Fitch affirms Jordan at ‘BB-' with stable outlook as reform momentum builds

Arab News

08-05-2025

RIYADH: Jordan's long-term foreign-currency issuer default rating has been affirmed at 'BB-' with a stable outlook by Fitch, citing the country's macroeconomic stability and progress in fiscal and economic reforms.
The US-based credit rating agency added that the grade, along with the stable outlook, also reflects Jordan's resilient financing sources — including a liquid banking sector, a robust public pension fund, and continued international support.
Despite the stable outlook, Jordan's credit rating remains lower than that of several other countries in the region. In February, Fitch affirmed Saudi Arabia's IDR at 'A+' with a stable outlook, while the UAE was rated 'AA-.'
In its latest report, Fitch stated: 'The ratings are constrained by high government debt, moderate growth, risks stemming from domestic and regional politics, and current account deficits and net external debt that are higher than rating peer.'
According to the agency, a 'BB' rating signifies elevated vulnerability to default risk, particularly in the event of adverse changes in business or economic conditions over time, although some business or financial flexibility exists to support the servicing of financial commitments.
The report noted that Jordan's government remains committed to advancing its three-pillar reforms across the economic, public administration, and political sectors, despite external pressures.
Fitch added that the pace of reform will continue to be influenced by the need to preserve social stability, resistance from vested interests, and institutional capacity constraints.
Jordan's gross domestic product expanded by 2.5 percent in 2024, and Fitch projects growth of 2.7 percent in 2025 and 2.8 percent in 2026.
'This reflects our assumptions of headwinds from weaker global growth, partly balanced by recovery in tourism from Europe following an easing of regional conflicts. Iraq will remain a dynamic export market for Jordan and nascent trade with Syria could add further impetus,' the report said.
In April, the International Monetary Fund offered a similar projection, forecasting 2.7 percent growth in 2025, driven by a rebound in tourism and improved domestic demand.
Fitch also noted that the imposition of US tariffs and the resulting uncertainty will slow global demand, which is expected to impact demand for Jordanian exports.
Exports to the US accounted for 26 percent of Jordan's total in 2024, including 27 percent from precious metals and stones — categories that are exempt from duties.
Apparel made up 56 percent of Jordan's exports to the US, and this sector faces the risk of a 20 percent tariff.
According to Fitch, the general government deficit stabilized at 2.4 percent of GDP in 2024, amid higher interest payments and lower capital expenditure.
The agency projects the deficit will rise to 2.6 percent in both 2025 and 2026, as continued spending restraint is offset by growing interest costs.
The report further warned that persistent geopolitical risks could negatively impact Jordan's credit profile, even as it benefits from strong multilateral and bilateral support.
'As tensions between Israel and Iran remain heightened and the war in Gaza continues, geopolitical risks remain high. Uncertainty remains regarding the course and duration of the conflict,' said Fitch.
Other factors that could weigh on Jordan's credit rating include a weakening of support from external partners and a marked increase in external indebtedness.
Jordan is on track to receive disbursements under its four-year, $1.2 billion Extended Fund Facility with the IMF.
It has also entered into a new program with the EU, which includes €1 billion ($1.07 billion) in macro-financial assistance.
Fitch identified several factors that could lead to a rating upgrade, including a sustained decline in government debt as a share of GDP and a return to growth levels above pre-pandemic averages, resulting in lower unemployment.