jordan pulse -
Moody’s credit rating agency announced an upgrade of Jordan’s long-term sovereign credit rating in both local and foreign currency from B1 to Ba3 with a stable future outlook.
This is the first time that Jordan’s credit rating has been raised in 21 years, having remained stable through regional and global challenges that have occurred since then.
The agency indicated that the upgrade reflects the success and effectiveness of the public finance management and the overall economy, as well as measures taken to mitigate risks, which have contributed to strengthening Jordan’s resilience against external shocks. This aligns with a higher level of credit rating. Jordan’s proactive policies, in particular, have protected its credit rating from the repercussions of the COVID-19 pandemic, the rise in global energy and food prices amidst the military conflict between Russia and Ukraine, and the global contractionary monetary policies. These policies have also bolstered Jordan’s resilience in the face of ongoing geopolitical conflicts in the Middle East.
Commenting on this historic event for Jordan, Finance Minister Dr. Mohammad Al-Ississ said, “This achievement represents a deserved recognition of the profound structural reforms accomplished by the Jordanian government to protect the middle class from the repercussions of global and regional shocks, by expanding the local revenue base in a fair and gradual manner without raising taxes on citizens. This achievement is also another significant international acknowledgment of the wisdom of the deep reform agenda launched by His Majesty the King, which has enhanced Jordan’s resilience and increased growth rates. It is noteworthy that the timing of this achievement comes amidst very difficult regional and global circumstances. Jordan has succeeded in raising its credit rating at a time when other countries have suffered downgrades or, at best, maintained stability. This upgrade confirms the financial stability as a supporting factor for the high level of Jordanian diplomacy led by His Majesty the King to alleviate the ongoing aggression against our people in Palestine.”
According to Moody’s, “This rating is based on the strength of Jordan’s financial and monetary policies and the international support Jordan receives financially and technically, as well as the size of local financing.” The agency praised Jordan’s commitment to implementing and following through with broad structural reforms, which have led to an improved business environment following the enactment of the new investment law that reduced the time required for approving new investments and granted investors legislative stability for seven years, concurrent with the establishment of the Ministry of Investment.
Regarding public finance, the agency emphasized the “stability” of public finance indicators in the coming years. The agency expects the general government budget deficit to range between 1.5% to 2% of the Gross Domestic Product (GDP) during the years 2024-2025, compared to 2.1% in 2023 and 2% in 2022. It also anticipates a downward trajectory for the general government debt (which includes the debt of the central government and municipalities, the guaranteed debt for the National Electric Power Company and the Water Authority, excluding the net debt of the Social Security Investment Fund) to reach 80% of the GDP by 2028, down from about 90% in 2023.
In turn, the Governor of the Central Bank of Jordan, Dr. Adel Sharkas, stated that the improvement in the sovereign credit rating by Moody’s, in the current regional context, is a strong testament from a prestigious global institution to the resilience of the national economy and its high capacity to face shocks, demonstrating the robustness of the macroeconomic fundamentals and the fruit of successful economic policies adopted by the government and the Central Bank.
Sharkas affirmed that the monetary policy pursued by the Central Bank, in alignment with the monetary policies of global and regional central banks, has contributed to maintaining monetary and financial stability in the Kingdom, as one of the pivotal pillars of the economy, represented by maintaining stable inflation rates and a fixed exchange rate system for the Jordanian dinar against the US dollar, supported by an unprecedented level of foreign reserves currently amounting to $19.0 billion, alongside a banking sector with a strong and stable financial structure.
Sharkas highlighted that the elevated rating of the Jordanian economy sends a strong and clear positive message to the global financial markets and investors, confirming the soundness of the economic approach focused on continuing the reform journey and moving forward with implementing initiatives and priorities of Jordan’s Economic Modernization Vision for the years 2023-2033. This coincides with the Kingdom’s success in completing the first review of the financial and economic reform program with the International Monetary Fund, which supports enhancing Jordan’s position as an attractive and safe destination for investments.