Jordanian Prime Minister Ali Abu Ragheb on Tuesday, July 10, announced the kingdom's first major petrol hike in over a decade, with new prices affecting gasoline, gas canisters and diesel for heating.
He said the move will help shore up the country's ailing economy in line with recommendations by the International Monetary Fund (IMF) and bring in to the economy 45 million dinars annually ($63 million), and 23 million dinars ($32 million) by the end of the year.
The price of gasoline—regular, premium and unleaded—will go up by 14 to 15 percent, while gas will increase by 15 percent and diesel for heating by 3.8 percent. The cost of public transport will also be raised, Abu Ragheb said, although he was not immediately able to say by how much.
According to government officials, the petrol hikes are still well below demands made by the IMF to raise petrol prices by 30 to 40 percent as part of efforts to maintain the budget deficit within a target of six percent of the Gross Domestic Product.
Jordan faces a budget deficit of $253 million for 2001. "We had tough negotiations with the IMF and over the past three days we had more discussions with them and yesterday we agreed to increase some petroleum product," Abu Ragheb said.
Six percent of the revenues that the government will earn from the increased petrol prices will be used to fund the desert kingdom's debt-ridden municipalities which face a budget deficit of 70 million dinars ($100 million), Abu Ragheb said.
Abu Ragheb insisted that the government decided against increasing fuel oil and other heavy duty petroleum products so as not to burden the industrial sector. The government also ruled out imposing increases on bread and electricity.
"We decided to restrict the increases in order to take into consideration the living conditions of Jordanians with limited income," Abu Ragheb said.
"The increases will not affect the economy of Jordan because it will not affect the price of bread, electricity, water, the trucking industry and therefore will not affect the lives of the limited income people," he said.
Petrol price hikes in April 1989 had triggered riots in the impoverished southern region of Jordan and similar protests gripped that same region in August 1996 when the government decided to raise the price of bread.
Abu Ragheb argued that the price hike was necessary to conform with a three-year IMF program for reforms in Jordan which expires in 2002, under which Jordan has been able to obtain loans and grants from the IMF, World Bank and other organizations and countries.
As part of that program Jordan has also been able to reschedule its huge external debts which amount to around $7.2 billion.
Abu Ragheb also argued that the increase was necessary to bring Jordan's gas prices on par with market prices around the world. He stressed that until now Jordan has "the lowest prices in the region, in the world and lower even than in oil-producing countries."
Jordan imports all its oil from Iraq, amounting to some five million tons annually. Half of the figure is purchased at a preferential rate of $21 per barrel while the rest is free of charge.
The government had announced plans to raise fuel prices at the end of 2000 before suspending the move. — (AFP)
© Agence France Presse
© 2001 Mena Report (www.menareport.com )