S&P Confirms Jordan’s Steady Credit Rating
Amid regional disturbances and worldwide geopolitical instabilities, Standard & Poor’s (S&P) has confirmed Jordan’s long-term sovereign credit rating at B+/B, assigning it a stable outlook.
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This announcement emphasizes remarkable resilience at a time when many countries are facing declines in their credit ratings. Jordan‘ solid credit position serves as evidence of its effective financial tactics, vital for maintaining financial stability, promoting fiscal responsibility, and progressively lowering its national debt, even amid the challenges posed by the region’s instability.
Strong financial policies and international support
S&P attributes Jordan’s stability to the country’s wise fiscal management and strong monetary policies. The country has effectively maintained stability in its monetary and banking systems, especially in response to international disturbances like the Gaza conflict.
Key to this achievement are Jordan’s financial and monetary reforms, strengthened by substantial support from an International Monetary Fund (IMF) program and international donors. The IMF’s provision of $1.2 billion over four years through its Extended Fund Facility highlights this funding.
S&P anticipates significant fiscal progress, forecasting a reduction in the general government deficit to 1.1% of GDP by 2024 and a decrease in the net debt ratio to 78.9% by 2027. Post-conflict, an increase of $900 million in foreign reserves is expected, along with a decrease in the current account deficit to GDP ratio from 7.2% in 2020-2022 to 4.5% in 2024-2027.
Finance Minister, Mohammad Al-Ississ, considers this confirmation as global recognition of Jordan’s strong fiscal management and policy effectiveness, apart from the challenges posed by the conflict in Gaza and the ongoing tensions in the West Bank.
The Central Bank Governor, Adel Sharkas, points out that the stable rating and outlook reflect the nation’s economic resilience, upheld by the Central Bank’s dedication to monetary and financial stability. This includes keeping the Jordanian dinar’s exchange rate steady, supported by substantial foreign reserves now totaling $18.1 billion. These efforts have made the dinar more attractive, reduced the rate of dollarization to its lowest point since 2016 at 17.7%, and maintained inflation at levels that support economic activity. Sharkas also praised the Jordanian banking sector’s capacity for risk management and its commitment to the highest banking practices.
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Employment grew for the 16th consecutive month as companies expanded.
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According to a recent PMI report, Qatar experienced its fastest non-energy sector growth in almost two years in June, driven by surges in both existing and new business activities.
The Purchasing Managers’ Index (PMI) headline figure for Qatar reached 55.9 in June, up from 53.6 in May, with anything above 50.0 indicating growth in business activity. Employment also grew for the 16th month in a row, and the country’s 12-month outlook remained robust.
The inflationary pressures were muted, with input prices rising only slightly since May, while prices charged for goods and services fell, according to the Qatar Financial Centre (QFC) report.
This headline figure marked the strongest improvement in business conditions in the non-energy private sector since July 2022 and was above the long-term trend.
The report noted that new incoming work expanded at the fastest rate in 13 months, with significant growth in manufacturing and construction and sharp growth in other sectors. Despite the rising demand for goods and services, companies managed to further reduce the volume of outstanding work in June.
Companies attributed positive forecasts to new branch openings, acquiring new customers, and marketing campaigns. Prices for goods and services fell for the sixth time in the past eight months as firms offered discounts to boost competitiveness and attract new customers.
Qatari financial services companies also recorded further strengthening in growth, with the Financial Services Business Activity and New Business Indexes reaching 13- and nine-month highs of 61.1 and 59.2, respectively. These levels were above the long-term trend since 2017.
Yousuf Mohamed Al-Jaida, QFC CEO, said the June PMI index was higher than in all pre-pandemic months except for October 2017, which was 56.3. “Growth has now accelerated five times in the first half of 2024 as the non-energy economy has rebounded from a moderation in the second half of 2023,” he said.
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