Jordan says IMF-backed reforms yielding ‘best results’

REUTERS/Alaa Al Sukhni

Jordanian Finance Minister Mohamad Al Ississ said on Thursday Moody’s’ upgrade of the kingdom’s rating outlook to positive from stable showed that its International Monetary Fund (IMF)-backed fiscal reforms were “producing the best results”.

“Our fiscal reform has shown that fair and equitable reform is not only good policy, but produces the best results as well,” Al Ississ told Reuters.

Ratings agency Moody’s upgraded Jordan’s credit outlook on Thursday from “stable” to “positive”, shifting its overall rating from B1-stable to B1-positive.

According to Moody’s, “the change in outlook to positive from stable is driven by the government’s strong commitment to wide-ranging structural reforms”.

Moody’s said it also “showed a track record of effective implementation at least on the fiscal front, which has the potential to raise the resilience of (Jordan’s) credit profile.”

The IMF said this week Jordan’s growth had quickened in 2022 despite global economic turbulence, driven by strong progress in structural reforms that have cushioned the economy and strengthened macro-economic stability.

The rating upgrade will help the kingdom secure lower borrowing and more loans at preferential rates to ease annual debt servicing, Jordanian officials say.

Jordan Central Bank governor Adel al Sharkas said the rating outlook reflected the central bank’s success “in maintaining monetary and financial stability” at a time of global economic crisis.

Sharkas said healthy reserves that topped $16 billion had bolstered the economy and a currency regime that is pegged to the dollar. Jordan has largely followed US Federal Reserve moves in its successive rate hikes to help contain inflation.

The Central Bank of Jordan has traditionally sought to preserve the attractiveness of dinar-denominated assets and to hamper any excessive outflow of dinars into dollar-denominated assets.

The IMF said this week a post-Covid recovery continued to build momentum in Jordan with expected 2022 growth revised upwards to 2.7 percent from a previous forecast of 2.4 percent.

Sharkas said the higher-than-expected growth was cause for optimism that the kingdom’s economy was on track to recover quickly, adding that tourism, exports and foreign investment flows had picked up.