Moody’s on Monday said the new International Monetary Fund (IMF)-sponsored programme for fiscal consolidation and additional donor funding by international community will support Jordan's public finances and would give a positive outlook for the Kingdom's sovereign credit.
The statement by the credit rating agency was issued to comment on the Extended Fund Facility (EFF), which last Monday Jordan and the IMF reached a staff-level agreement on, pending approval of the IMF executive board.
The Kingdom's credit rating by Moody's is currently B1 stable.
The statement –– e-mailed to The Jordan Times by the credit rating agency –– said the Ministry of Finance expects the new agreement with the IMF to help release $1.9 billion in additional donor funding to help cover the cost of hosting refugees and $1 billion in US-guaranteed bonds.
The EFF follows a $2 billion three-year Stand-By Arrangement (SBA) that the country completed with the IMF in August 2015.
Jordan's public finances have been declining since 2009, with government debt surpassing 90 per cent of the gross domestic product (GDP) in 2015, versus 65 per cent in 2009, Moody's said, adding that under the auspices of the SBA programme, which also unlocked access to additional funding, structural fiscal reforms began to produce positive results, slowing the debt buildup.
The central government’s fiscal deficit, excluding foreign grants, narrowed to 6.8 per cent of the GDP in 2015 from 7.2 per cent in 2014 and 8.2 per cent in 2013.
The rating agency said that under the new EFF programme, the government expects to post a budget surplus of JD170 million (0.5 per cent of GDP) by 2019 (including grants), and remain in surplus through 2021, not only as a result of structural reforms and access to further funding, but also as the country continues to benefit from lower oil prices.
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