Khaberni - The International Monetary Fund confirmed that Jordan's repayment capacity is still sufficient, and that the public debt course is within a sustainable framework, supported by fiscal discipline and economic growth, and the maintenance of external debt levels, especially private ones, within moderate limits.
The report on the fourth review within the Extended Fund Facility and the first review under the Resilience and Sustainability Facility with Jordan, published by the Fund, indicated that Jordan possesses significant precautionary margins supporting debt sustainability, which include foreign cash reserves exceeding seven months of imports, and the assets of the Social Security Investment Fund amounting to about 40% of the Gross Domestic Product, according to "Al-Mamlaka".
The Fund also emphasized that the continuation of fiscal discipline and accelerating structural reforms, including reducing the losses of the National Electric Power Company, addressing water scarcity in a financially prudent manner, implementing standards-based reforms to maintain long-term financial sustainability of the social security system, and mitigating the risks of climate change, are essential for maintaining debt sustainability and enhancing inclusive growth and competitiveness.
It is expected that the Fund's exposure to Jordan will remain "moderate," with total outstanding credit peaking at 4.3% of Gross Domestic Product, 11.0% of exports of goods and services, 13.6% of reserves, and 630% of the quota in 2027, before it begins to gradually decline.
The Fund noted that its debt service will peak in 2029 at 96.4% of the quota, 22.4% of external public debt service, 2.6% of fiscal revenues, and 1.5% of exports of goods and services, before subsequently decreasing, revealing that repayment periods for the Resilience and Sustainability Facility arrangement will begin in 2036, with debt service remaining low as a percentage of Gross Domestic Product.
In its assessment of public debt sustainability, the Fund confirmed that public debt in Jordan is assessed as "sustainable," noting that the medium-term baseline scenario shows a "downward trajectory" for the debt-to-Gross Domestic Product ratio.
According to the report, public debt (excluding social security debts) is expected to reach 83.4% of Gross Domestic Product in 2025 after redefining the base year of Gross Domestic Product, and to decrease to 80% by 2028, indicating that public debt was at 82.1% in 2024, rising to 83.4% in 2025, then declining to 82% in 2026, 81.3% in 2027, and 80% in 2028, 78.6% in 2029, and 77.2% in 2030 in the medium term, eventually reaching 75.6% in 2031, 73.9% in 2032, and 72.1% in 2033, reaching 69.8% in 2034 in the long term.
The report explained that this downward trajectory is driven by fiscal discipline, the reduction of losses in the energy and water sectors, and the continuation of real Gross Domestic Product growth, with stability expected at 3% in the coming years.
It referred to the redefinition of the base year of Gross Domestic Product, which by itself raised nominal Gross Domestic Product by 10%, in turn reducing the expected debt-to-Gross Domestic Product ratio for 2025 at the time of performing the third review from 89.7% to 81.6%.
It explained that the expected ratio for 2025 within the framework of the fourth review to 83.4% reflects a decrease in the unified surplus of the Public Institution for Social Security, in addition to the effects of the valuation resulting from the depreciation of the dinar against the euro and Special Drawing Rights, alongside a proactive financing operation that involved saving the proceeds of Eurobond issuance in November 2025 and other sources of external financing to repay Eurobonds maturing in January 2026.
The report indicated that public external debt "remains at moderate levels," despite expecting it to increase from 41.3% of Gross Domestic Product in 2024 to 43.5% in 2025, and 44.9% in 2026, peaking at about 46.1% in 2028, before beginning to gradually decrease. This near-term increase is attributed to the continuing rise in the total public sector financing needs, and the ongoing reliance on concessional financing and access to markets, confirming that the debt profile remains appropriate and supported by an improvement in the current account deficit, non-debt-creating capital inflows, a decrease in the central government's primary deficit, and a relative increase in the share of concessional financing.
In terms of private external debt, the report anticipated that it would remain at "moderate levels," at about 50% of the total external debt. As of the second quarter of 2025, banks represented about 82% of private external debt, mostly in the form of non-resident deposits accounting for about 90% of the banks' external debt, with the remainder attributed to non-financial firms.
The report also noted that external financing needs are expected to remain high during the program period, but will gradually decrease thereafter, resulting from the ongoing current account deficit coupled with a rebound in domestic demand, continued imports associated with direct foreign investment, relatively low fertilizer export prices, rising interest rates, in addition to increasing repayment needs, particularly for Eurobonds due in the medium term.
