S&P affirms Kingdom’s credit rating amidst regional challenges, highlights successful financial policies

AMMAN — Credit rating agency Standard & Poor's (S&P) has upheld the Kingdom's long-term sovereign credit rating at B+/B with a stable outlook.

This decision comes amidst regional challenges and geopolitical uncertainty, with many countries in the region and worldwide experiencing credit rating downgrades, the Jordan News Agency, Petra, reported on Saturday.

S&P attributed this stability to Amman’s successful financial policies, which have ensured financial stability, achieved fiscal consolidation and gradually reduced debt, despite regional challenges.

The agency also commended the Kingdom’s monetary policy for maintaining monetary and banking stability, highlighting its robust fiscal and monetary policies to handle external crises, including the Israeli war on Gaza.

The agency also emphasised the success of Jordan’s fiscal and monetary reform program, backed by the International Monetary Fund (IMF) and the strong international support for the Kingdom, highlighting that the IMF has recently announced its Extended Fund Facility to Jordan with $1.2 billion over four years.

S&P also forecasted a reduction in the general government deficit to 1.1 per cent of GDP in 2024 and expected the ratio of the general government’s net debt to decrease to 78.9 per cent by 2027.

The agency also forecasted a $900 million increase in foreign reserves since the onset of the war on Gaza, reaching $19 billion.

It also anticipated a decrease in the average ratio of the current account deficit to GDP from 7.2 per cent during 2020-2022 to 4.5 per cent during 2024-2027.

Minister of Finance Mohammad Al-Ississ said that maintaining Jordan’s credit rating, despite the war on Gaza and ongoing West Bank attacks, reflects international recognition of Jordan’s robust public finances and effective economic and financial policies.

Governor of the Central Bank of Jordan Adel Sharkas said that S&P’s maintenance of Jordan’s credit rating and stable outlook attests to the national economy’s stability, supported by the Central Bank’s success in maintaining monetary and financial stability, including preserving the dinar’s fixed exchange rate, backed by high foreign reserves currently at $18.1 billion.

He added that such procedures preserved the strength and attractiveness of the dinar amidst an unstable global environment, contributing to a decrease in the dollarisation rate to 17.7 per cent, the lowest since 2016, and maintaining inflation within appropriate limits for economic activity.

Sharkas also affirmed the resilience and efficiency of the Jordanian banking sector in risk management and adherence to the best international banking practices.