S&P upgrades long-term currency ratings

03 July 2003
International ratings agency Standard & Poor's (S&P)on 3 July announced the upgrade of Jordan's sovereign long-term foreign and local currency ratings to BB from BB- and to BBB from BBB- respectively. The short-term foreign and local currency ratings were affirmed at B and A3, and the outlook set at stable. S&P attributed the upgrade to improving macroeconomic indicators. 'The upgrade reflects the expected gradual decline in the net general government debt, to 63.5 per cent of GDP [gross domestic product] in 2006 from the current 84.5 per cent, as a result of favourable debt treatment, debt swap operations, and moderate fiscal deficits,' says S&P credit analyst Serge Ghanem. 'Furthermore, the Paris Club exit agreement signed in July 2002 will lead to an improvement in Jordan's debt service ratio, with external debt service declining to 9.8 per cent of current account receipts in 2006, from 11.1 per cent in 2002.' The Paris Club of international creditor governments agreed to reschedule $1,200 million in servicing payments on the kingdom's $4,100 million in debts to club members (MEED 12:7:02). The government's commitment to structural economic reform should ensure strong growth and reduced unemployment, S&P said. Amman's fiscal deficit is narrowing and external liquidity position strengthening, it added. 'Ratings improvements would be supported by the implementation of further structural reforms and fiscal consolidation, which are required to ensure the decline in the debt burden,' says Ghanem.

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