SETP Mechanism of Selecting Projects, Fund Allocation, and Implementation

Selecting Projects & Fund Allocation:

During the preparation of the annual budget, relevant ministries and the MOPIC agree on a proposed list of projects to be included in the SETP based on the development priorities of the country, after which the Council of Ministers reviews and approves the projects to be included in Chapter 2 of the general budget, which are not funded by the budget. Therefore, the SETP is part and parcel of the Budget Law, and as such all its financial and administrative rules and regulations apply to it, which ensure accountability and transparency through an institutionalized mechanism per article (9) - (g) of the Budget Law No. (12) for the year 2003 and article (10) - (g) of the draft Budget Law for the year 2004. Moreover, the SETP is subject to the Jordanian Parliament's scrutiny and becomes law only upon its approval, similar to all other projects.

In addition to the measures and procedures outlined above, all SETP funded projects are subject to the audit of the Audit Bureau which submits its annual report to parliament.

The following details the mechanism for approving and funding the SETP projects:

1. Relevant Ministries submit project proposals to the MOPIC (already included in Chapter 2 of the budget).
2. Relevant ministries, in coordination with the SETP Unit at the MOPIC, prepare Project Documents and set the action plans and time tables for each project.
3. In order to maximize the benefit of the Public Investment component, and due to the shortage of funds, the projects included in the SETP were identified using a prioritization model that takes into account projects with the most significant impact on the standard of living of all Jordanians, subject to budget constraints. The model, which was prepared with the assistance of the World Bank, uses a group of economic, social, as well as capacity implementation indicators in the process of identifying the projects. The prioritization criteria give varying weights for the indicators, with a special weight attached to unemployment and poverty incidence in each Governorate. Other indicators employed by the model include the ratio of current expenditures to capital expenditures, estimated future recurrent expenditures, the share of domestic inputs and imported inputs needed for each project, the sequencing of implementation of various projects, and the multi-project capacity of implementing ministries and departments. Moreover, the prioritization process includes priorities within each sector and between the different sectors
4. The list of prioritized projects is submitted to the Council of Ministers for approval.
5. The SETP Unit consults with donors on the selected projects (to confirm that the projects selected are in accordance with the focus areas and guidelines of the General Agreements concluded between the GOJ and donors).
6. Based on the outcome of the above, recommendations for funding priority projects are sent to the Prime Minister, who in turn instructs the Development Committee (the ministerial committee established for the purpose of assessing Jordan's developmental needs) to review them. 
7. The Development Committee sends its recommendations regarding the selected priority projects to the Council of Ministers for approval.
8. Once approval has been issued by the Council of Ministers, the projects are specifically marked within Chapter 2 of the budget. As such, the SETP Unit at the MOPIC relays the information to the relevant ministries.
9. The relevant ministries proceed by contacting the Ministry of Finance (MOF), which issues a Letter of Financial Commitment from the General Budget Department (GBD) in the amounts to be allocated for the projects.
10. The tendering process by the relevant ministries takes place according to the same rules and regulations that govern all other contracts--per the General Supplies Department - Supplies Act No. (32) in the case of goods and equipment or per the Public Works By-Laws No. (71) in the case of construction.

Tendering, Disbursement and Implementation

 The tendering process is conducted through Tendering Committees established at each ministry. The laws and regulations governing the tendering process are:

• In the case of goods and equipment: Per the General Supplies Department - Supplies Act No. (32) for the year 1993 and its amendments as of 2001; or
• In the case of construction: Per the Public Works By-Law No. (71) for the year 1986 (in the case of construction).

The laws and regulations governing the process for tendering SETP projects are the same ones that govern all other awarded contracts. Moreover, all the projects are subject to the audit of the Audit Bureau which submits its annual report to parliament.

The tendering process starts only if the funding for the projects is available per article (6) - (g) of the Temporary Budget Law No. (2) for the year 2002, and per article (6) - (h) of the Budget Law No. (12) for the year 2003, as follows:

1. Once the tendering process is completed in accordance to the guidelines specified above, contracts are awarded, project implementation commences, and invoices are issued in accordance with progress achieved.

2. Relevant ministries conduct two types of verification:

• Regular technical verification of work accomplished, which is done through the technical and project implementation departments at the relevant ministries;
• Regular financial verification and checking for the invoices issued for work accomplished, which is done through the financial department at the relevant ministries.

3. Following internal verification at the ministry, invoices are verified by:

• The financial controller--who is a representative of the MOF;
• The auditor--who is a representative of the Audit Bureau--per the Financial By-Law No. (3) for the year 1994.

4. Relevant ministries submit a request to the MOF to transfer funding for approved projects from the SETP special account to their respective accounts at the Central Bank of Jordan (On 29 January 2002, a special account (number 3100/1005/2) for the SETP was established at the Central Bank of Jordan, where all grants and privatization proceeds that pertain to the SETP are transferred).

5. Relevant ministries present monthly financial reports to the MOF to monitor and verify the cash flows and to the GBD to validate that the expenditures of the relevant ministries are compliant with the Budget Law. Technical progress reports are also sent to the SETP Unit at the MOPIC as illustrated in the next section on monitoring.

6. The GBD verifies the invoices and financial commitments of the relevant ministries as pertains to the projects per article (14) of the Temporary Budget Law No. (2) For the year 2002 and article (14) of the Budget Law No. (12) for the year 2003.

Thus, the process of fund allocation to the SETP is governed by the strict laws and regulations of the GOJ, as it is part and parcel of the Budget Law.  Furthermore, all SETP funded projects are subject to the audit of the Audit Bureau which submits its annual report to the Parliament. Therefore, the procedure of fund allocation, tracking and management is conducted in a clear and transparent manner