Jordan’s credit ratings affirmed at ’BB-/B’ with stable outlook: S&P Global

Investing.com -- The credit ratings for Jordan have been affirmed at ’BB-/B’ with a stable outlook by S&P Global Ratings. The decision was announced on March 7, 2025. Despite the U.S. administration’s recent move to temporarily halt foreign aid disbursed via the U.S. Agency for International Development (USAID), the ratings agency anticipates that Jordan will manage the immediate impact effectively.

The U.S. typically provides Jordan with annual aid in the range of $1.45 billion to $1.65 billion, which is around 3% of Jordan’s GDP. This includes broader military and budget-related support. S&P assumes that most of this aid will continue, alongside the support Jordan receives from other international donors and multilateral partners.

The ratings agency acknowledges the risks tied to Jordan’s reliance on overseas aid and the complex regional security situation. However, it also notes that Jordan has shown resilient economic growth and maintained its fiscal and economic reform efforts.

The U.S. administration’s recent decision to pause USAID-funded foreign aid programs for 90 days, which are mostly project-related, could potentially impact around $300 million of annual disbursements, or 0.5% of Jordan’s GDP. Yet, S&P believes that Jordan will continue to receive broad military and budget-related support from the U.S., along with support from other international donors and multilateral partners.

S&P could lower the ratings for Jordan within the next 12 months if the strong bilateral and multilateral donor support it currently receives diminishes significantly, leading to fiscal and external financing pressures. The ratings could also be downgraded if Jordan’s reform momentum stalls or if regional social and security conditions worsen.

On the other hand, the ratings could be raised if Jordan’s external imbalances decrease, for example, due to a sustained improvement in the current account deficit. Upward pressure could also build if Jordan sustainably reduces its level of net general government debt beyond current projections, without significantly undermining economic growth. However, an upgrade is seen as unlikely in the next 12 months.

In 2024, foreign aid made up about 12% of Jordan’s GDP. Approximately a quarter of this came from the U.S., with the rest provided by other partners, including those in the EU, World Bank and Gulf Cooperation Council (GCC).

In 2025, the economy is expected to grow by 2.7% as tourism recovers and trade with Syria and Iraq gradually increases. Growth is predicted to strengthen gradually towards 3% by 2026-2027 as the economy recovers from recent geopolitical shocks in the region.

Jordan’s fiscal position remains vulnerable, with last year’s budget deficit amounting to 2.8% of GDP, weaker than the projected 2%. However, the deficit is expected to gradually narrow through 2028. Despite the ongoing losses at state-owned enterprises, the government’s commitment to reducing debt is expected to slowly decrease net debt to GDP through 2028 as economic activity gradually strengthens.

The Jordanian dinar’s peg to the U.S. dollar has supported price stability and contained inflation, but it limits the central bank’s policy maneuvering room. Inflation has increased slightly, rising to 2.3% in January 2025 from 0.8% in October 2024, but is expected to remain moderate until 2028.

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