* Cutting $2.3 bln subsidy bill crucial to ease budget woes
* Prices rises spark protests around country
* PM says Arab spring cost Jordan financially
(Adds PM remarks on economic crisis)
By Suleiman Al-Khalidi
AMMAN, Nov 13 Jordan lifted fuel subsidies on
Tuesday, aiming to reduce the budget deficit and secure a
$2-billion IMF loan, but sparking public protests as gasoline
and other prices soared.
More than 1,000 people hit the streets in the capital Amman
and small protests erupted in several provincial towns after
Islamist and tribal opposition groups said they would
demonstrate. Authorities increased security measures across the
The move, announced by the cabinet and which takes effect
after midnight, is the first major rise in petrol prices since
street protests early last year, inspired by the wave of Arab
unrest, pushed Jordanian authorities to expand social spending
and freeze major fuel price hikes.
The price rises range from more than 50 percent for bottled
gas used for cooking, 33 percent for diesel and kerosene for
transport and heating and a 14 percent on lower grade petrol.
The government, mindful of public fury that exploded into
street clashes in the depressed south of the country after price
hikes in 1989 and 1996, had been reluctant to raise fuel prices.
Prime Minister Abdullah Ensour told state television that
the price hikes were now unavoidable.
"If the move was delayed we would have faced a catastrophe
and insolvency," he said.
The budget deficit is forecast to rise to $3.5 billion this
year, he added, without saying how much would be saved by
cutting the subsidies. Jordan had been spending $2.3 billion
annually on subsidies, almost a quarter of its annual budget.
"The fiscal situation of the kingdom had been heavily
impacted by the Arab spring," Ensour said.
The bombing of a pipeline bringing Egyptian gas has forced
Jordan to switch to costlier fuels for power generation and
Saudi Arabia declined to repeat this year its payment of a $1.4
billion cash injection to stop the economy heading to the brink
Jordan hopes the subsidy cuts will show its commitment to
fiscal consolidation and win support from the International
Monetary Fund, Western and Arab aid, and help it tap capital
markets in a Eurobond issue.
Economists have said Jordan's ability to maintain a costly
subsidy system and a large bloated state bureaucracy, whose
salaries consume the bulk of state expenditure, was increasingly
untenable in the absence of large foreign capital inflows or
infusions of foreign aid.
Ensour said direct cash transfers that begin to be disbursed
to Jordan's poorest households within a week to mitigate the
price impact. He also promised that energy prices would be
adjusted lower if oil prices fell below $100 a barrel.
(Reporting by Suleiman Al-Khalidi; Editing by Robin Pomeroy)