Market Reacts Positively To S&P's Upgrade Of Jordan's Credit Rating

(MENAFN- Jordan News Agency)

Amman, Sept 8 (Petra) – financial experts have described Standard & Poor's (S&P) upgrade of Jordan's credit rating as a significant and positive step, marking the first such move in 21 years, which will serve as a strong catalyst for the national economy.
Speaking to the Jordan News Agency (Petra), the experts said this achievement reflects a sound fiscal management path and a stable economic strategy focused on continuing reform efforts and advancing the implementation of the Economic Modernization Vision for Jordan 2023-2033, despite the challenges posed by the war in Gaza.
S&P announced an upgrade to Jordan's long-term sovereign credit rating in both local and foreign currency from B+ to BB- with a stable outlook.
This marks the first credit rating upgrade by S&P in 21 years, despite ongoing global and regional external shocks.
In its report, S&P noted that the upgrade was driven by the government's ability to maintain fiscal discipline, achieving last year's objective of reducing the primary deficit relative to GDP.
Dr. Adli Qandah, a financial and banking expert, explained that the upgrade signals improved investor and lender confidence in Jordan, granting the country access to international financing at lower costs.
Qandah noted that the lower borrowing costs would ease the public debt service burden and allow the government to allocate financial resources to other vital sectors like infrastructure, education, and healthcare three key sectors that impact citizens' daily lives.
This move will also boost confidence among local and international investors, encouraging capital inflows and new investments, as well as greater flexibility in executing structural reforms.
He warned, however, that while improved borrowing terms could lead to increased reliance on debt, it is essential to bolster non-traditional productive sectors like technology, renewable energy, and tourism to ensure sustainable economic growth.
Qandah emphasized the importance of continued fiscal reforms to enhance spending efficiency and reduce debt dependence, with a focus on supporting the private sector and small and medium-sized enterprises to achieve long-term economic growth.
Dr. Omar Gharaibeh, a finance professor at Al al-Bayt University, stated that the credit rating upgrade is a positive shift and an important boost for the Jordanian economy. It signals the government's enhanced ability to meet its financial obligations, reflecting greater financial stability.
He explained that the upgrade from B+ to BB- reflects a relative improvement in creditworthiness and reduced investment risk, stemming from better growth rates, political stability, and the government's fiscal strength, particularly amid global economic slowdowns, supply chain disruptions, heightened geopolitical risks, and trade tensions.
Gharaibeh highlighted that bonds issued by countries with a BB- rating are considered less risky compared to those with a B+ rating. This means Jordan's financial situation is more stable and offers reasonable repayment capacity, albeit with some risks.
This facilitates easier access to global financial markets, better international financing terms, and the ability to secure loans under more favorable conditions from institutions like the International Monetary Fund (IMF) and the World Bank.
It also attracts investors seeking relatively high returns with moderate risk, enabling the government to finance capital expenditures at lower costs compared to when its credit rating was lower.
He added that the credit rating upgrade reflects responsible fiscal policies capable of controlling the budget deficit and public debt levels, as well as supporting the payment of public sector salaries without significant financial pressure. It also indicates a balanced monetary policy and the robustness of Jordan's banking sector.
The upgrade is expected to positively impact investor confidence, encouraging more foreign investment and boosting liquidity in the Jordanian market by improving local companies' ability to borrow under better conditions.
Additionally, it will reduce pressure on the local currency and strengthen the Jordanian dinar by enhancing trust in the economy.
Gharaibeh noted that the credit rating upgrade will, in the long term, contribute to promoting economic development and growth, which will positively impact living standards, reduce unemployment, and enhance the government's ability to implement large-scale development projects.

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