monitoring through development and expansion
of an intergovernmental fiscal database, building on ongoing
efforts of Jordanian German Technical Cooperation Project (GTZ)
and CVDB, and related systems and capacity development to
improve the effectiveness of MOMA operations.
This component could also support CVDB through training and
capacity building for its staff in line with its new strategy and
product lines.
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Project Funding:
•
•

The project is estimated to cost roughly $60 million, depending
on technical studies prior to the project.
The breakdown of funding agencies is as follows:
International Bank for Reconstruction and Development (IBRD)
$ 35 million.

Agence Française de Développement (AFD) $15 million.

The Government of the Hashemite Kingdom of Jordan $5 million
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