Regaining Debt Sustainability in Jordan: A Preemptive Restructuring Strategy

Abstract

The COVID-19 pandemic hit Jordan economy after a decade of mediocre growth. While growing at 6.1 percent during 2000-2009, the economy decelerated to 2.2 percent in 2010-2019 and fell 1.6 percent in 2020. With an increasing unemployment and worsening of the fiscal and current account since before the pandemic, the unemployment reached 22.7 percent in 2020, while the overall fiscal and current account deficit of 7 and 8 percent of GDP, respectively. In order to finance this twin-deficits, Jordan’s public debt-to-GDP ratio increased 11.3 percentage points, from an already high ratio of 95.2 percent in 2019 to 106.5 percent in 2020.