Jordan’s Macroeconomic Stability Secures Fitch Ratings Affirmation
In a testament to Jordan’s macroeconomic stability, Fitch Ratings has affirmed its long-term foreign currency issuer default ratings at BB- with a stable outlook.
The confirmation underscores the country’s strides in fiscal and economic reforms, bolstered by resilient financing from its liquid banking sector, public pension fund, and international assistance, as detailed in a press release.
Despite these achievements, Jordan’s ratings face constraints due to high government debt, sluggish growth, and uncertainties in domestic and regional politics.
Fitch’s report acknowledged Jordan’s ability to maintain economic and political stability amidst external shocks, such as social unrest in the region and conflicts in neighboring countries. However, these challenges have dampened growth and escalated government debt levels.
The analysis warned that a prolonged conflict in Gaza, even indirectly involving Jordan, could hamper growth prospects and heighten debt reduction challenges.
Additionally, current account deficits and elevated net external debt levels have adversely impacted Jordan’s standing compared to its peers.
A BB- rating from the US-based agency indicates a heightened vulnerability to default risk, particularly in the face of adverse economic conditions. It also signifies a level of financial flexibility to meet financial obligations.
Fitch emphasized Jordan’s commitment to advancing its economic, public administration, and political reform agenda despite external headwinds.
While Jordan’s economy expanded by 2.6 percent in 2023, growth is expected to slow to 2.3 percent this year due to factors like reduced tourism, weak external trade performance, and ongoing regional uncertainty.
If geopolitical risks ease, Fitch anticipates a growth rate of 2.8 percent in 2025 for Jordan’s economy.
The credit rating agency highlighted that Jordan’s general government deficit reached 3 percent of GDP in 2023, largely driven by a wider central government deficit at 5.2 percent of GDP.
Fitch projected a gradual improvement in the deficit to 2.6 percent and 2.4 percent in 2024 and 2025, respectively, through a mix of expenditure control, modest revenue growth, and higher interest payments.