Jordan regains stable S&P credit rating

AMMAN – Jordan has regained its stable credit rating from Standard and Poor's (S&P) almost three years after a downgrade to negative over concerns of economic and political problems caused by regional instability. 

The international rating agency said the revised outlook for Jordan's rating was supported by expectations that the Kingdom's fiscal and external balances will continue to improve. 

S&P also affirmed its long-and short-term foreign and local currency sovereign credit ratings for Jordan at “BB-/B”.

Welcoming the revised outlook, Finance Minister Umayya Toukan said the improvement in Jordan's credit rating would reflect positively on the public debt as it would reduce the cost of borrowing from local and international creditors. 

Toukan told Jordan Television's 60 Minutes programme on Friday that the stable outlook would also boost the confidence of investors and international agencies in the Kingdom's economy, according to the Jordan News Agency, Petra. 

He stressed the importance of maintaining sound economic policies, noting that the government will keep public spending at the same level for the years 2015, 2016 and 2017, standing at around JD8.1 billion. 

Toukan urged the Lower House to endorse the draft income tax law during the ordinary session set to start on Sunday, indicating the law would have a positive impact on the views of international organisations in assessing economic reforms in the Kingdom, Petra reported. 

S&P said the successful implementation of key political and structural economic reforms, supporting more sustainable and economic growth and further easing fiscal and external vulnerabilities, could lead it to consider a positive rating action.

In its rationale for revising Jordan’s outlook to stable, S&P said that the deterioration in fiscal and external balances will stabilise, and these balances will moderately improve over the medium term. 

“We anticipate ongoing energy diversification and a more favourable oil price environment for Jordan, supported by government reform efforts,” the ratings agency said in its report, made available to The Jordan Times.  

“We also forecast that public finances will strengthen as the state-owned power company [NEPCO] moves back towards cost recovery through 2017, and as a result of the government’s fiscal consolidation efforts,” the report added. 

“External balances will also narrow. This trend will be supported by lower energy imports — due predominantly to energy diversification — as well as lower oil prices and high current transfers stemming from official grants and private remittances.”

However, S&P warned that it could consider lowering the ratings if external and fiscal balances were to diverge significantly from its expectations, in case external and official funding were less forthcoming, or if financing needs widened beyond the scope of available external assistance.