AMMAN, Jordan, April 17 (UPI) -- Jordanians faced price hikes of bread and oil derivatives Wednesday for the second time in less than a year following cuts in government subsidies made to renew economic reforms sought by the International Monetary Fund and to reschedule its $3.8 billion debt to the Paris Club for 30 years. Jordan's total foreign debt stands at $7 billion
Government officials said the "minimum" price increase would save the treasury 60 million Jordanian dinars ($84.5 million) this year and would keep the budget deficit within the predicted 6.5 percent, or 100 million dinars ($141 million).
The Jordanian Cabinet ordered the subsidy cuts late Tuesday after what officials said were long and intense negotiations with the IM. The price of a gas cylinder used for cooking and heating rose from 2.4 dinars ($3.40) to 2.5 dinars ($3.53). Kerosene and diesel, also used for heating, was hiked from 110 fils (15 cents) to 120 fils (17 cents) per liter. The government less than a year ago increased the price of oil derivatives by 15 percent and announced its aim was to eventually remove government subsidies altogether.
Amman also decided to hike slightly the cost of a kilogram of bread from 150 fils (21 cents) to 160 fils (23 cents) as of next Saturday. But officials said that would still cost the government 45 million dinars ($63.4 million) a year in bread and cereal subsidies.
Officials said government subsidies of oil derivatives cost the treasury 115 million dinars ($162 million) a year, although Jordan receives all its oil needs from Iraq at concessionary prices, and some of it for free.
Jordan first raised the cost of fuel in 1989, sparking widespread riots across the country that eventually led to the first free parliamentary elections in 25 years. Riots also swept the impoverished southern Jordan when the government first increased prices of bread and cereal in 1996.
Around one-third of Jordan's 5.2 million population lives below the poverty line. The annual per capita income stood at $1,716 last year.
In what analysts said was a clear effort to avert potential unrest in the kingdom, the government also decided on Tuesday to allocate part of the funds saved to add 5 dinars ($7) to the monthly salaries of civil servants and retired government employees.
