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Jordan king blocks unpopular fuel price hike

Government has long been reluctant to raise fuel prices

Jordanian deputy Hamad Al Hajaiya objects to a plan to raise fuel prices
Image Credit: Reuters
Jordanian deputy Hamad Al Hajaiya (right) gestures as he objects to the government's decision to raise fuel prices, at the House of Representatives in Amman on September 2, 2012.
Gulf News

Amman: Jordan’s King Abdullah has ordered the government to freeze a hike in the price of the low-grade fuel used by the poor in the aid-dependent kingdom, which is struggling to absorb refugees from neighbouring Syria.

The price hike, which sparked several scattered street protests by the government’s tribal and Islamist opponents, was the second this year under IMF-guided measures to cut subsidies and ease budget strains.

Palace officials said the king had asked Prime Minister Fayez Al Tarawneh’s government to freeze the planned 10 per cent rise in the price of lower-grade gasoline.

At the weekend 89 of the 120 deputies in the country’s lower house of parliament signed a petition urging the king to dismiss Tarawneh over the move, which took effect on Saturday.

The government, mindful of public fury that exploded into street clashes in the depressed south of the country after two price hikes in 1989 and 1996, has long been reluctant to raise fuel prices.

Street protests early last year, inspired by the wave of Arab unrest, pushed the authorities to expand social spending and freeze fuel price hikes, including gasoline.

But the government raised the price of premium petrol by 20 per cent last May and a month later raised the price of lower grade gasoline used by lower-income Jordanians - the majority of the country’s seven million population - by 12.9 per cent.

Jordanian officials say such measures show the commitment to fiscal consolidation needed to keep International Monetary Fund (IMF) support and win further aid.

Economists have it is becoming increasingly untenable for Jordan to maintain subsidies, plus a bureaucracy whose salaries consume most of the $9.6 billion annual budget, in the absence of large inflows of foreign capital or aid.

Officials say the rise in gasoline prices will help Jordan meet an IMF-backed budget deficit target of around 5 percent of gross domestic product after grants that traditionally cover budget shortfalls.