Monday, January 28, 2008

Jordan: - Over half of Jordan's 5.6 million people are on the brink of serious economic hardship

A vegetable market in downtown Amman. Prices of vegetables and other key food items are expected to skyrocket in the coming weeks

Over half of Jordan's 5.6 million people are on the brink of serious economic hardship as the country faces the prospect of an unexpectedly large increase in the cost of living.

Decisions to allow fuel prices to float freely and to lift subsidies on basic commodities - including food, cooking oil and gas - will come into effect when parliament endorses the draft budget for 2008, most likely in early February, according to members of parliament.

The 30 percent of the population currently deemed poor is likely to double, say economists and politicians, who also fear a rise in crime.

"We are spending millions to maintain security, but the deteriorating conditions of citizens will lead to more crimes as people will struggle to feed their children," warns Mohammad Akel, who represents the Baqa refugee camp in Jordan's parliament.

"Most of the middle class will gradually join the poor and the poor will become poorer," he said.

The government has said it has little option but to take such measures to balance the economy, which has a huge deficit resulting from decades of subsidising fuel and food prices.

"We are embarking on the most difficult year in the history of the kingdom as the middle class is being eroded," said another member of parliament, Mahmoud Kharabsheh.

Potato prices set to double

Fear is growing that rising fuel prices will have a domino effect on the price of services and basic food items, as well as transport and accommodation.

When the new measures come into effect, the price of a kilogram of potatoes is expected to rise to US$1.5 from its current price of 75 US cents. Exacerbating the situation is the recent severe frost that has killed crops over 5,000sqkm in the Jordan Valley.

Most of Jordan's food products are locally produced but the kingdom also imports tomatoes and potatoes from neighbouring countries.

Fuel prices

As of next month, fuel prices will be pegged to international market prices, leading to a 20-50 percent increase, said economists.

Over the past three years, fuel prices have been gradually going up, increasing by 300 percent.

This caused serious challenges to low income citizens, including public servants and hundreds of thousands who live on the minimum wage.

The average income of a teacher is US$300 a month, while the minimum wage is fixed at US$140.

In 2005, according to USAID-Jordan, possibly up to 30 percent of Jordanians lived below the country's declared poverty line of $36.58 per month.

The government’s department of statistics says that according to a 2007 study, 14.5 percent of the population are poor.

Bread prices frozen?

The government has meanwhile cancelled taxes on 13 basic commodities and promised to keep bread prices unchanged, having in mind two bread riots over the past two decades that threatened the stability of this small nation.

Economist Yusuf Mansur doubted there would be riots this time: "As long as the government does not increase the price of bread, the poor class will not rebel," he said.

Rising food prices in 2007 led to social unrest in a number of countries such as Mexico, Morocco, Uzbekistan, Guinea, Mauritania and Senegal.

Published with the permission of IRIN
Disclaimer: This material comes to you via IRIN, the humanitarian news and analysis service of the UN Office for the Coordination of Humanitarian Affairs. The opinions expressed do not necessarily reflect those of the United Nations or its Member States.
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