Ammon News - Credit rating agency Standard & Poor's (S&P) upgraded Jordan's long-term sovereign credit rating in both local and foreign currencies from B+ to BB-, with a stable outlook.

Despite external shocks from around the world and in certain regions, Standard & Poor's has upgraded its rating for the first time in 21 years.

The agency said in its report that one of the key factors that led to the rating increase was the public finance management's ability to stay on course in spite of the difficulties the government faced as a result of the Gaza War and its accomplishment of goals over the previous year, which included a decline in the primary deficit to GDP ratio.

According to the agency, the government's implementation of a series of structural reforms since 2019 has improved the business environment and expanded the tax base, which has increased the potential for economic growth and will, in the agency's opinion, lead to a decline in the public debt. This has also contributed to the rating increase. In addition to Jordan's considerable international support, during the upcoming years.

The rise was also due to the Jordanian economy's resilience in the face of several crises in recent years, including the war in Gaza, the Russian-Ukrainian conflict, and the coronavirus pandemic.

The agency further stated that Jordan's debt is sustainable and that net public debt will peak at 83% of GDP next year, before starting to drop. This is in contrast to projections that the government's net public debt may climb slightly in the near term as a result of the Gaza War. gradually.

In terms of capital, the agency predicted that Jordan's foreign reserves would rise to 18.7 billion dollars by the end of June 2024, supporting the country's currency peg to the US dollar. Following this, inflation would drop to 1.7% in the first half of 2024. Due to cheaper housing and transportation expenses, it reached 3.0% during the same period in 2023.

"Standard & Poor's raising Jordan's credit rating a few months after Moody's did so is an affirmation by the most important global institutions of the wisdom of the deep reform agenda launched by His Majesty the King, and an affirmation of the... overall stability of the Jordanian economy in light of the most severe regional challenges imposed by the brutal Israeli aggression," stressed Muhammad Al-Issis, the Minister of Finance, in response to the credit rating increase.

While Jordan is currently experiencing geopolitical instability on a regional and global scale, particularly due to the ongoing war, Standard & Poor's upgraded Jordan's long-term sovereign credit rating from B+ to BB-, indicating a stable future outlook, Governor of the Central Bank of Jordan Adel Sharkas said. Regarding Gaza for almost a year, it is a confirmation of the trust that international organizations have in the ability of the Jordanian economy to withstand shocks from without and to adjust accordingly.

Sharkas referenced Standard & Poor's commendation in its report for the Central Bank's prudent monetary policy, which maintained the Kingdom's monetary stability environment, as evidenced by the inflation rate dropping to 1.7 percent and the preservation of trust in the dinar's fixed exchange rate system against the dollar, which is backed by substantial foreign reserves. Amounting to a record-breaking $20 billion at present, this is sufficient to cover over 8.5 months' worth of goods and services imports into the Kingdom. This is in addition to the strength and resilience of the Jordanian banking industry and the external sector's positive performance, as evidenced by a decline in the current account deficit in the balance of payments to 3.7% of output in 2023, the lowest since 2019.