* New cabinet formed after unprecedented consultations
* Ensour faces challenge of maintaining austerity
* New finance minister supports unpopular reforms
By Suleiman Al-Khalidi
AMMAN, March 30 (Reuters) - Jordan’s King Abdullah swore in a reformist government on Saturday tasked with pushing through austerity measures required under a loan agreement with the International Monetary Fund.
The cabinet lineup was confirmed after nearly three weeks of unprecedented consultations led by Prime Minister Abdullah Ensour, who himself was reappointed on March 9 after the king canvassed members of parliament.
The monarch’s rare consultations follow constitutional changes devolving powers away from the palace - a response to calls for reform prompted by uprisings across the Arab world and smaller scale protests inside Jordan.
King Abdullah previously hand-picked his prime ministers without consulting parliament and the 150 member assembly did not play a role in forming governments. The cabinet announced on Saturday was the smallest in four decades, with 18 ministers.
The appointment of former central bank governor Umayya Toukan as finance minister signalled a desire by lawmakers to press ahead with unpopular reforms sought by the IMF in return for a $2 billion loan.
U.S.-educated Toukan is a strong advocate of fiscal steps to reduce years of overspending by successive governments. The IMF pushed the kingdom to liberalise fuel prices last November, sparking several days of civil unrest, mainly across rural and tribal areas.
Ensour has faced down street protests, arguing a shift from broad subsidies towards targeted cash transfers to the poor was the only way to deal with a financial crisis that drove the deficit to over 12 percent of gross domestic product (GDP) and forced Jordan to seek IMF help.
The Fund has urged the country to continue to overhaul its costly subsidy scheme and raise electricity tariffs, which officials say will be hiked in June.
The IMF this month completed its first review of last year’s stand by arrangement with Jordan and applauded Ensour’s economic reforms, saying it saw some signs of economic recovery.
It said on March 11 its executive board could consider Jordan’s request for completion of the first review as early as April, making available the second tranche of about $385 million.
Jordan’s financial crisis has been deepened by a drop in Gulf aid which traditionally tops up the country’s coffers, and the economy has been strained by a flood of refugees from the two-year-old civil war in neighbouring Syria.
Ensour, untainted by corruption allegations, has held senior government posts in successive administrations.
He was appointed in October after the king dissolved parliament halfway through its four-year term to prepare for the country’s first parliamentary elections since the Arab Spring uprisings of 2011.
The constitutional changes transferred some of the monarch’s powers to parliament, which critics said had become sidelined, and restored to the government some executive powers which had shifted to the palace and security forces.