November 15, 2013 / 1:26 PM / 6 years ago

Jordan sees Syria refugee costs soar, vows subsidy reform

BEIRUT (Reuters) - Jordan said on Friday the total cost of hosting Syrian refugees in 2013 and 2014 would exceed $5 billion, more than previously estimated, but vowed to stick with painful economic reforms including the removal of power subsidies.

Finance Minister Umayya Toukan attributed the escalating costs mainly to the need for more infrastructure to alleviate overcrowding in Jordan, now home to more than 600,000 refugees from the civil war in neighbouring Syria according to U.N. data.

Toukan said Jordan’s own estimates put the number of Syrian refugees somewhat higher, at between 700,000 and 1 million.

“The numbers are continuing to increase... Our schools and hospitals and all our infrastructure are overcrowded,” he said on the sidelines of a Union of Arab Banks’ conference in Beirut.

“This is not just to accommodate refugees in the same classroom any more, you have to build new schools, new hospitals,” Toukan told Reuters in an interview, adding Jordan would need more international support to host the Syrians.

The United Nations has estimated the cost of hosting the refugees at $2.1 billion for 2013 and $3.2 billion for 2014, he said. Jordan’s own estimate just for 2013 was $1.5 billion.

The growing burden comes as the kingdom recovers from an acute financial crisis last year when foreign aid fell and welfare payments and its energy import bill both leapt, forcing it to take a $2 billion International Monetary Fund loan.


Under reforms agreed with the IMF, electricity prices for households will rise next year as part of a gradual four-year removal of subsidies.

“On January 1 (prices) will go up 15 percent each year, so that by 2017 the electricity selling price should be equal to the cost of production,” said Toukan, adding the government was committed to the plan despite concerns about protests.

Arab governments have long used subsidised fuel and electricity to try to prevent unrest among their populations. After the wave of Arab Spring revolts that toppled four leaders across the region, removing them has been seen as very risky.

“Of course we are concerned, but if you have the political will you should proceed with the reforms because the economy will be much healthier,” said Toukan.

He said Arab countries spend a total of around $200 billion in fuel and electricity subsidies, which mainly benefited big consumers and the wealthy.

The only way Jordan’s subsidy removal plan could be derailed, he said, was a parliamentary vote of no-confidence that brought down the government.

If the reform plans go ahead, Toukan said Jordan’s fiscal position would improve greatly in the next two or three years.

“Looking ahead, I think we have a very good outlook if we are patient and work hard now,” he said. “This is like medicine, nobody wants to take it. But we’ll be much healthier if we do.”

Editing by Gareth Jones

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