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Saudi Arabia wary of Jordan's economic crisis

June 9, 2018

Saudi Arabia says it will host a donors' conference of several Arab countries to discuss ways to support cash-strapped Jordan, which is facing mass demonstrations over the kingdom's austerity measures amid price hikes.

Jordan anti-government protest
Image: picture-alliance/dpa/J. Nasrallah

Rulers of Saudi Arabia, Jordan, the United Arab Emirates and Kuwait will meet on Sunday to discuss the ongoing economic crisis in Jordan, the Saudi Royal Court said in a statement on Saturday.

"They agreed to hold a meeting comprising the four countries… to discuss means of supporting Jordan to overcome its current crisis," the official Saudi Press Agency said.

Jordan, a US ally, is struggling to reduce its debt after securing $723-million (€613 million) loan from the International Monetary Fund (IMF) in 2016.

Jordan's new PM Razzaz discarded a controversial income tax bill that sparked angry protests in the country Image: picture-alliance/AP Images/K. Mazraawi

Mass protests against Amman's austerity measures forced Former Prime Minister Hani Mulki to step down on June 4.

Read more: Jordan's middle class revolt

In order to defuse anti-government protests, Jordan's new prime minister, Omar Razzaz, withdrew a controversial income tax bill on Thursday.

The legislation, backed by the IMF, would have increased taxes on employees by at least 5 percent and on companies by between 20 and 40 percent.

But the kingdom still faces a big challenge to balance popular demands with the need to curb public debt. The World Bank forecasts "weak growth prospects" for Jordan this year as well.

Riyadh and Washington are Amman's two major donors and are wary of the prospect of an expanding uprising in a strategically important country. The kingdom neighbors Egypt, Israel, Syria, Iraq and Saudi Arabia.

Jordan's economy has been affected by an influx of refugees from neighboring Iraq and SyriaImage: picture-alliance/AP Photo/R. Adayleh

'A change in attitude'

Prime Minister Razzaz said Thursday he would hold "broad consultations with civic bodies over a new tax system that will not trample on citizens' rights."

The most recent protests began when unions called for nationwide demonstrations.

"As unions, we've done our duty," said the head of Jordan's trade unions council, Ali al-Abous, after a meeting with Razzaz. "The meeting was very positive and we felt a change in attitude," he said.

Jordan's economy has suffered in recent years, affected by high unemployment and an influx of refugees from regional conflicts, particularly in neighboring Iraq and Syria. Jordan also hosts almost half of the roughly 5 million Palestinian refugees and their descendants in the region.

Since January, the country has seen numerous price rises for staples such as bread, as well as extra taxes on basic goods.

Fuel prices have risen five times since the start of the year, while electricity bills have increased by 55 percent since February.

Jordan: Protests continue despite resignation of prime minister

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shs/kms (AP, AFP)

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