Jordan’s government claimed stern austerity measures are kickstarting the economy and stressed the recent economic decisions were directed at managing the state’s finances.
Speaking at a press conference organised by the Jordan Press Association, the cabinet’s economic team underlined that the measures were aimed at minimising the government’s subsidies of several commodities, including fuel derivatives and electricity prices.
The ministers dispelled the impression that the recent austerity measures were dictated by the IMF and other ‘external players’, adding that tough decisions are being taken to rebalance economic policies and improve the country’s economy roiled by Arab uprisings and conflicts in neighbouring Syria, Lebanon and Iraq.
The government’s bill of subsidies is expected to around JD2 billion ($2.81bn) by the end of the current year, despite a JD300 million ($422.24mn) million fuel subsidy. “Although we have started to see some positive signs, the economic situation is still harsh as we are yet to receive the promised assistance from the donor community and the international assistance,” Finance Minister Suleman Al Hafez said while adding that the government’s measures have been received with satisfaction by countries that are supporting the Kingdom and are keen on investing in the country.
Jordan’s Minister of Industry and Trade Shabib Ammari said the recent austerity measures were taken after thorough consultations with all stakeholders involved in the private sector in order to ensure that the lower and middle classes are not affected. He added that industry and trade sector representatives are of the view to increase the prices of the essential items to address the effects of the government’s austerity measures.
“The majority of the industrial sector, whose monthly consumption is less than 2,000 kilowatt hour, was not affected by the recent increase on the electricity prices, while the increase on medium-size enterprises was less than 4.8% of what they used to pay,” the minister said.
Meanwhile, Amman reiterated its pledge to complete work on all mega-projects, including the work on the first phase of the Jordan Red Sea Project (JRSP), valued at more than JD200 million. Both Arab and foreign investors signed a deal with the government last month on an agreement to improve the Dead Sea Development Zone.
According to Alaa Batayneh, the government imports oil from from Iraq at $5 less than the market price on top of the cost of insurance and transportation to the bill. The minister acknowledged Egyptian natural gas has not been supplied since it came under attack by unknown militants in Sinai Peninsula.
“On average, the daily supply of Egyptian gas was never more than 24 million cubic feet as opposed to 300 million cubic feet stipulated in the agreement we had signed,” the minister said, adding that at times the flow dropped to zero.
Fuel consumption has increased 5.5% annually and consumption of water and electricity has gone up by 7.5% in Jordan. The cabinet insisted that the recent increase in the prices of hi octane-90 and octane-95 was consistent with a previously adopted mechanism which calculates additional costs to the oil prices on international markets, adding that the government is ready to reconsider prices should international oil prices drop.