According to Articles 112 and 113 of the Jordanian Constitution, the general budget, which is approved by section, is to be submitted to the National Assembly one month before the start of each financial year. Article 111 stipulates that in imposing taxes, the government should adhere to principles of progressive taxation, equality, and social justice, and not exceed the taxpayers' capacity to support the state. Jordan’s top marginal income tax rate is 30 percent; the average taxpayer faces a 5 percent marginal tax rate.
The ministry of finance adopted a plan to improve fiscal management for 2004-06. The Sales Tax and Income Tax departments are being merged, and the Large Taxpayer Office opened in October 2004. The ministry also launched a Financial Management Reform Project to improve data collection and dissemination about the operations of the general government in addition to those budgeted by the central government.
The main supervisory agency in the financial area is the Audit Bureau of the Hashemite Kingdom of Jordan, established under the Constitution and by Law 28 of 1952 as a financially and administratively independent organization within the government. The bureau is charged with monitoring government revenues and expenses, in the areas of ministerial departments, public enterprises, local authorities, and rural councils. It conducts both regular and surprise examinations of publicly funded operations. Each year the bureau submits to Parliament a report of its findings, including any violations. A Chartered Accountants Association is also active in the country.
The General Supplies Department of the Ministry of Finance regulates all public procurement of other government departments in accordance with Supply Act 32 of 1993. Competitive bidding is usually required, and the rules are publicly accessible although tenders are not always widely publicized to the private sector.
The Central Bank of Jordan (Al Bank al-Markazi al-Urduni), established in 1964, enjoys the status of an autonomous corporate body. Among its functions it supervises the commercial banking system, which consists of thirteen conventional commercial banks, for the most part privately owned, two Islamic banks, and eight foreign bank branches. The oldest and largest of the commercial banks is Arab Bank, founded in 1930. The Central Bank’s Banking Supervision Department intensified its on and offsite examination program in line with the corporate governance guidelines issued for banks in 2004. Banks were encouraged to increase their capital and provisions against nonperforming loans.
Provisional Law No. 83 of 2003 ratified the International Convention for the Suppression of the Financing of Terrorism, and the Chamber of Deputies, convened in a special summer session, passed the Law to Combat Money Laundering on May 6, 2007. Jordan was a founding member in 2004 of the Middle East and North Africa Financial Action Task Force (MENAFATF), a part of the global network to combat money laundering and terrorist financing.
A major banking scandal in January 2002 suggested flaws in the supervision of the banking system that were being remedied. A local businessman fled the country, leaving as much as US$ 100 million in outstanding bank loans, after being accused of falsifying contracts with government departments to gain credit. In the wake of the scandal, the Central Bank ordered the three banks involved—Jordan Gulf Bank, Jordan Investment and Finance Bank, and Jordan National Bank—to increase their capital. By 2005 one small bank was under temporary administration of the CBJ pending merger with a stronger bank, and the nonperforming loans of the commercial banking system were almost entirely provisioned.
The Privatization Law no. 25/2000, issued in July 2000, provides the legal and institutional framework for privatization. The government set up a special committee called the Executive Privatization Commission (EPC), under the supervision of a higher council chaired by the prime minister with the membership of several ministers and the heads of concerned departments. Its duties include the selection of projects to be privatized, project assessment, determination of appropriate forms of privatization, preparation of offers for interested parties, and appraisal of submitted offers for privatization. The World Bank has praised Jordan’s privatization program for striking a successful balance between effectiveness and transparency, although it did not list new public offerings on the Amman Stock Exchange.
The Amman Stock Exchange was established in March 1999 as the sole authorized agency to operate as a formal market for trading securities in Jordan. The Jordanian Securities Commission, established by Securities Law No. 23 in 1997 and strengthened by legislation in 2002, is charged with regulating and monitoring the issuance and dealing of securities on the ASE, and the Securities Depository Centre is responsible for registering securities, clearing and settling trade, settling payments and accepting shares deposits. 192 companies were listed on the exchange at the end of 2004.
The market capitalization of the ASE reached $18.4 billion (almost double Jordan’s 2003 GDP) by the end of 2004, and the turnover rate was 36.3%. The ASE is divided into three markets depending on criteria of paid-in Capital, market value, per annum earned profits, distributed profits, shareholders’ equity, turnover ratio and trading days.
In an attempt to attract foreign direct investment and encourage an expansion of the private sector, the government has committed itself to promote entrepreneurship through corporate governance reform in accordance with OECD prinicples. The Code of Corporate Governance under consideration will encourage the Jordanian Security Commission to develop its capability to review the disclosure content of listed companies on the ASE.
The Amman World Trade Center, a part of the World Trade Center, aims at providing services for investors which make international communication quicker and less expensive and finding trade partners much easier. The Jordan Trade Association provides businesses with international links by organizing and arranging the participation of Jordanian companies in exhibitions, fairs, and trade missions around the world. The Federation of Jordanian Chambers of Commerce (FJCC) was established as a private sector representative in December 1995. It works as an umbrella for 15 chambers of commerce in different Jordanian cities, and provides its services to a community of 70,000 members engaged in various trading and business activities. The Federation's primary responsibility is to achieve a balanced economy, steer the state's foreign economic relations and strive for economic integration with public sector bodies.
International Transparency Standards
Jordan has participated in the International Monetary Fund’s (IMF) General Data Dissemination System since 2000 has engaged with the IMF and World Bank in publishing a Report on the Observance of Standards and Codes (ROSC) for fiscal transparency.
Both Moody’s and Standard & Poor have rated the country.