JORDAN

RISK RATING
Elevated
Default High Risk Score 4.80
Normal Average 3.18
Weighted Average 2.62
RISK RATING HISTORY
RISK RATING SCALE

Risk Rating Scale

Severe: 8.0 to 10
High: 6.0 to 7.9
Elevated: 4.0 to 5.9
Moderate: 2.0 to 3.9
Low: 0.0 to 1.9
EXCHANGE RATE
Country Outlook

The pandemic has dealt a heavy blow to Jordan’s already debt-burdened economy and its key tourism industry. Under the constitution, most powers rest with King Abdullah, a staunch US ally, who appoints governments and can dissolve parliament. Islamists, Palestinians, and liberal activists are mostly excluded from the political sphere, which raises the risk of unrest in cities as socio-economic grievances mount. The opposition is calling for democratic reform that would limit the powers of the pro-Western king and a crackdown on corruption. The debt-burdened economy is dependent on foreign aid and IMF support. A well-diversified economy bodes well for an eventual recovery, although poverty and unemployment are fast becoming worse and raising the risk of unrest and insecurity.

  • Hashemite King Abdullah II holds wide executive and legislative powers and can rule by decree. The 2020 parliamentary elections showed that most candidates still appeal to voters along mostly tribal and family loyalty lines. A low turnout in those elections ensured that the parliament remains dominated by retired senior military officers, businessmen, and representatives of powerful tribes. Tribal, centrist, and pro-government lawmakers remain dominant in a system that under-represents the cities where their Islamist, Palestinian, and liberal opponents do best. Yet, successive governments have side-lined the almost powerless assembly and real power rests with the king and his court officials. Opposition parties such as Islamic Action Front, the political arm of the Muslim Brotherhood, lost seats in 2020.
  • Public discontent is on the rise due to political side-lining of Palestinians and the opposition. Socio-economic grievances have been exacerbated by the pandemic, which has battered the country’s tourism industry and put pressure on public revenue. Unemployment and poverty have been aggravated by the COVID-19 outbreak. Low turnout in the 2020 elections indicate a loss of confidence in the political system. As a result, the risk of protests will rise, particularly in cities, where Islamists enjoy most support. The country is home to some 2.2 million Palestinian refugees and more than 650,000 Syrian refugees, which drives instability risks. Jordan’s pro-western stance leaves it exposed to Islamist terror attacks, although security forces have proven themselves capable of preventing large-scale attacks and curbing protracted unrest that would pose a threat to political stability.
  • An economic crisis has been exacerbated by the pandemic. Resource-poor and dependent on foreign aid, Jordan has built up a public debt that exceeds 100 percent of GDP. Unemployment stood at 23 percent before the pandemic had even fully hit. Official statistics show the poverty rate has increased to 15.7 percent, a rate which the World Bank forecasts will rise sharply because of the pandemic. Jordan secured a USD 1.3 billion Extended Fund Facility from the IMF in 2020, which is conditional on structural adjustments such as phasing out subsidies, combating tax and customs avoidance, and reducing business-doing costs, including labour and energy. The EFF has helped Jordan access global debt markets to obtain financing at competitive prices and strengthened investor and donor confidence in the resilience of the national economy.
CUMULATIVE AND DAILY COVID-19 INFECTIONS AND DEATH RATE
INTERNATIONAL MONETARY FUND | DATAMAPPER
Risk Perils
Political Instability
2.0
Expropriation, Nationalisation, Confiscation & Deprivation
2.0
Contract Frustration & Breach
2.5
Taxation
3.5
Bribery & Corruption
3.0
Regulatory Burden
3.5
Strikes, Riots & Civil Commotion
3.2
Security
2.5
Sovereign Default
4.8
Economic Volatiliy
4.8

Risk Rating Scale (small)

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