By Massoud Derhally
Moody's Investors Service has upgraded the country ceiling for foreign currency bonds of issuers domiciled in Jordan to Ba2 from Ba3 and the ceiling for foreign currency bank deposits to Ba3 from B1.
Moody's Investors Service has upgraded the country ceiling for foreign currency bonds of issuers domiciled in Jordan to Ba2 from Ba3 and the ceiling for foreign currency bank deposits to Ba3 from B1. The international rating agency attributed the new ratings to lessening geopolitical risks stemming from the threat representedby Iraq. "In the period prior to the war on Iraq, there was considerable uncertainty concerning the duration and outcome of the war and possible harmful effects on the political and economic stability of countries in the region, including Jordan," the rating agency said in a statement. Moody's went on to say concerns subsided as a result of the short and contained war.The negative financial impact of the war on the Jordanian economy hasbeen largely mitigated by generous grants that are expected to amount to around 10.6% of GDP in 2003, notes Moody's. The predictability of such grants and the strong support that Jordan has received from the international community are positive elements and are factored into the ratings. Although the pace of economic growth is expected to slow down this year compared to 2002, the prospect for GDP to grow between 5% and 6% in the medium-term is good. The rating agency noted that Jordan's debt situation has improved over the past few years, and the prospect of a debt reduction following the exit agreement with the Paris Club has also improved. According to Moody's, the upgrade of Jordan's ratings reflects the positive impact on social and macro-economic stability of the reforms that have been undertaken over the past few years. A continued strong pace of such reforms is still necessary, however, to sustain economic growth and to reduce fiscal imbalances.