Shutterstock/luisrsphotoby Kudakwashe Muzoriwa
Moody's said that the Jordan government’s fiscal consolidation efforts and commitment to structural reforms are supporting the country’s credit profile, adding that the economy is expected to expand by 2.4 per cent between 2019-22.
The rating agency stated that Jordan's credit profile (B1 stable) reflects the government's commitment to fiscal consolidation and structural economic reforms, as well as its strong international support and relative government effectiveness.
However, Moody’s said that credit challenges rising from weak growth, high unemployment as well as large current account deficits and very high government debt in the context of rising domestic social pressures and slowing global growth.
Alexander Perjessy, a Moody's Vice President – Senior Analyst, said, “Jordan's weak fiscal fundamentals stem from its persistent fiscal deficits in the past and a very high government debt burden.”
Additionally, Jordan is also exposed to geopolitical tensions and political instability that have contributed to subdued growth, while the country’s comparatively weak external and fiscal positions have limited shock absorption capacity.
In May 2018, protests organised by trade unions erupted in Jordan after the government proposed a new tax law as part of the International Monetary Fund-backed measures to contain the country's public expenditure.
The Hashemite Kingdom’s friends in high places are strongly backing Prime Minister Omar Razzaz’s commitment to maintain the reform momentum, strengthen growth and reduce public debt. The London Initiative on 28 February 2019 helped unlock essential budget grants and concessional financing to support the authorities’ reform programme.