AMMAN — Standard & Poor (S&P) has
affirmed Jordan’s long-term sovereign credit rating to remain at “B+/Stable/B”,
in light of Jordan’s implementation of a set of reforms related to stimulating
investment and competitiveness, expanding the tax base within the economic
reform program, in addition to the international support that Jordan receives
in various fields, according to the Jordan News Agency, Petra.
اضافة اعلان
S&P, the international credit rating agency,
said Jordan’s public financial indicators achieved positive results and better
than the targeted estimates in the general budget law during the past two years
due to structural reforms undertaken by the government, represented in
expanding the tax base, closing gaps, improving tax compliance, and customs
reforms, which led to a decrease in the central government deficit from 7
percent as a percentage to GDP in 2020 to 5.4 percent in 2021.
S&P projected that the average fiscal deficit of
the central government will reach 4.6 percent between 2022 and 2025, and that
the general government’s net debt will begin to decline, reaching 79 percent of
the GDP in 2025.
Minister of Finance Mohammad Al-Ississ said that
“the stability of Jordan’s rating in light of the economic challenges among
countries of the world is an indicator of the successful structural reforms
implemented by the government in order to maintain the stability of financial
and monetary indicators, which is positively reflected on the credit ratings
and the confidence of investors and international institutions in the national
economy and its resilience”.
“We will continue efforts to maintain financial
stability in Jordan by working to sustain the public debt and its service, and
restore the momentum of growth to provide jobs, especially among youth,” Ississ
said on Sunday.
In terms of monetary policy, S&P indicated that
Jordan was able to maintain a good level of foreign reserves during the
pandemic, to rise by $3.6 billion since the beginning of 2020, reaching $19
billion at the end of 2021.
In order to maintain monetary stability and in light
of the Jordanian Dinar’s link to the dollar, the Central Bank raised interest
rates in conjunction with the US Federal Reserve’s multiple increases of the
interest rates in 2022.
The agency said that inflation rates in Jordan will
not reach the heights of figures recorded in European countries and the US, as
the inflation rate is expected to reach its peak at the end of 2022, reaching
4.2 percent, to start declining and reach 2.5 percent in 2025.
CBJ Governor Adel Sharkas said that S&P’s
affirmation of the Kingdom’s credit rating and the future outlook of the
national economy is supported by the sound management of macroeconomic policies
and the confidence of international institutions in the targeted and proactive
response to the CBJ’s monetary and banking policies, especially during the
COVID-19 pandemic and its impacts.
This affirmation by
S&P, Sharkas added, also comes as a reflection of the strength of monetary
and banking stability in the Kingdom, according to the latest macroeconomic,
monetary, and banking indicators, as well as banking safety indicators that
confirm the solidity, efficiency and risk management of operating banks and
their ability to respond appropriately and responsibly to the CBJ directions
and keep abreast of the best technical, technological and banking developments
in the world, which contributed to absorbing and containing the negative
effects of the internal and external shocks that the Jordanian economy has been
exposed to recently.
S&P stated that Jordan succeeded in limiting the
repercussions of the Russian-Ukrainian war on its economy as it possess
sufficient reserves of wheat stock, the government’s conclusion of natural gas
future contracts, the significant increase in fertilizer exports, and the
tourism sector’s recovery.
S&P has lowered the credit rating of a large
number of emerging economies in light of the repercussions of the
Russian-Ukrainian war and the interruption of gas supplies, in addition to the
US Federal Reserve and the European Central Bank interest rates raising to
contain inflationary pressures resulting from high energy prices.
The successful completion of four previous reviews within
the economic reform program implemented in cooperation with the IMF had a
positive impact on maintaining Jordan’s financial stability and credit rating,
given that the program is based on a number of structural reforms and aims to
reduce the government debt-to-GDP ratio through a set of public spending
controls, enhancing its efficiency, combating tax evasion and avoidance, and
improving tax governance.
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