S&P has affirmed its ‘BB-/B’ long- and short-term foreign and local currency sovereign credit ratings on the Hashemite Kingdom of Jordan. The outlook is negative.
The ratings on Jordan are constrained by its high public debt, the economy’s large external financing needs driven by large structural current account deficits, and by pressures from the ongoing regional conflicts that have had a negative impact on the country’s growth trajectory. The ratings are supported by the authorities’ efforts toward fiscal consolidation that have been apparent since last year and which we expect will result in a reduced accumulation of government financial obligations over the forecast horizon to 2020 compared with 2011-2015. International assistance from the US and the GCC are also a ratings support.
Given the regional instability affecting Syria and Iraq, as well as Israeli-Palestinian tensions, we expect international support for Jordan will remain strong. Maintaining Jordan’s relative stability is an important foreign policy objective for the US and the GCC. Bilateral international support has included budgetary and non budgetary grants (3.5 per cent of GDP on average over 2009-2016), US military aid (approximately 1 per cent of GDP), and US-guaranteed Eurobonds issued in 2014-2016. Jordan also benefits from concessional lending and donor flows from multilateral agencies (about 2 per cent of GDP), which have been important sources of financing Jordan’s twin fiscal and external deficits. The agency expects this support to continue in 2017-2020.