Tuesday,24 October, 2017
Current issue | Issue 1123, 22-28 November 2012-
Tuesday,24 October, 2017
Issue 1123, 22-28 November 2012-

Ahram Weekly

Austerity or stability?

Muna Awwad reports on why the Jordanian government is finding itself between a rock and a hard place

Jordan strikes
Jordan strikes
Al-Ahram Weekly

The Hashemite Kingdom of Jordan has recently been witnessing an unprecedented wave of popular protests and strikes triggered by a government decision to lift fuel subsidies. The situation in Jordan seems to be heading to a dead-end; people are calling for an immediate overturning of the decision, while authorities stress that the step was inevitable and the only option to save the country’s deteriorating economy that stands on the verge of a major crisis.
Analyst and columnist in Al-Ghad newspaper, Fahed Al-Khitan, described the current scene in Jordan saying: “In both cases, we are in serious trouble; lifting subsidies means more poverty, unemployment, price hikes, and popular anger, while delaying the lift of subsidies would increase the budget deficit and the state’s failure to fulfil its basic obligations. The decision cannot be delayed due to the absence of any Gulf aid to Jordan and any alternative for the Egyptian gas supply, while people will remain in the streets if it was not cancelled.”
The Jordanian Cabinet announced 13 November its decision to lift subsidies on oil derivatives, raising the prices of four fuel products. Prime Minister Abdallah Nsour, made the announcement himself in an interview with Jordan’s official TV station. He said “the government has endorsed several measures to cut spending, in addition to policies that would raise state revenues,” assuring that Jordan had lost 4-5 billion Jordanian Dinars (JD) due to oil cut-out, especially of Egyptian gas. He added: “expenses in 2012 exceeded revenues by approximately JD3 billion.”
It all started in July when the International Monetary Fund (IMF) announced that it had reached a preliminary agreement with Jordan for a $2 billion loan to support the country’s economic reform programme. Approval of the loan came in response to a critical economic crisis in Jordan.
“Jordan was hit by a series of external shocks in the past year. Repeated sabotage of the Arab Gas Pipeline in the Sinai Peninsula reduced average daily flows of natural gas from Egypt. This necessitated an increase in imports of expensive fuel products for electricity generation while oil prices were high. At the same time, regional tensions adversely affected tourism, remittances and foreign direct investment. As a result, growth slowed significantly, investor confidence weakened, and the external current account deficit (including grants) widened. In addition to that, budgetary pressures were further exacerbated by the need to provide housing and medical services to refugees from Syria,” explains Kristina Kostial, the IMF mission chief in Jordan.
The approval of the loan forced the state to adopt certain adjustments in order to meet the requirements of the IMF agreement.
Economic analyst Abdel-Razzak Bani Hani told Al-Ahram Weekly, “when a country borrows from the IMF, its government agrees to adjust its economic policies to overcome the problems that led it to seek financial aid from the international community. These loan conditions also serve to ensure that the country will be able to repay the Fund.”
In this context, Jordanian Finance Minister Suleiman Hafez said that Jordan’s government has coordinated with the IMF and the World Bank to secure sufficient financing.
Bani Hani added: “even taking this decision or any other measures will not solve Jordan’s financial crisis in the short term,” Bani Hani said.
In spite of the fact that the Jordanian authorities have been preparing the public since July for this decision, which would also increase the price of all basic commodities and services, popular protests broke out in the streets of the capital Amman and other governorates even before Prime Minister Nsour completed his TV interview. And for the first time, Jordanians in the streets demanded the fall of the regime.
“We cannot deny the involvement of the regime in the current economic crisis; the crisis is a result of a series of successive economic policies that the regime enhanced and approved, by privatising Jordan’s main resource companies, and ignoring a number of corruption cases that have cost Jordan a lot of loss and caused the current deficit in the state budget. It is not fair for us citizens to pay the price the corruption of the regime caused in the budget,” activist Zeid Fayez told Al-Ahram Weekly.
While the majority of protesters are mere angry people whose lives are affected by the price hikes, members of the elite participated in the popular action to stress that the state is able to solve the economic problem without having to reach into the citizens’ pockets.
Member of the popular movement Nihad Zuheir also told the Weekly, “it’s all about the state’s economic system. It’s been years since we started advising the regime to take real steps to save the economy. The progressive tax system stated in the constitution is totally ignored by the state. The huge number of ministries that basically do nothing, in addition to many independent institutions linked to the state that hire officials’ relatives for extraordinary salaries; selling Jordan’s companies for very low prices in a corrupted way — all those non-citizen-related issues can help in the state budget. But the state does not have the will to take such steps because the interests of those who are involved in the corruption is linked directly to those who rule the state.”
In addition to continuous popular action, Jordan’s professional associations and trade unions started a strike and threatened to escalate their action if the government did not retreat from the decision.
However, Prime Minister Nsour assured in several statements after the street explosion that the government will not back down on its decision.
 “The government counts on the Jordanian people’s understanding of the reason that forced such decision,” he said.

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