(MENAFN- Capital Intelligence Ltd) 28 November 2025

Rating Action

Capital Intelligence Ratings (CI Ratings or CI) today announced that it has affirmed Jordan’s Long-Term Foreign Currency Rating (LT FCR) and LT Local Currency Rating (LT LCR) at ‘BB-’. At the same time, CI Ratings has affirmed the sovereign’s Short-Term (ST) FCR and ST LCR at ‘B’. The Outlook on the ratings remains Stable.

Rating Drivers

The ratings reflect the sovereign’s capacity to withstand external shocks, as demonstrated by the resilience of the Jordanian economy and improving foreign reserve buffer, despite the challenging geopolitical landscape. The ratings continue to be supported by low-to-moderate external debt and a relatively sound banking sector. The ratings also take into consideration the availability of external financing in the form of bilateral and multilateral loans from the World Bank and the IMF, as well as donor support from the EU.

The ratings are constrained by high geopolitical risk factors, including the tension between Israel and Iran. The ratings are also constrained by a chronic current account deficit, very high general government debt burden, high central government interest expense, and significant socioeconomic challenges (including high unemployment).

International liquidity remains moderate – albeit improving – with the central bank’s stock of external reserves increasing to USD24.0bn in October 2025 (from USD21.0bn in 2024 and USD18.1bn in 2023). The improvement in external reserves is largely attributable to the increase in gold prices. Reserve adequacy has improved, with official reserves at end-2025 expected to cover 129.3% of short-term external debt on a remaining maturity basis, up from 113.5% in 2025. Non-resident deposits in the banking system still account for a large portion of short-term external debt. CI notes that these deposits have proven relatively stable over time and are mostly linked to Jordanian expatriates working abroad. Reserve coverage of short-term external debt rises to a more comfortable 3.7 times if these deposits are excluded. Moreover, CI views the upcoming external general government debt maturities of USD3.9bn (4.5% of GDP) in 2026 to be within the government’s repayment capacity.

The country’s chronic current account deficit continues to constrain the ratings, although it is expected to narrow slightly to 5.5% of GDP in 2025, from 6.4% in 2024, with the decline in the prices of energy imports expected to offset sluggish services receipts. Moving forward, CI expects the current account deficit to average 5.6% of GDP in 2026-27, reflecting ongoing external adversities, including US trade policy. We view the current and projected levels of external indebtedness as being low-to-moderate, with gross external debt projected to slightly increase to 140.5% of current account receipts in 2025, from 136.8% in 2024.

External risk factors remain very high, reflecting elevated regional uncertainty, including the tension between Israel and Iran, and the fragile ceasefire agreement in Gaza. The uncertainty surrounding the medium-term impact of a US trade tariff of 15% could limit future export growth. These external pressures are partially mitigated by the lifting of sanctions on Syria and our assumption that trade routes via Syria will resume in the short to medium term. Moreover, CI notes that the signed agreement between the EU and Jordan would assist in mitigating the risks stemming from frozen USAID projects. Notwithstanding these developments, Jordan has a record of weathering external shocks while maintaining economic and political stability.

Fiscal strength is moderately weak. The central government budget (including grants) is expected to post a deficit of 5.7% of GDP in 2025 (5.5% in 2024), reflecting slower-than-projected revenue growth. CI expects the central government budget deficit to post an average of 5.6% of GDP in 2026-27 given significant spending pressures.

The general government budget recorded a lower deficit of 2.8% of GDP in 2024 (1.9% in 2023) compared to the central government, thanks to the surplus generated by the Social Security Corporation (SSC). General government interest expense – net of interest paid to the Social Security Insurance Fund (SSIF), the investment arm of the SSC – increased to 13.1% of total general government revenues in 2024, from 10.6% in 2023.

General government debt (net of debt held by the SSIF, but including guaranteed debt) is expected to remain unchanged at 90.2% of GDP in 2025. Moving forward, general government debt is expected to decline to 85.4% of GDP in 2027, closer to the GDP target of 80% that was set by the IMF for 2028. This decline is expected to be supported by improving nominal GDP growth rates as well as increasing domestic debt holdings by the SSIF. CI notes that SSC holdings of government securities through the SSIF stood at around JOD11bn (27.5% of GDP) in August 2025, compared to JOD10bn (26.4% of GDP) in December 2024.

Economic strength remains moderate. Jordan’s economy is currently operating below its productive capacity, with key macroeconomic indicators pointing to continued underperformance. Real GDP growth is expected to grow by 2.7% in 2025 (2.5% in 2024), a rate broadly consistent with recent trends but insufficient to narrow the gap between actual and potential output. Labor market conditions remain challenging, with the unemployment rate persistently high at 21.3% in H1 25 and youth unemployment approaching 46.0% – levels that reflect significant underutilisation of human capital. Inflationary pressures remain contained, with CPI inflation increasing by 1.8% y-o-y in October 2025, indicative of subdued domestic demand. The recent increase in the minimum wage offers limited support to household consumption, while overall wage growth remains restrained.

Jordan’s ratings continue to be supported by the relative soundness of the banking sector, which benefits from effective regulation, good capital and liquidity buffers, adequate asset quality, and continued profitability. These positive factors help to offset underlying vulnerabilities, including significant funding and credit concentration risks, as well as high exposure to the sovereign.

Rating Outlook

The Stable Outlook indicates that the ratings are likely to remain unchanged in the next 12 months. The outlook balances the increase in the country’s reserve buffer and the availability of international support (especially from the EU and the IMF) against the moderately weak public finances and very high general government debt burden.

Rating Dynamics: Downside Scenario

The Outlook could be revised to Negative or the ratings lowered in the next 12 months if regional or domestic instability risks increase markedly, policy discipline weakens, or the public and external finances deteriorate as a result of an unexpected external shock and/or significantly slower-than-expected economic growth.

Rating Dynamics: Upside Scenario

The Outlook could be revised to Positive or the ratings upgraded in the event of a more pronounced and durable decline in the budget deficit and government debt than currently envisaged, supported by the implementation of significant fiscal consolidation measures that further improve the budget structure and reduce rigidities.

Contact

Primary Analyst: Dina Ennab, Sovereign Analyst, ...
Committee Chairperson: Morris Helal, Senior Credit Analyst


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The credit ratings have been issued by Capital Intelligence Ratings Ltd, P.O. Box 53585, Limassol 3303, Cyprus.

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