Jordan will tap the bond market for the first time in more than two years as the nation struggles with a cut in foreign aid, a rising energy bill and an influx of Syrian refugees.

The country is preparing to sell eurobonds early this year, Jordan’s Prime Minister Abdullah Ensour said in a Jan. 16 interview without providing further details. The yield on the 3.875 percent notes due November 2015 fell to 4.77 percent Monday from 5.77 percent a year ago, according to data compiled by Bloomberg.

“The country has been hit by external factors ranging from political tension, rise in energy prices and global economic slowdown,” said Tariq Qaqish, deputy head of asset management at Al Mal Capital PSC in Dubai.

“A big factor would be the confidence of investors that the government is taking the right measures to narrow the deficits.”

Jordan, the second-smallest economy in the Middle East after Bahrain, imports more than 90 percent of its oil and relies on foreign investment and grants to support public finances. The government removed fuel subsidies in November as part of a $2 billion credit facility agreed with the IMF in July.

The premium that investors demand to hold Jordan’s dollar-denominated debt over U.S. Treasuries rose 18 basis points, or 0.18 percentage points, to 417 in the week ending Jan. 18, according to JPMorgan Chase & Co.’s EMBIG Jordan Sovereign Spread index. This compared with a four basis-point decline in Lebanon’s sovereign spread to 383. The premium was at 414 basis points on Jan. 25.

Still, “the sharp decline in foreign donor support is a substantial concern for Jordan,” said Robert Powell, a Middle East and North Africa analyst at the Economist Intelligence Unit. “Without foreign grants, we estimate that the deficit would balloon to over 9 percent of gross domestic product.”

Jordan’s 2013 budget foresees a deficit of 5.4 percent of GDP, the official Petra news agency reported on Jan. 1. The last time government spent less than it earned was in 2004, according to IMF data. Jordan’s gross debt increased to 79 percent of GDP in 2012, the fourth consecutive year the rate rose, the data show.

Jordan last year got only half of the 1.3 billion dinars ($1.83 billion) in foreign grants it received in 2011, placing “pressure on the budget and some pressure on the domestic market,” Central Bank Governor Ziad Fariz said in a Jan. 16 interview.

The kingdom received less than half the 250 million cubic feet of cheap gas agreed upon with Egypt last year, forcing it to buy more-expensive fuel elsewhere. Disruptions in Egyptian gas supply has already cost Jordan $5 billion, King Abdullah II said in December. Its infrastructure, especially its scarce water resources, are also being strained by 300,000 Syrian refugees.

“These concerns are heightened by the appalling financial problems” at Jordan’s National Electric Power Co., EIU’s Powell said. The electricity company lost 889 million dinars in 2012 and has loans of about 1.7 billion dinars, according to Governor Fariz.

The economic growth rate hasn’t exceeded 3 percent since 2009, after averaging 6.5 percent a year in the preceding decade, IMF data show.

“More positively, the domestic banks remain willing buyers of government debt, although this simultaneously risks the crowding out of private-sector lending,” Powell added.

Jordan’s economy saw some recovery at the end of last year and beginning of 2013 “from the setback it has witnessed,” a trend augmented by an 5 percent increase in remittances from Jordanians working abroad and 15 percent rise in tourism, Fariz said.

The government has a “national program” to deal with the debt, he added. This year’s budget is supposed to trim current expenditure and lower fuel subsidies. There are also efforts to save energy and improve the investment climate in the country, he said.

Concern among citizens that violence could turn Jordan into another Syria, as well as loyalty to the monarchy, make Jordan “the least risky economy in the region,” said Jordanian economist Yousef Mansour, chief executive officer of Envision Consulting Group. Elections were held on Jan. 23 despite a boycott by main opposition bloc the Muslim Brotherhood.

“We hope this year things will become smoother and the government with the new budget will reduce its borrowing requirements,” Fariz said. He expects economic growth to accelerate to 4 percent in 2013 from 2.8 percent last year.