That’s an extra 36,523 lodgings in five yearsJune 29, 2015 9:03
Rating agencies punish Jordan on political turmoil
Concern linked to uprisings in Egypt, Tunisia.
February 8, 2011 3:58 by Reuters
Ratings agency S&P cut Jordan’s local currency ratings on Tuesday and Moody’s downgraded the outlook on its foreign currency bond to negative, citing turmoil in the region and at home where King Abdullah sacked the government last week.
Standard and Poor’s cut Jordan’s local long-term and short-term currency ratings to BB+/B from BBB-/A-3 and revised the outlook on its long-term foreign currency and local currency ratings to negative from stable.
Moody’s downgraded the outlook on Jordan’s Ba2 foreign currency government bond to negative from stable, saying the new government may raise spending to deflect protests inspired by the uprising in Egypt.
The agency also downgraded Jordan’s local currency bond rating to Ba2 from Baa3 to align it with the foreign currency government bond rating.
S&P credit analyst Luc Marchand said its negative outlook on long-term foreign currency and local currency ratings reflected concern about social unrest in Jordan and the likely repercussions of regional conflicts on economic growth and fiscal revenue expectations.
“If unchecked, this trend could result in, on our current expectations, a one-notch lowering of both ratings this year or next,” Marchand said in a statement.
Moody’s said its moves reflect concern that “the fiscal and economic downside risks related to ongoing turmoil in the region have risen following events in Tunisia and Egypt”.
Jordan’s King Abdullah sacked his prime minister last week after weeks of anti-government protests, replacing him with a conservative former premier known for his hostility to the private sector.
The new prime minister, Marouf Bakhit, is likely to be sympathetic to calls for government spending to be maintained on subsidies and state jobs for the country’s influential tribes — despite Jordan’s large budget deficit.
“Moody’s points to the possibility that the new Jordanian government could significantly relax its fiscal stance as part of its policy response to such popular discontent,” the agency said in a statement.
Moody’s said Jordan’s gross government debt of around 60 percent meant its public finances were “in some respects weaker than those of Ba rating peers”.
The Ba2 rating could be downgraded “if there were disruptive political turmoil that threatened a structural weakening of Jordan’s credit fundamentals relative to ratings peers”.
Moody’s also said rising political risk had led to a “moderate deterioration in the operating environment for businesses and other entities based in Jordan”.
(Editing by Stephen Nisbet)