Standard & Poor’s upgrades Jordan’s credit rating to BB- with stable outlook

AMMAN — Standard & Poor’s (S&P) has upgraded Jordan’s long-term foreign and local currency sovereign credit rating to BB- from B+, with a stable outlook. 

This is the first sovereign credit rating upgrade by S&P for Jordan since 2003, reflecting the positive outcomes stemming from Jordan’s transformative fiscal and monetary policies in recent years, according to a Finance Ministry statement.

S&P said that “despite a number of macroeconomic shocks in recent years … Jordan's economic outcomes have proven resilient. In our view, this implies economic buoyancy that is more consistent with a higher rating.” 

The agency credits this resilience to “successive reforms since 2019 [that have] widened the government's domestic tax base while fostering an improved business environment,” which the agency believes has “structurally improved Jordan's growth potential and will likely put debt on a declining path.”

S&P highlights that “Jordan’s fiscal trajectory remains broadly on track, notwithstanding modest pressure the government is already facing due to the latest shock.” The agency remarked on Jordan’s success in reducing its primary central government balance before grants, which S&P reports improved with a reduction to 2.7 per cent of GDP in 2023 from 3.6 per cent in 2022.

S&P specifically noted that Jordan’s economic activity “has shown resilience to the latest Israel-Hamas war, and we expect it to pick up again as the country adjusts to the heightened regional tensions.” S&P also credits Jordan’s authorities in their continuation of implementing its structural reform program, which “should boost macroeconomic resilience further.”

The outlook for economic growth is positive, the statement said, with S&P estimating gross domestic product (GDP) growth at 2.3 per cent for 2024 despite the current regional escalations, which the agency expects will “bounce back towards 3 per cent by 2026-2027 as the economy adjusts after the initial shock to increased regional tensions.” 

One of the sovereign credit strengths highlighted by S&P is the sustainability of Jordan’s Social Security Investment Fund (SSIF), as the agency notes, “actuarial estimates suggest the SSIF has several decades before it will need to draw on its assets.” 

Commenting on the S&P's report, Minister of Finance Mohamad Al Ississ said, “This affirms the recognition Jordan received in May earlier this year when Moody’s Ratings upgraded Jordan’s credit rating due to the deep structural reform that the government has been enacting to safeguard the middle class against global and regional headwinds."

Governor of the Central Bank of Jordan Adel Sharkas highlighted that the upgrade, following Moody's upgrade four months earlier, "reinforces international confidence in Jordan's economic resilience to external shocks. It underscores the significance of Jordan's robust financial and economic reform efforts, particularly the Economic Modernization Vision."