Jordanians Demand Government Resign Over Cut in Fuel Subsidies

Hundreds of Jordanians protested after the government removed subsidies on cooking gas and other fuels to offset an estimated 3.5 billion-dinar ($4.9 billion) budget deficit.

Protesters chanted slogans last night against Prime Minister Abdullah Ensour and demanded that the government step down. At least two policemen were seriously injured when they were shot by demonstrators in the northern city of Irbid, the Middle East News Agency reported, without saying how it obtained the information.

“Lifting fuel subsidies should have happened two years ago, but the government didn’t do that because of the political circumstances,” Ensour told Jordanian state-run television, according to the state-run Petra news agency. “There are two fuel ships in the Aqaba port, and we don’t have the cash to pay for that.”

Protests broke out in September after the government raised the prices of 90-octane gasoline by 10 percent and diesel by 6.8 percent. The demonstrations prompted Jordan’s King Abdullah II to freeze that decision. The government, which has diesel reserves to last a week, doesn’t have cash to buy more and has lost at least $4 billion since regional political upheaval of the Arab Spring disrupted energy supplies, particularly natural gas from Egypt, Ensour said.

Energy Imports

Jordan, one of the smallest economies in the Middle East, imports more than 90 percent of its oil and relies on foreign investment and grants to support public finances. Repeated bomb attacks against a gas pipeline in Egypt have disrupted Jordan’s supplies, raising the nation’s energy imports bill by 54 percent last year.

The government secured a $2 billion loan accord with the International Monetary Fund in August. Officials must decide on “trade-offs” to meet the objectives of an economic program supported by the IMF, the fund’s director for Middle East and Central Asia, Masood Ahmed, said in September.

Ensour, the prime minister, said the kingdom’s foreign currency reserves stand at 7 billion dinars, and its electricity subsidies have reached 1.7 billion dinars in 2012.

The government increased energy subsidies last year, adding to the strain on public finances, as part of its response to the popular uprisings that swept across the Middle East. While Jordan escaped the worst of the unrest, there were rallies against unemployment and rising living costs.

Families earning less than 800 dinars a month will qualify for monthly cash payments, Ensour said. “All Jordanians will buy fuels at the same prices,” he said. The government is also seeking to merge ministries to cut costs and is pushing a law to boost taxes on banks, he said.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE