S&P affirms Jordan's ratings on greater fiscal reforms hopes

The agency affirmed Jordan’s ratings at 'B+/B' with a stable outlook

Suburbs of Amman with giant Raghadan flagpole.
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S&P Global ratings on Saturday affirmed Jordan’s long-term foreign and local currency sovereign credit ratings, as the kingdom whose economy is struggling with the influx of Syrian refuges, continues to make efforts to pull back high debt levels and bring about greater fiscal consolidation in the country.

The agency affirmed Jordan’s ratings at 'B+/B' with stable outlook, as it expects the country’s net debt to broadly stabilise, supported by financial aid from its bilateral and multilateral partners and economic reforms, it said in a statement.

“The ratings are supported by the [Jordanian] authorities' efforts to implement greater fiscal consolidation and measures to reduce losses in state-owned enterprises, which we expect will result in gradually falling government debt levels over the forecast horizon through 2021,” S&P said. “International assistance from the US and the Gulf Cooperation Council ….  continue to support the ratings.”

Jordan which has seen strong economic growth, averaging 6.1 per cent between 2000 and 2010, has struggle to maintain the pace of GDP expansion, following the global financial crisis, particularly, in the wake of the uprisings that swept the Arab world. The kingdom's trend growth outlook for 2011-21 has shifted to a significantly lower average of 2.6 per cent, Moody’s Investors Service said in November. BMI research, a unit of the Fitch group, expects Jordan’s real GDP to grow at 3.0 per cent in 2018 and 3.2 per cent in 2019.


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The government is implementing several measures under the 2018 budget that will help reduce fiscal deficits gradually. Amman has already removed subsidies on flour, raised general sales tax on several basic commodities to 10 per cent and has increased tariffs on imported cars, carbonated drinks, and cigarettes. The government will also increase taxes on oil derivatives over the coming months.

Going forward, Jordan plans to introduce a revised tax law next year, which would include lower thresholds for income taxes and penalties for tax evasion, and phase out all GST exemptions, resulting in a unified GST rate of 16 per cent on all products, as it seeks to increase its revenue base, S&P noted.

Jordan's government debt levels have increased substantially to an estimated 95 per cent in 2017 from around 62 per cent of GDP in 2011. It is expected to rely increasingly on foreign currency commercial debt.

The country issued two Eurobonds in 2017, amounting to $1.5 billion, following a $1bn issuance in 2016. Its exposure to foreign currency debt rose to 44 per cent of total debt at end-2017 as a result.