Jordan's King Abdullah blocks fuel price hike

Second fuel price rise in year would have hit poor; had sparked some protests
Jordan's King Abdullah blocks fuel price hike
Jordans King Abdullah has ordered the government to freeze a hike in the price of the low-grade fuel.
By Reuters
Mon 03 Sep 2012 02:38 PM

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 on Monday the king had asked Prime Minister Fayez al-Tarawneh's government to freeze the planned 10 percent rise in the price of lower-grade gasoline.

On Sunday, 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 percent last May and a month later raised the price of lower grade gasoline used by lower-income Jordanians - the majority of the country's 7m population - by 12.9 percent.

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 US$9.6bn 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.

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