Jordan: Fuel Subsidy Reform

Until 2005, Jordan supported high fuel subsidies for the state-owned petroleum company, leading to distortions in its fiscal stability. Beginning in 2004, the government put in place fuel fiscal reform aimed at removing fuel subsidies in order to stabilize the country’s fiscal position and liberalize fuel prices, with a new system of automatic price adjustments. A social protection program was introduced to mitigate the effects from the increase in the price of oil that followed. The reform is considered to have been successful in reducing the fiscal burden of the fuel subsidies.