Thursday, December 27, 2007

Waiting for shit to hit the fan

According to plans, the New Year will witness final lifting of subsidies on fuel. The 2008 budget carries no provisions for subsidies, and the government is promising to spend 300 million dinars on a “social safety net”, which includes a pay raise for government workers to offset the expected effects.

According to reports, the pay raises will be in the ball park of 30 dinars for people making less than 300 dinars per month, and lower amounts for people who make more. On the other hand, the minister of energy expects that the cylinder of liquefied petroleum gas, which is currently sold at 4.75 dinars will go up to a whopping 9.90 dinars when the subsidies are lifted. If a family is using LPG for heating, it can easily use 6 cylinders per month, effectively wiping out the pay raise in a single blow. Of course, LPG is only one commodity of many that will become more expensive.

The current pricing scheme (as far as anybody can tell) overprices gasoline and uses to surplus to lower the costs of other products such as diesel and kerosene. The previous government tried to impose a “quality tax” on gasoline, but the parliament refused. I read today that the government will try this again. It is not clear whether the point is to use the money to continue subsidizing diesel and LPG or just to raise money. The government sometimes imposes taxes for a specific purpose and then decides to pocket the money instead (like the University Fees Tax).

Anyway, most people are pessimistic, and expect a massive wave of inflation that will be difficult for poorer people to handle. Surprisingly, nobody thinks that a special parliamentary session to discuss inflation will lead to anything useful. I wonder why.

So we are in a wait and see mode. Everybody expects a lower standard of living, the question is how much lower, and how will society cope?

6 Comments:

At 6:10 PM, Anonymous Ahmad Al-Sholi said...

I hope that organized crime, prostitution rates don't go up like in so many poor societies.

 
At 8:46 PM, Anonymous Anonymous said...

Dear Khalaf,
It is scandalous that the likes of Fahed Al Fanek are still being quoted as the father of Jordanian columnists. He is already warning about the “return” of the Jordanian welfare state http://www.alrai.com/pages.php?opinion_id=7312 on the occasion of شبكة "الهيلمان" http://www.alarabalyawm.net/pages.php?articles_id=3314 .

On the other hand his other respectable ex upper house, senile colleague did not blink when he wrote provoking an attack on Ghassan (Calvin clein) bin Jeddo http://www.alrai.com/pages.php?opinion_id=7254

I think both of the above had matured in the same circumstances as Tonny Benn. However, the formers would argue that they are more realistic and national.

Merry Christmas

El Erhaymy

 
At 8:58 PM, Anonymous Anonymous said...

This revelation hit me much harder than Amman bombings, I still want to believe that it isn't true but I'm afraid its a fait accompli.

 
At 8:19 AM, Blogger Masalha1 said...

Khalaf,
The expected pay raise will be eaten by the 96% increase of the LPG alone, yet once that raise is approved watch for those adds in the newspapers thanking the government for it generosity of allowing us to breath free oxygin.
Can any economist out there tell me or our out of touch government what is wrong with setting the price of gasoline used by rich people's 4x4's cars to 20Jd for instance and use the extra money along with 300 million Jd allocated to the so called social safety net, to susidize the deisel and LPG which is used by the poor?
What is wrong with replacing all government vehicles with a 1300cc size engines and assigning one car per minister instead of three vehicles, one of which is a 4x4 6000cc engin?
You know a man can go to bed hungry, but to watch his children go to bed cold and hungry is an unbearable thought, and he is not only willing to steal but is willing to kill for it, and as Ahmad said crime rate will go up despite his and other's hopes.
We have become a society of sheeps where governments are telling us how eat, breath, think, work and at the end of the day we have to support our corrupted and spoiled government's behavior, and be grateful to the government kindness of allowing you to even breath that free and polluted air.

 
At 12:32 AM, Blogger Don Cox said...

It always hurts when subsidies are removed. That is one reason why they are a bad thing. The other reason is that they distort the economy.

 
At 5:09 PM, Anonymous Anonymous said...

im thinking to go to jordan by my car its big and it has a big engine this mean its good reliable car especially for travelling.but am i suppose to save couple of (JD)and go to jordan to spend them on fuel ????why all the time there are people who can(not deserve) drive cars in jordan but the rest cant!!!!!!!!!maybe i will buy a bike for the trip.

 

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