Jordan's prime minister defends price rise

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Associated Press

Posted on November 17, 2012 at 11:30 AM

Updated Saturday, Nov 17 at 11:30 AM

AMMAN, Jordan (AP) — Jordan's prime minister defended his decision to raise prices for subsidized fuel on Friday, four days after the move sparked unrest that left one person dead and scores wounded.

Protests across the country that featured rare calls for deposing the king turned unusually violent this week, threatening stability in the close U.S.-ally. One person was killed and 75 others, including 58 policemen, were injured in the violence.

Abdullah Ensour said shaky state finances forced him to hike prices for heating and cooking gas by 54 percent, and some oil derivatives by up to 28 percent. "It's a sound move meant to save the Jordanian economy from further deterioration," he told reporters.

He said that when he took office last month, he found that foreign currency reserves this year had shrunk by half to $10 billion, while unemployment and poverty stood at alarming levels.

"Economic indicators were alarming, the situation was dangerous and there were projections that it would impossible to navigate the ship in safe waters," he said.

Adding to the trouble were rising costs of fuels themselves, losses incurred by the subsidy program, a shortfall of donations from oil-producing Gulf Arabs, and disruptions in the flow of cheap Egyptian gas used for generating electricity. As a result, the budget deficit swelled to a new record high of $3 billion and debts grew by 20 percent this year, he said.

"It's a painful decision, but it had to be taken," said Ensour, a renowned economist and an ex-lawmaker who headed parliament's financial committee.

He said the removal of nearly all the state subsidies on fuel and gas products would spare the government further losses if oil prices went up, and generate funds that could be directed to needier economic sectors.

He assured low-income Jordanians that they will be compensated by $600 per year based on a household of six.

More austerity measures will be introduced, he added, including the merger of ministries and semi-independent institutions. The price hike decision is "irreversible," he said.

Jordan's economic moves were commended in a telephone call on Friday by U.S. Secretary of State Hillary Clinton to Jordan's King Abdullah II. A spokeswoman said she praised Jordan's government for trying to address the country's economic challenges and its commitment to political reform.

Jordan has so far weathered nearly two years of Arab unrest that has seen longtime rulers toppled in Egypt, Libya, Yemen and Tunisia. Its own street protests calling for political reforms have largely been peaceful.

Shortly after Ensour announced the price hike on Tuesday, thousands poured into the streets, pelting riot police with stones and torching police cars, government offices and private banks in the largest and most sustained protests to hit the country since the start of the region's uprisings.

Police say "outlaws" with criminal records took advantage of the disorder to rob banks and homes, attack police stations, courts and other government buildings and carry out carjackings. At least 157 people have been arrested since Tuesday.

Jordan has been hit by frequent, but small, anti-government protests over the past 23 months, but this week's demonstrations have shifted the focus from the government squarely to the king. So far, Abdullah has largely maintained control, partly by relinquishing some of his powers to parliament and amending several laws guaranteeing wider public freedoms.

No protests took place Saturday, but unions said they may hold a strike Sunday.

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