Jordan govt to reduce subsidies as budget deficit hits $900m

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Jordanian dinar banknotes. Photo - Travelblog.org

Jordanian state news agency Petra announced the country’s budget deficit could reach 2.06 billion dinars ($900 million) after donations and assistance in 2012. Suleiman Hafez, Jordan’s minister of finance, said that external and internal public debt in Jordan is estimated to amount to 1.75 billion dinars ($2.46bn) in 2012.

Meanwhile, Jordanian Prime Minister Fayez Tarawneh said on Monday that the government will gradually reduce subsidies on basic items in order to handle spiralling public debt and budget deficit. He emphasised that measures taken are necessary to tackle growing public debt and fiscal deficit. He also refused to rule out a review of all subsidies during this month and adjust prices accordingly.

Jordan is one of the smallest economies in the Middle East and imports more than 90% of its oil. The kingdom is heavily reliant on foreign investment and grants to supplement its budget income and deficits.

An attempt to raise electricity prices, which are heavily subsidised by the government, resulted into mass protests and was quickly withdrawn. The country has also seen widespread industrial action by state employees, including teachers and healthcare professionals, as the government is refusing to increase their wages and allowances and meet other demands.

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