Jordan reverses Arab Spring concessions, hikes petrol
Published Sunday, May 27, 2012
Jordan has raised the price of gasoline and electricity for major mining firms, hotels and banks, officials have confirmed, sparking fears of further street protests in the autocratic nation.
The move, announced by the cabinet, takes effect on Sunday and is the first major rise in retail gasoline prices since 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.
The prices of premium petrol would increase to 1 dinar ($1.4) from 0.795 dinars per liter – almost 20 percent – and electricity tariffs have also been substantially raised for major industrial and service sectors of the economy, including banks and hotels.
Mindful of public fury that exploded into street clashes in the depressed south of the country after two price hikes in 1989 and 1996, the government declined to raise lower grade ordinary gasoline prices used by lower-income Jordanians - the majority of the country's seven million population.
The government said the measures were aimed at easing the country's worsening budget deficit that could reach $4 billion this year.
Successive governments have adopted an expansionist fiscal policy characterized by sizable state subsidies and salary increases in response to the months of protests.
To head off greater unrest, the authorities also created new state jobs in an already bloated public sector, and maintained subsidies for bread and other staple goods, further straining public funds.
In the latest sign of popular discontent, Islamist and tribal opposition groups held street protests against rising prices on Friday.
Jordanian officials say the price hikes will show a serious commitment to fiscal consolidation and win the International Monetary Fund's (IMF) continued support and further aid.