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Sat 9 Feb 2008 02:12 PM

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Fuel prices skyrocket as Jordan cuts subsidies

Gov't announces immediate increase in fuel prices, some of which will jump 76%.

The Jordanian government on Friday announced an immediate increase in fuel prices, some of which will jump 76%, as Amman phases out subsidies.

In a statement it said domestic fuel and kerosene prices had been raised by 76.1% from Friday with petrol prices climbing 3%, 9% and 33% depending on quality.

As a temporary winter measure, Amman will maintain a subsidy on bottled gas until April 1 although the price has been increased by 53%, from 4.25 to 6.50 dinars ($9.15).

Economists expect that from April the price will jump to around 10 dinars.

Last month Prime Minister Nader Dahabi said during the budget debate that to alleviate problems faced by Jordanians, salaries would be increased and backdated to January 1.

This covered salaries for all public sector employees, civilians and military, as well as those on pensions, with direct financial help going to the poorest workers in the private sector.

"These increases are between $63 to $70 a month for the public sector, and with a range of $150 to $220 a month for those families whose annual income is $1,000 or less," a government minister, not wishing to be named, told newswire AFP at the time.

Some families have to survive on part-time work, paid at a lower rate than the minimum monthly wage of $155 for full-time employment.

The increases and other measures will reach some 60% of Jordan's population of 5.8 million.

MPs and political parties, particularly the influential opposition Islamic Action Front, had been warning against rising prices which they said could "constitute a real catastrophe".

They have also warned that price freedom would "lead to social tensions that will be difficult to control".

Jordanians still have memories of the violent riots in April 1989 that broke out in the south following a rise in prices, that resulted in 12 deaths.

Other riots erupted in 1996 after bread prices rose, although there were no casualties then and the situation was quickly brought under control.

Jordan has seen a series of sit-ins and demonstrations against the liberalisation of fuel prices.

The country used to be fully dependent on neighbouring Iraq for its fuel supplies which Baghdad supplied at a preferential price. But since the US-led invasion of 2003, Amman has had to buy its supplies at the market rate.

As a result, the kingdom has already increased fuel prices five times, and the latest budget has freed prices for the commodity, ending an era of government subsidies.

In another measure to help the poorest sector the government has decided to exempt 13 basic necessities from tax, including milk, the price of which has jumped 40%.

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