DEAD SEA -- An International Monetary Fund (IMF) official on Saturday said Jordan is expected to liberalise electricity prices this summer.
Masood Ahmed, director of the IMF's Middle East and Central Asia Department, said the government was supposed to remove subsidies on electricity prices to stop financial losses of the state-owned power company earlier this year but preferred to discuss the issue further with lawmakers and the public.
Speaking to journalists on the sidelines of the World Economic Forum, Ahmed described the government's policy to lift fuel subsidies in November last year while providing direct cash support to low-income households as successful.
Last year, Jordan and the IMF agreed on an economic reform programme to enable the country to benefit from a $2 billion loan under a Stand-By Agreement.
However, once authorities decide to liberalise electricity prices, no cash support will be extended to poor consumers, Ahmed said.
Instead, the government can raise electricity tariffs according to consumption; for instance households consuming 200 kilowatts or less can be subject to lower charges than households consuming more power, the IMF official noted.
On subsidies in general, Ahmed said their benefits go mainly to the better off, adding subsidies are a burden on government budgets at the expense of much needed investments in important sectors that provide services and employment to people.
He cited IMF estimates showing that energy subsidies in the Middle East cost close to $240 billion in 2011, which accounts for about one-half of global energy subsidies.
© Jordan Times 2013
