S&P downgrades Jordan credit rating

AMMAN (AFP) -Standard & Poor’s on Wednesday lowered Jordan’s long-term local-currency sovereign credit rating to “BB” from “BB+” expressing concern about the country’s economy and political situation.

The ratings agency also maintained its “BB/B” long- and short-term foreign-currency sovereign credit ratings on the Kingdom as well as the short-term local-currency rating at “B”.

“The outlook is negative. The recovery rating is ‘4’. The transfer and convertibility assessment is ‘BBB-’,” the agency said in a statement.

S&P said Jordan, like many other Arab countries in 2011, is under public pressure to meet demands for political and economic reform.

“At the same time, the economy has suffered external shocks from commodity price inflation and the fallout from regional instability, which has resulted in slower economic growth and larger fiscal deficits,” it added.

“However, in our view, these challenges are partially mitigated by Jordan’s close relations with donor countries supporting comparably modest external borrowing needs, though these are rising…”

Since this year’s uprisings sweeping the Arab region, Jordan has seen protests where calls for political reform and the end of widespread corruption were made.

His Majesty King Abdullah last month pushed ahead with his reform plans, appointing International Court of Justice judge Awn Khasawneh as prime minister as well as a new intelligence chief and a Royal Court chief.

“The domestic political situation [in Jordan] is fluid and unpredictable,” S&P said, adding that a “technocratic Cabinet may indicate the King’s increased sense of urgency to accelerate political and economic reforms”.

“Even so, we believe the new government faces major challenges in meeting the demands of an increasingly impatient public expecting more rapid changes.”

jordantimes