Jordan cuts taxes before protests

Jordanians complain of growing unemployment as inflation last month reached 6.1 percent.

Jordan cuts taxes before protests

Jordan approved on Tuesday a $225 million package to keep commodity price pressures in check and cut some fuel prices to mitigate the impact of high food prices on the country's poor, officials said.

Several left-leaning, labour and tribal opposition groups have called on Jordanians to rally next Friday after prayers in several cities and towns to protest the rise in prices and the economic policies they blame for worsening their plight.

The measures announced by the cabinet after a session to implement directives by King Abdullah to find ways to control food price rises, include a 6 percent drop in the price of kerosene, widely used for domestic heating and a 5 percent drop in the price of gasoline.

The latest steps also include reducing the cost of sugar and rice sold in state-run supermarkets by 10 percent and enforcing price caps on food price hikes, a cabinet statement said.

Securing basic staples is politically sensitive in Jordan and analysts say the government is particularly wary now because it wants to head off any kind of unrest similar to riots in Algeria, triggered by a sharp rise in food prices and in Tunis over worsening living standards.

Jordanians complain of growing unemployment as inflation last month reached 6.1 percent.

The kingdom had witnessed civil unrest in the past over fuel price hikes and when it sought to end bread subsidies.

Finance Minister Mohammad Abu Hammour told Reuters the new measures would cost the state coffers an extra 160 million dinars annually ($225.6 million) but without missing the budget deficit target for 2011 by reallocating priorities.

The budget deficit is expected to narrow to 5 percent of gross domestic product this year after tough spending cuts the kingdom began implementing since last year.

The budget deficit hit a record $2 billion in 2009 or 9 percent of GDP, as public finances came under strain after the global downturn hurt domestic demand and capital inflows from the Gulf.

The government has already allocated 170 million dinars in the 2011 budget to subsidise bread on which many poor in the country of 7 million people depend, officials said. ($1 = 0.709 dinar)


Agencies

Last Mod: 12 Ocak 2011, 13:23
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