Al-Ississ: The credit rating upgrade will not justify further debt, and no additional “single penny” may be borrowed without adhering to the public budget law.

Al-Ississ: The upgrade is an achievement that comes as a cumulative result of efforts made by all parties, including the banking sector.

Al-Ississ: The upgrade reflects global confidence in the Jordanian economy, enhances the kingdom’s attractiveness to foreign investments, helps the government access global markets, obtain future credit benefits, and boosts economic growth opportunities.

Al-Sharkas: The credit rating upgrade for Jordan by Moody’s is a successful outcome of the macroeconomic policies implemented in Jordan.

Al-Sharkas: The Central Bank’s flexible and proactive response to challenges over the past years, supported by high independence in implementing its monetary policy, was a significant factor contributing to the credit rating upgrade.

Al-Sharkas: Monetary indicators clearly show the effectiveness of the Central Bank’s measures in dealing with the inflationary wave the world witnessed over the past two years, enhancing international institutions’ confidence in the Jordanian economy.

Al-Sharkas: The national economy continues its positive growth despite the challenges in the region.

Al-Sharkas: The existence of a roadmap to address current challenges through the national economic reform program in cooperation with the International Monetary Fund, and a clear vision for the economy through the economic modernization vision, has bolstered confidence in the national economy and placed it on a path of upward growth.

Al-Salem: The upgrade reflects high confidence in the national economy and public finances, and we congratulate the banks whose ratings were raised during this evaluation.

Al-Mahrouq: The presence of strong institutions for formulating macroeconomic and financial policies contributed to the achievement of the credit rating upgrade, which reflects the importance of economic reform.

 

The Association of Banks in Jordan held a dialogue meeting to discuss, within the second quarterly briefing of 2024, the upgrade of Jordan’s credit rating by Moody’s to Ba3 with a stable outlook. The meeting was attended by the Minister of Finance, Dr. Mohammad Al-Ississ, the Governor of the Central Bank, Dr. Adel Sharkas, along with several banking and economic leaders.

The Minister of Finance, Dr. Mohammad Al-Ississ, stated that this achievement is the cumulative result of efforts made by all concerned parties, including leading national and economic institutions.

He added, “We are here today to celebrate an achievement that would not have been possible without close cooperation between all parties. The upgrade of Jordan’s credit rating comes at a time when other countries are facing downgrades or struggling to maintain their ratings, especially after the massive economic shocks caused by the COVID-19 pandemic and the Russian-Ukrainian war.”

Al-Ississ touched on the challenges faced by the Jordanian economy in light of global crises, such as inflation, rising food and energy prices, as well as regional disturbances in Gaza.

He affirmed that these factors did not prevent Jordan from achieving this milestone but rather increased its determination and resolve to improve its economic conditions.

Al-Ississ explained that the rating upgrade reflects global confidence in the Jordanian economy, enhances the kingdom’s attractiveness to foreign investments, aids the government in accessing global markets, secures future credit advantages, and boosts economic growth opportunities.

He pointed out that Moody’s based its evaluation on a set of criteria, including the country’s ability to meet its financial obligations, economic competitiveness, and the effectiveness of government policies.

He underscored that this improvement in the rating is not just a governmental achievement but the result of collective work involving all state institutions and the private sector, particularly the banking sector.

In his speech, Al-Ississ highlighted the importance of continuing economic reforms supported by the results of the International Monetary Fund reviews. He also noted that the concerted efforts focused on addressing the elements of the evaluation and preparing for them by communicating with investors holding Jordanian bonds, understanding the market nature and characteristics, and clarifying the economic developments’ impacts to the rating agencies. This helped them understand the limited effects of regional circumstances on the Jordanian economy due to its resilience, identify influencing factors, and the response mechanism, which reflected confidence in the government’s response to developments. Additionally, he stressed the importance of close cooperation with international institutions, particularly the International Monetary Fund, in implementing financial reforms and adopting prudent policies, which contribute to enhancing the rating level and addressing weaknesses.

He said, “This improvement would not have been achieved without the significant efforts made by the Jordanian government and various national institutions, whether private or public, to preserve and enhance national achievements.”

Al-Ississ also emphasized the role of the National Economic Modernization Vision, which contributed to unifying efforts and setting a comprehensive framework for building a better future. He added that this vision played a significant role in achieving this accomplishment, noting that collective work and perseverance are the keys to success.

In concluding his remarks, Al-Ississ expressed his gratitude to the Jordanian government and all national institutions for their continuous efforts, affirming that the rating upgrade is an achievement that brings pride to every Jordanian. It reflects the strength and stability of the national economy in the face of global and regional challenges. Al-Ississ also clarified that the wise leadership of His Majesty the King has been fundamental in various aspects, particularly in supporting and endorsing the reforms undertaken by the government, which have been reflected in the orientations of Prime Minister Dr. Bisher Al-Khasawneh’s reform process.

Al-Ississ pointed out the joint efforts of the government with the Central Bank in negotiating with the International Monetary Fund to renew the previous program, explaining that Jordan managed to successfully complete six reviews, while other countries could not complete even a single review due to global circumstances.

In response to a question about whether the rating upgrade would increase the government’s appetite for more borrowing, Minister Al-Ississ stressed that borrowing is subject to the Debt Law, and no additional borrowing is permitted without adhering to the law that sets a ceiling on indebtedness.

on his part, the Governor of the Central Bank, Dr. Adel al-Sharkas, affirmed that Moody’s decision to upgrade Jordan’s credit rating from B1 to Ba3 with a stable outlook is a fruit of the success that validates the soundness of the economic policies pursued in Jordan. These policies have strengthened the resilience of the economy and its ability to withstand challenges. He emphasized that this achievement gains greater significance given the timing of its realization, amidst geopolitical instability due to the ongoing repercussions of the war in Gaza. He pointed out that this accomplishment would not have been possible without the concerted efforts made by the government and the Central Bank.

Al-Sharkas provided a detailed explanation of Moody’s rating methodology, indicating that the agency relies on qualitative analysis focusing on aspects, impressions, and expectations, as well as quantitative analysis based on four measurable factors. These analyses are then integrated to arrive at the final assessment. He noted that Jordan received higher ratings in some of these indicators compared to the overall rating, especially concerning growth dynamics, economic size, national income, as well as the effectiveness of fiscal, monetary, and overall economic policies.

Al-Sharkas highlighted three key factors as strengths that elevated Moody’s rating for the Kingdom, namely, the possession of strong, reliable, and efficient institutions with a strong commitment to implementing reforms, strong international financial support, and significant domestic reserves that can be leveraged.

Al-Sharkas reviewed the historical evolution of Jordan’s credit rating by Moody’s, stating that the current rating is the highest in 21 years. It reflects the diligent efforts made by the Jordanian government to enhance economic growth, achieve internal and external stability, and effectively implement economic reforms.

On the front of monetary policy, Al-Sharkas stated that credit rating institutions view monetary policy as a confidence and stability factor for the economy, a prerequisite for growth and development, and a significant factor that reflects its impact on the overall performance of other economic indicators. He pointed out that the central bank’s monetary policy has succeeded over more than two decades in maintaining monetary stability, despite all the challenges faced by Jordan and the region during this period, and has been able to respond flexibly and proactively to the challenges we have faced in recent years, such as the repercussions of the COVID-19 pandemic and the inflationary pressures that followed the pandemic’s aftermath. He emphasized that this response, supported by the high independence of the central bank in implementing its monetary policy, was among the important factors highlighted by Moody’s agency in upgrading its credit rating for Jordan.

Regarding the performance of monetary indicators, Al-Sharkas pointed out that today’s monetary indicators clearly demonstrate the effectiveness of the central bank’s monetary policy in dealing with inflationary pressures and the globally tightened monetary policies over the past two years. This includes the continuous downward trend in the dollarization rate, which is considered an indicator of confidence in the local currency, reaching 18.0% at the end of March 2024, compared to levels exceeding 20% before the pandemic’s repercussions in 2020. This is in addition to the significant growth in the central bank’s foreign reserves, which currently stand at about $19 billion, covering 8.2 months of the Kingdom’s imports of goods and services. Al-Sharkas affirmed that the success in managing the inflationary wave over the past two years through the integration of the central bank’s monetary policy decisions with various governmental measures at this level has contributed to supporting the upgrade of the Kingdom’s credit rating, as inflation remained within reasonable limits, reaching 1.6% during the first four months of the current year, compared to a rate of 4.2% at the peak of the inflationary wave in 2022.

Al-Sharkas highlighted that the prudent banking policy implemented by the central bank in accordance with the best international practices, and the significant commitment of banks to implement the central bank’s decisions and directives, especially regarding the effectiveness of overall and partial precautionary policies, played a major role in achieving this accomplishment. This has also led Moody’s agency to upgrade the long-term deposit ratings of four Jordanian banks from stable to positive outlooks, affirming that Jordan’s banking sector enjoys the highest levels of confidence, earned as a result of its flexibility and its ability to withstand shocks as evidenced by financial resilience indicators and stress tests conducted by the central bank.

Al-Sharkas emphasized that the national economy has shown clear resilience despite recent challenges, recording an average growth rate of 2.9% over the past three years, which will undoubtedly have a positive impact on the economic outlook for 2024 and beyond. He pointed out that the Central Bank’s forecasts indicate an economic growth rate of 2.4% for the current year, compared to 2.6% in 2023, which is a good growth rate given the geopolitical instability in the region, which has affected the performance of external sector indicators, especially tourism income. He noted that the national economy has a roadmap for addressing existing challenges through the National Economic Reform Program in cooperation with the International Monetary Fund and a clear vision for the economy through the Economic Reform Vision, which puts Jordan on a path of upward growth.

And on his part, the Chairman of the Association of Banks in Jordan, Bassem Khalil Al-Salem, emphasized the importance of Moody’s credit rating agency raising the Kingdom’s credit rating, marking the first time Moody’s has upgraded Jordan’s rating in 21 years of stability.

In his statement, Al-Salem expressed his happiness and pride in the rating upgrade, noting that this step comes at a time when the region is facing economic crises and negative global developments. He affirmed that the rating upgrade reflects high confidence in the national economy and public finances, enhances Jordan’s attractiveness to foreign investments, and sends positive signals to global markets, international institutions, investors, and donor entities.

Al-Salem explained that Moody’s agency based its evaluation on a set of criteria, such as the state’s ability to meet its financial obligations, levels of public debt, economic competitiveness, effectiveness of government policies, and the impact of negative risks.

He added that this move confirms that Jordan enjoys strong security and stability, enabling it to overcome various difficult circumstances and shocks wisely and competently, supported by strong institutions and astute policies.

Al-Salem also stressed the importance of continuing reforms that are reinforced by the results of International Monetary Fund reviews, noting that the improvement achieved would not have happened without the significant efforts exerted by the Jordanian government and various national institutions, both private and public, to preserve and enhance national gains.

He also praised the National Economic Reform Vision, which had a clear impact on unifying efforts and setting a comprehensive framework for building a better future.

Al-Salem commended the joint efforts made by various sectors to achieve this accomplishment, affirming that the rating upgrade will contribute to enhancing investor confidence in the Jordanian economy and increasing foreign investment inflows.

He also congratulated the banking sector, celebrating the banks whose ratings were upgraded by Moody’s agency two days ago, namely Arab Bank, Housing Bank, and Capital Bank, as a direct result of the credit rating upgrade for the Kingdom.

Al-Salem highlighted that the government will continue to work on implementing necessary economic reforms to maintain financial stability and achieve sustainable growth.

He expressed optimism about the future of the Jordanian economy in light of this improvement in the credit rating, noting that this upgrade will enhance Jordan’s ability to access international financial markets on better terms, thus reducing financing costs and supporting developmental projects in the country.

on his part, the Director General of the Association of Banks in Jordan, Dr. Maher Al-Mahrouq, emphasized that the upgrade of Jordan’s credit rating was based on a set of key criteria, including debt repayment capability, national economic performance, government policies, debt levels, and funding sources, in addition to economic competitiveness, geopolitical and economic risks.

Al-Mahrouq mentioned that the credit rating report highlighted several justifiable factors for the upgrade, including the long record of effective macroeconomic management, public financial measures, and risk mitigation measures.

He noted the effective proactive policies adopted during the COVID-19 pandemic, commodity flows, and energy prices due to the Russian-Ukrainian war, and global monetary tightening policies.

Al-Mahrouq affirmed that Jordan’s practices in enhancing flexibility to confront regional conflicts, in addition to the limited impact of geopolitical developments in the region, were important factors that contributed to this upgrade.

He pointed out the presence of strong institutions for making overall economic and financial policies, strong international financial and technical support from a wide range of development partners, as well as effective access to local markets.

Al-Mahrouq added: “At the same time, we cannot ignore the challenges outlined in the report facing Jordan, including rising debt levels, structural constraints contributing to low growth, high unemployment rates, social pressures, in addition to the volatile geopolitical and regional environment.”

A comprehensive discussion session took place, addressing many questions regarding the economic developments and challenges facing Jordan under current circumstances.