His successor, Hamad Kasasbeh, should reintroduce Fariz’s policy when he presents the government’s budget in December. The cost of subsidising its citizens’ car journeys is crippling Jordan’s public finances.
At the beginning of 2007, the government forecast a budget deficit of JD385m ($544m) for the calendar year. In early November, after months of steadily increasing petrol prices, it revised its forecast deficit to JD561m. With oil now at almost $100 a barrel, the eventual deficit will be even higher.
Kasasbeh will need the support of Jordan’s new cabinet. The new prime minister, Nader Dahabi, is an unknown quantity, but he kept Kasasbeh as his finance minister in the full knowledge that Kasasbeh had committed the government to end fuel subsidies by the beginning of 2008.
The reaction from ordinary Jordanians will determine the finance minister’s fate. When Fariz resigned, many Jordanians were outraged that their finance minister wanted them to pay more to use their cars. In an economy that is largely dominated by the state, the price of petrol is seen as something set by politicians, rather than as a function of an international market.
Dahabi has already called for a modern public transport system in Amman that will encourage people to use their cars less. But the government cannot afford to wait until Amman has a metro system, or even a better bus system. While cutting subsidies is fraught with political difficulties the government must make significant strides in that direction.