The Jordanian government raised the price of premium unleaded gas by 25%. [Ali al-Rawashdah/Al-Shorfa]
As part of efforts to reduce the country's budget deficit, the Jordanian government on Saturday (May 26th) approved a 25% price increase on premium gasoline and a hike on electricity tariffs for certain industries.
The price of premium unleaded gasoline increased from 0.795 Jordanian dinars ($1.1) to one dinar ($1.4) per litre. Unspecified price increases will also be applied to propane, fuel oil, diesel for ships and other oil derivatives.
Increases in electricity costs, based on recommendations from the Electricity Regulatory Authority, will be applied to banks, communications companies, water plants, hotels, the ports authority, and major industries such as mining.
Financial analyst Abdul Munim al-Zubi said he believes the government resorted to a fast and easy way to reduce the budget deficit.
"The expected fiscal deficit for 2012 will reach two billion dinars ($2.8 billion) in light of rising world oil prices, a rising fuel bill and a disruption in the supply of Egyptian natural gas, which is a main source for generating electricity," he told Al-Shorfa.
Al-Zubi said the government's latest austerity measures -- including last week's decision to cut the salaries of certain high-ranking officials by 20% -- revealed the severity of the kingdom's economic situation.
He said the new government measures would result in a decrease in fuel subsidies by 200 million dinars ($281.7 million) annually.
"This will not eliminate subsidisation of prices for major oil products such as diesel, regular unleaded gasoline and kerosene. Private residences have not yet been hit by the price increase," he said.
The Ministry of Finance reported that subsidies for fuel and food cost the state 206 million dinars during the first four months of 2012, a 100% increase from the same period during 2011.
Economist Mohammed al-Tel said the government needed to introduce legislation that would reduce public spending and energy consumption. He said he expects the cost of energy consumption in Jordan during 2012 to reach four billion dinars ($5.6 billion).
He said it is important to reduce energy consumption among household and business users. He also suggested making it easier to use motorcycles while raising taxes on luxury cars with higher fuel consumption, and encouraging investment in renewable energy sources.
"The government plan does not stop at raising the price of some types of fuel and electricity provided to some sectors, but also seeks to gradually reduce the subsidisation of oil products," said economist Amer al-Muasher. "There will also be amendments to the income tax law so that corporate taxes, as with, individual income taxes, become incremental."
He said government hiring will be frozen and purchases will be reduced substantially in addition to an imposition of a tax on luxury goods.
Al-Muasher estimated these procedures will reduce the budget deficit from 2 to 1.2 billion dinars ($1.7 billion). He said he supported these measures as long as they do not increase prices among the poor and the middle class.
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نوري
2012-6-16
With the growing value of the import bill of oil from abroad and the declining supply of Egyptian gas to Jordan, Jordan seeks to diversify its options in the energy imports. According to Jordanian officials, the Jordanian economy is now experiencing many problems that caused many complications and harm the country. The Jordanian citizen faces many obstacles because of the high prices that affect him and his state’s economy. The international economic crisis and the high prices of fuel and its derivatives in the international markets influenced Jordan and the Jordanian citizen, especially as Jordan lacks the oil wealth and is totally dependent on importing it from the international markets or the neighboring countries. The Jordanian budget is now draining in order to import fuel and to provide the highest degree of support for it, so that the Jordanian citizen could get if at a convenient price. The electricity sector in Jordan depends on the oil and gas that are imported. The rise in prices led to increasing deductions of the citizen's finances to be outfitted with electricity and this has become one of the problems experienced by the Jordanian citizen because of the high price of derivatives and the high prices that enable him to obtain electric current.
زكي
2012-6-16
It is necessary to raise the economic level in the country by providing all the needs of the Jordanian people through increased business and production as well as the employment of manpower and the elimination of unemployment. The government should be the first mover in this matter in order to improve the economy of the country by effectively contributing and expanding the dealings of Jordan with banks, corporations, and investments; and also to expand the tourism movement because it has a very big role in restoring the economic vitality of the country due to the fact that a lot of visitors or foreign tourists and Arabs will play a big role in raising Jordanian funds, as they will be dealing with dollars, in addition to staying in hotels, restaurants, clubs, tourist places, and museums. All these things have great importance and the Jordanian government should be the reason for pushing Jordan to better conditions and working on raising their economic level. This is the role of the government and it should do so to serve the Jordanian citizen so that he will feel better, earn his daily bread and find an appropriate job by expanding projects in Jordan and working on developing and changing its conditions, in addition to improving the economic level. That will speed up the renaissance of Jordan, but it should be done in a right way and continuously in order for the kingdom of Jordan to achieve the best results and achievements that every Jordanian citizen dreams for Jordanian interest. Of course, this is the role of the government, besides the cooperation of the Jordanian people to work for the fruits of growth and to improve the level of the economy in general throughout Jordan.
عادل
2012-6-12
The high gasoline prices are reflected on the increase of operational costs for the distribution of goods and for shipping them. What remain evident is that only the consumer will bear the increase in good's price. While distributing goods, companies use a large amount of cars running on gasoline and these companies must be monitored, so that they would not take advantage of the high fuel prices for their own interests and increase their goods and products' prices. When prices are high, consumption and procurement will be reduced and this will undermine and deteriorate the economy externally and internally.
وهاب كرم
2012-6-12
Fuel is important for our daily lives and we do use it in everything we do. If its price rises, the prices of other goods will rise too. And when the fuel price declines, it would bolster the investments especially in the industry field. Fuel is closely linked to all of the market activities and we use it more than any other source of energy. For me, fuel represents energy and with energy comes movement that expands and enhances the production of goods. Therefore, the price of fuel controls the production of goods and their prices in both internal and external markets and sub-consequently, it controls the economy. When the exporting State has stocks of fuel, it would be able to control its price, and would be the primary beneficiary, especially in terms of improving the economy and raising its revenue. In both cases, the owner of fuel is the winner and the increase of its price indicates a deficit in the exporting country's economy. I note that raising fuel prices would lead to raising goods' prices at a level that exceeds by far the fuel ratios; this increase represents a fraction of the cost of the products and commodities; companies and traders should restrain from arbitrary raising their products prices and take first into account the rise in transport prices before wisely adjusting accordingly their goods' prices.
صديق
2012-6-12
There is a greater misfortune, which is that because of the high cost of oil, many transportation costs become high to twice the value and this is another deficit that affects many staff who continuously suffer from resorting to public transportation to go to their work places at a high cost making their salary insufficient until the end of the month. Unfortunately, the high prices represents a calamity that affects the Arab employee, which makes him suffer from unfair wages, making him resort to sit-ins which cause his suspension from work until his demands are satisfied and this generally negatively affects the economy. The government must impose severe controls on the suppliers of those goods, which are very precious so that the citizen would not be suffering from their problems in the future.
موفق
2012-6-10
It is known that poverty is a major social problem that much of the Arab population is suffering from because of the economic policies that are being followed in the countries that are suffering from poverty and needs, like Jordan and most of the Arab countries that have not achieved social justice and did not distribute the economic wealth fairly, which left bad effects and negative economic implications. It has a great influence on a person's life due to the lower monthly income of a family, which is the backbone in order for them to continue their lives and save their dignity from committing deviant acts that will lead to the destruction of the community because he cannot afford the necessities of life like food, clothes, and housing, as well as providing some other necessities such as education and health. It has been noted that the incidence of poverty usually appears prominently in developing communities whose economic growth does not match the reality of population growth. This is what happened in Jordan from the government of Rifai that increased tax rates related to fuels and nutrients that are the backbone of life for Jordanian citizens. It also did not follow good methods to distribute wealth fairly in order to achieve solutions that would end injustice on the Jordanian citizen who has become unable to provide a living for his family as a result of the increase of prices in the domestic market as well as the tax rates that the government imposed on the citizens. Besides this, there is the failure of the government to fight corruption and other illegitimate sources of income in order to deal with the weakness of the economy of Jordan for many years and to this day. Jordanians have to work on the application of several programs to get rid of this weakness and the economic recession in order to achieve economic growth aimed at strengthening stability in the country and reducing debt. But that did not result in the desired purpose, as it is clear that unemployment has continued to rise and the poverty rates continued to increase and are in need to be solved urgently.
رياض
2012-6-10
Jordan has become one of the weak countries in terms of its economy and the results of the acts of austerity and weakness in economic terms affected significantly the citizens' lives. The Jordanian parliament is playing with the people's condition and does not work on solving the crisis, but made matters worse instead of being more rational. The Jordanian economy is one of the weak economies because the country's economy is based on the safety, security and the increase of trust between citizens and the government. The Arab leaders got a sudden illness spreading rapidly and we do not know how they got this strange virus. King Abdullah was treating his people well at first, but now he has descended to a low level indeed and we cannot stay silent. The agricultural and economic conditions in Jordan have become very weak and no one knows what the cause is. Is it the government or the people or who? People need to regain their rights by any means and they do not want the conditions to worsen; they always work on finding solutions for these problems. The Jordanian parliament's duty is to create job opportunities to raise the level of the economy in order to live peacefully and safely and not commit mistakes like the other Arab countries, so that the economy will become better. This will happen if the Jordanian government will move itself and take important decisions for the Jordanian people.
بشير
2012-6-9
The high prices of goods and services have become one of the economic phenomena affecting the economic community. The price increase did not include certain goods, but it hit the majority of goods and services, and everyone, i.e. the merchant and the consumer, is now suffering from these constant increases, as they affected all of us without exception, despite the intervention of the concerned authorities. The importers, traders, marketers, consumers and government services have become parties to the problem and the solution, as many of the countries within the Middle East are seeking to ease the local impact of rising fuel and food prices through subsidies and other measures, such as wage increases, cash transfers and tax cuts. Because of the public finance limitations in many countries, it is likely that governments will seek to offset part of the additional cost implications of these measures through reductions in other items. We think that governments should help poor families and support them. Such assistance has to be largest in difficult times to fully meet the needs and to address the limitations of public finances without necessarily resorting to reducing other important costs, such as spending on the infrastructure. It is important to improve and modernize the available social safety nets, so that they become permanent networks and are more accurate in identifying their goals. If we compare the accurate safety nets in terms of targeting those who deserve a comprehensive support system which benefits everybody, we find that these networks are limited to helping those who have the greatest need for government subsidies. Thus, they provide for the needy, obtaining greater benefits in a more durable manner, despite their lower cost to public finances.
خليل احمد حمزة
2012-6-9
The phenomenon of the constant increase in oil prices that the Arab economies have been witnessing for a few years has huge impacts on the circumstances and economic policies in most Arab and foreign countries. The effect of this phenomenon is not only visible in the oil countries; it has moved to the non-oil countries as well.
مسلم
2012-6-8
Consumer countries such as Jordan are suffering because of the fuel prices increase. However, countries like the Gulf States will benefit given that new surplus in oil revenues have not been spent as expenditures. They have dealt with these material surpluses more cautiously. In fact, despite the increase of the expenditure on salaries and investments in the infrastructure projects in addition to the increase of the allocations for education and healthcare, the larger part of the surplus has been mainly employed in positive fields. Besides, the surplus has contributed to promoting the foreign reserves in central banks. The other positive effects of the surpluses coming from the oil price increases consist in increasing the transfer of Arab labor in these oil countries. In addition, these effects have been reflected in the increase of trade, tourism and investments.
شاكر
2012-6-8
There is no doubt that the increase of the oil-export returns helped in improving the rates of the economic growth, because the rise in the economic development rates increases the investment opportunities and the development projects. It also creates jobs that helped in alleviating the unemployment rates in some cases and improving the living conditions of the citizens.
عايد السهيل
2012-6-4
Jordan is a very poor country, but intellectually sophisticated and this makes her distinctive from many other countries. They have competencies that can change their world for the better; the economic future of Jordan is a future full of surprises in the coming years, although they do not have a good social life, but they obtain many interests in many areas that make them high achievers against others in such areas, if we talked about the first interests that the citizens of Jordan get.