World Bank Approves $700M Jordan Loan to Fund Reform Phase Two

The World Bank’s Board of Executive Directors approved a $700 million loan to Jordan on Wednesday, the second phase of a programmatic series that ties the country’s recent macroeconomic stability to a specific reform agenda on private investment, MSME finance, green taxonomy and digital government payments. The Jordan Growth and Competitiveness Development Policy Financing II (DPF-II) joins a US$400 million first phase that began in May 2025, and the Bank structured the new operation around two reinforcing reform pillars under Jordan’s Economic Modernization Vision.

Jordan recorded real GDP growth of 2.8 percent in 2025 and secured in 2024 its first sovereign credit rating upgrade in more than two decades, maintained again in 2025, conditions the Bank framed as the entry point for converting stability into investment and jobs. The new loan backs reforms that span licensing, the electricity sector, the National Green Taxonomy and the shift to digital government payments, a list that goes beyond routine ease-of-doing-business measures and into structural change.

What the $700M Jordan Loan Funds

The second-phase operation is the latest instalment of the Growth and Competitiveness Development Policy Financing series, a programmatic World Bank instrument that disburses against verified policy actions rather than against project outputs. Per the the World Bank DPF program factsheet, the framework supports the Government of Jordan’s Economic Modernization Vision by combining fast-disbursing budget support with sequenced reform triggers.

The new loan keeps the same two-pillar architecture used in the first phase. Pillar one focuses on streamlining the business environment; pillar two deepens access to finance for companies and entrepreneurs. The disbursement comes in a single tranche tied to demonstrated progress on those reforms, and the Bank’s statement frames the program as a way to convert stability into private investment and “more and better jobs” rather than as general budget support. The $700 million size is also a clear scale-up from the $400 million first phase, a signal that the Bank is treating the reform track as live and moving.

Why the World Bank Is Doubling Down Now

The World Bank timed the second instalment to a stretch of policy delivery that began in 2024. Jordan maintained macroeconomic stability through a “challenging regional environment,” the Bank said, recording 2.8 percent real GDP growth in 2025. The country also broke a long rating stalemate, earning its first sovereign credit rating upgrade in more than two decades in 2024 and keeping that upgrade through 2025.

That backdrop is what the Bank’s Middle East Division Director, Jean-Christophe Carret, points to in framing the operation. Per Carret’s World Bank division director profile, he oversees the Bank’s engagement in Iran, Iraq, Jordan, Lebanon and Syria and joined the Bank in 2005 as a natural-resources economist. He framed the financing as a way to “preserve macroeconomic stability and sustain reform momentum,” wording echoed by the bank’s description of the loan as supporting reforms tied to Jordan’s Economic Modernization Vision 2033. The new loan also sits beside the IMF’s recent work on Jordan, completing the fifth review under the Extended Fund Facility and the second review under the Resilience and Sustainability Facility (per the IMF’s June 2026 review of Jordan’s program), a parallel track that signals the broader official-sector commitment to Jordan’s macro framework.

DPF funding is conditional in the policy sense, not the cash sense. The loan disburses once the Bank has verified that a sequenced set of prior actions, from legislative amendments to budget allocations, has been delivered. The model makes the second-phase approval a confirmation that the first phase held; the loan is the second instalment of a programmatic bet already partly won.

Pillar One: Streamlining the Business Environment

The first pillar targets the frictions that raise the cost of doing business in Jordan. The reform list announced with the loan:

• Licensing: streamline sectoral licensing procedures across industries to shorten setup timelines.
• Digital transactions: modernize the legal framework for electronic and cross-border transactions.
• Labor formalization: extend social protection to flexible and part-time workers and pull more workers into formal employment.
• Electricity sector: open the door to private transmission, generation and energy storage in a sector that has historically been state-led.

The electricity piece is the deepest shift inside the pillar. By enabling private participation in transmission, generation and storage, the reform reaches into capital spending categories that the public sector has carried alone. The same strand extends social protection to non-standard workers, a structural change because Jordan’s labor market has long split between formal employees with full benefits and a larger informal segment with limited coverage.

Procedural items like licensing and the e-transaction legal framework support the broader operational story. They lower the per-deal cost for foreign and domestic investors alike, and they meet a condition that international rankings have flagged in past years. Together the four reforms turn the business-environment pillar into a procedural-plus-sectoral package, not a list of compliance edits.

Pillar Two: Capital Markets for the 99 Percent

The second pillar reaches into how money actually flows to Jordanian firms. Four figures anchor the pillar’s scale:

• $700 million: DPF-II loan amount approved by the Bank’s executive directors on Wednesday.
• 2.8 percent: Jordan’s real GDP growth recorded in 2025.
• about 99 percent: share of Jordan’s firms classified as micro, small or medium-sized enterprises (MSMEs).
• 21+ years: the gap since Jordan’s previous sovereign credit rating upgrade before 2024.

Because around 99 percent of Jordan’s firms sit in the MSME bracket, reforms that move capital into this layer reach almost the entire private sector. The second pillar introduces new lending formats, including crowdfunding and cash-flow-based lending, and explicitly opens finance to women entrepreneurs, who have historically been under-served by Jordanian banks. It also aims to expand access to formal business accounts for unbanked micro-entrepreneurs.

Modernizing capital markets makes the funding side of these reforms sustainable. Crowdfunding and cash-flow-based lending require a legal and supervisory setup that most emerging market regulators have only recently begun writing, and the Bank’s statement frames them as the instruments “particularly” suited to MSMEs. Each new format needs a corresponding rulebook, sandbox and reporting pipeline before it can move money at scale.

Beyond core lending tools, the pillar also touches the insurance sector, the National Green Taxonomy and the shift to fully digital outgoing government payments. The insurance reform updates legal foundations; the Green Taxonomy work defines what counts as green finance in Jordan; the digital payments shift is meant to reduce transaction costs and improve efficiency. Carret’s statement tied these together as the supporting structure for inclusive MSME growth.

The implementation test sits at the heart of pillar two. The reforms are sequenced and policy-actioned, so unlocking the loan’s full effect depends on whether the new rules, sandboxes and reporting pipelines actually land in time, the kind of operational delivery that domestic regulators, not the Bank, drive.

The Deeper Restructuring: Power, Green Finance, Digital State

Three of the reforms announced with the loan go beyond standard doing-business indicators. The electricity-sector opening invites private investment into transmission, generation and storage, segments the Jordanian state has historically financed and operated on its own. The National Green Taxonomy, adopted by the Council of Ministers in February 2026, creates a Jordanian definition of “green” that banks and investors can use to channel capital toward projects that meet climate criteria. The push toward fully digital outgoing government payments is meant to shrink the cash-handling footprint of the state, lower transaction costs and pull more citizens into the formal financial system.

Each item carries a distinct structural pressure. The electricity reform matters because the sector has been a recurring fiscal drag. The Green Taxonomy matters because it gives Jordan’s banks a locally authored standard to screen climate-aligned projects. Digital government payments matter because they convert informal cash flows into data-rich payment records that can be used for credit decisions.

These reforms are tied to the Bank’s disbursement logic, not a calendar. The Bank verifies that each prior action has been delivered before releasing the loan’s money, so each reform on this list is also a check-box the Bank will sign off on.

With the foundations of macroeconomic stability firmly established, Jordan’s economic reform efforts represent a major step in the country’s journey toward a more inclusive economy driven by private investment and backed by the promising opportunities of a green and digital future.

The quote comes from Jean-Christophe Carret, the World Bank’s Division Director for the Middle East Department, in the World Bank statement carried by Ammon News and the Jordan Times on Wednesday.

From Phase One to Phase Two: How the DPF Has Already Moved

The DPF-II loan builds on reforms that the first $400 million phase (started 13 May 2025 and running through December 2027 per details on the earlier $400 million first phase) already delivered:

The phase-one list reads like a cross-section of competition, trade, gender inclusion, fintech supervision, credit infrastructure, climate-risk and insurance reform. The Insurance Policyholders Protection Scheme (the country’s insurance guarantee fund) was also established in the first phase. Together these provide the legal and supervisory floor on which the second phase builds.

Some phase-two items depend directly on phase-one work. The Fintech Regulatory Sandbox cohort, for instance, prepared the supervisory ground for the new lending formats in phase two. The national eKYC platform and digital credit reporting feed the cash-flow-based lending tools pillar two introduces. Climate-risk instructions for banks set the supervisory context for activating the Green Taxonomy. The phase-two agenda is an extension of an operating reform stack, not a new program layered on top of an older one.

The Delivery Clock

DPF loans pay out in tranches only after reforms are verified, so the binding clock for the $700 million is reform delivery rather than calendar. The first phase runs through December 2027, and the Bank statement does not publish a phase-two closing date. That choice keeps the disbursement tied to specific actions: each reform mentioned in the loan’s policy matrix becomes a check the Bank must sign off on before money moves.

The two tranches together, $400 million already in the pipeline and $700 million now approved, amount to $1.1 billion in programmatic support, and the next move belongs to Jordan’s implementing ministries as much as to the Bank. The first phase runs through December 2027; the second phase follows its own reform schedule.