Financial Times FT.com

Oil price poses threat to Jordan's stability

By Tobias Buck in Amman

Published: April 5 2008 03:00 | Last updated: April 5 2008 03:00

The sharp rise in oil prices over the past year has provided a massive economic boost for many Arab states. In Jordan, however, it has forced the government into a delicate balancing act in order to preserve political and fiscal stability.

Unlike most of its neighbours, Jordan does not sit on vast oil and gas riches. All the same, the kingdom has for many years offered citizens generous subsidies to purchase cheap petrol and heating fuel. Yet with oil climbing towards - and recently topping - the $100 a barrel mark, the cabinet has been forced to reduce subsidies steadily to prevent soaring deficits. In February this year, they were eliminated entirely.

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