Jordan – Ratings Affirmed with a Stable Outlook

(MENAFN- Capital Intelligence Ltd) 22 May 2026

Rating Action

Capital Intelligence Ratings (CI Ratings or CI) has today announced that it has affirmed the Long-Term Foreign Currency Rating (LT FCR) and LT Local Currency Rating (LT LCR) of Jordan 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 moderate external shocks, as demonstrated by the resilience of the Jordanian economy and improving foreign reserve buffer, despite the challenging geopolitical landscape and continued external adversities. 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 US and the EU.

The ratings are constrained by the high general government debt burden and weaknesses in the budget structure, which together limit fiscal flexibility, as well as persistent current account deficits and significant socioeconomic challenges, including high unemployment. The ratings are also constrained by very high geopolitical risk factors, including the possibility of renewed military escalation between the US, Israel and Iran in the absence of an agreement in the near term.

International liquidity remains moderate – albeit improving – with the central bank’s stock of gross official reserves increasing to USD27.1bn in April 2026 (from USD25.5bn in December 2025), supported by higher readily available balances of foreign cash and deposits. Reserve adequacy has improved, with gross official reserves at end-2025 expected to cover 138.6% of short-term external debt on a remaining maturity basis (up from 113.5% at end-2024). CI notes that a large portion of short-term external debt is made up of non-resident deposits, which 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 4x if these deposits are excluded. Short-term external debt also includes general government debt maturities of USD3.9bn (4.5% of GDP) scheduled for this year, which are well within the government’s repayment capacity.

The country’s chronic current account deficit continues to constrain the ratings, and is projected to widen further to around 7.1% of GDP in 2026, from 6.1% in 2025, largely reflecting higher energy-related imports and moderating services receipts. Gross external debt remains low-to-moderate and is projected to increase to 142.9% of current account receipts in 2026, from 134.0% in 2025.

CI notes that all the projections in this rating action remain subject to an unusually high degree of uncertainty given ongoing regional geopolitical tensions. While the intensity of military exchanges between the US-Israel and Iran has moderated, in line with CI’s baseline assumptions, the risk of renewed escalation remains significant in the absence of a durable political settlement. A more prolonged or severe regional conflict than currently assumed would materially weaken Jordan’s credit profile. The economy remains structurally reliant on imported hydrocarbons, tourism receipts, workers’ remittances and external financial support, rendering it vulnerable to developments in regional energy markets and economic conditions across the GCC. A prolonged disruption to shipping through the Strait of Hormuz or a renewed escalation in regional hostilities could result in persistently higher hydrocarbon prices, weaker tourism activity, softer remittances and lower foreign direct investment. Such developments would increase external financing pressures and weigh on the gross official reserves. Nonetheless, Jordan has a record of weathering external shocks while maintaining economic and political stability.

Access to external financing remains adequate, with Jordan benefitting from long-standing relationships with bilateral and multilateral creditors, including the IMF, the World Bank, the US and the EU which provide an important source of concessional financing and policy support.

Fiscal strength remains moderately weak, reflecting weakness in the budget structure (including expenditure rigidities and moderate domestic revenue mobilisation) and a high general government debt burden. The central government budget deficit (including grants) is projected to widen to 5.9% of GDP in 2026, from 5.1% in 2025, due to persistent spending pressures, while the general government deficit is expected to remain lower at around 2.7% of GDP, supported by the continued financial surplus of the Social Security Corporation (SSC).

General government interest expenditure remains elevated and continues to constrain fiscal flexibility. Interest expense net of payments to the Social Security Investment Fund (SSIF) is estimated to have increased to 14.5% of gross general government revenues in 2025, from 14.1% in 2024, reflecting the high stock of debt.

Central government gross financing needs remain moderate-to-high at a projected 18.2% of GDP in 2026, while central government liquid financial assets provide low coverage of around 20.0% of these gross financing needs. CI notes that heightened geopolitical uncertainty and increased volatility in regional and international financial markets could increase refinancing risks by weakening investor confidence, raising borrowing costs, and limiting access to external commercial financing. Nevertheless, refinancing risks are partially mitigated by the sovereign’s continued access to concessional financing from bilateral and multilateral creditors, the strong participation of domestic banks and the SSIF in the government debt market, as well as the favourable maturity profile and relatively low cost of official external borrowing.

General government debt (net of debt held by the SSIF but including guaranteed debt) is high and expected to increase to 84.8% of GDP in 2026, from 83.1% in 2025, reflecting the increase in the general government budget deficit. CI notes that SSC holdings of government securities through the SSIF increased to around JOD10.6bn (24.2% of GDP) in 2025, from JOD9.5bn (22.8% of GDP) in 2024, continuing to provide an important and stable source of domestic financing for the government.

Economic strength remains moderate. Real GDP growth increased to 2.8% in 2025, from 2.5% in 2024, supported by public and private investment projects, as well as resilient domestic demand. Nevertheless, economic activity remains below potential and insufficient to materially improve labour market conditions or reduce broader socioeconomic pressures. Unemployment remains persistently high, particularly among the youth. Inflationary pressures remain contained, and the credibility of the exchange rate peg framework remains preserved, although higher regional energy prices could lead to some upward pressure on inflation in 2026.

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 Jordan’s demonstrated resilience, increased foreign reserve buffer, and the availability of international financial support against very high geopolitical risk factors, moderately weak public finances, and the high general government debt burden.

Rating Dynamics: Upside Scenario

The Outlook could be revised to Positive or the ratings upgraded in the next 12 months in the event of a pronounced and durable decline in the budget deficit and government debt, supported by the implementation of significant fiscal consolidation measures that further improve the budget structure and reduce rigidities.

Rating Dynamics: Downside Scenario

The Outlook could be revised to Negative or the ratings lowered in the next 12 months if the public and/or external finances deteriorate significantly due, for example, to a worsening in the regional security environment, weaker policy discipline, or a large reduction in international financial assistance.

Contact

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


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