New Energy Sources for Jordan : Macroeconomic Impact and Policy Considerations

Jordan's initiatives to reduce its energy dependency could have substantial macroeconomicimplications, but will crucially depend on the level of international oil prices in the nextdecade. Significant uncertainties remain regarding the feasibility of the initiatives and theirpotential fiscal costs, including from contingent liabilities, could be very large. Given thelead time required for such major investments, work should start now on: (i) conductingcomprehensive cost-benefits analysis of these projects; (ii) addressing the challenges arisingfrom the taxation of natural resources; and (iii) designing a fiscal framework to anchor fiscalpolicies if revenue from these energy projects materializes.