Jordan’s debt levels are sustainable for the present

Significance

Despite a series of IMF programmes since 1989, public sector debt levels have climbed to worrying heights, driven by deficits on both fiscal and current account accounts. Jordan’s vulnerability to external events such as the global financial crisis, the Arab uprisings, high oil prices and COVID-19 exacerbated the situation.

Impacts

• A sudden devaluation of the dinar would increase debt servicing costs on Jordan’s external public sector debt.
• Donor fatigue may increase if a nuclear deal is signed and Iran adopts a more constructive approach to regional security.
• Government austerity measures will result in more protests but these will not threaten the regime into the medium term.