There is a consensus among economists that subsidy policy is the worst economic policy because, according to experts, it is the cause of price distortions and the misallocation of economic resources and prevents the optimal use of energy resources.
Economists insisted during the seminar "Dimensions of the Liberalization of Petroleum Products Prices in Jordan" held by the University of Jordan today that subsidy policy lead to increased trade deficits through increased reliance on imported energy, thus contributing to the decline in foreign reserves and increasing debt burdens.
Economists noted that a considerable portion of the supported energy seeps for non-Jordanian residents, which is due to Jordan's population composition and having many Arab residents in light of the uprisings in the region.
The experts stressed that despite the rationale for not adopting subsidy policy but the decision to lift fuel subsidies taken by the government recently didn't gain popularity, especially with regards to the financial conditions that prevailed in the state, not to mention that decision was made in the absence of the House of Representatives.
UJ's President, Prof. Ekhleif Al Tarawneh said the aim of the symposium is to reach a scientific opinion regarding the issue and in promote dialogue, participation and views on issues of concern to the Jordanian arena.
UJ holds such seminars on the basis of its role as an academic facility that serves the surroundings to provide decision makers a solid database to resort to it when making decisions, said Tarawneh.
Dr. Mohamed Adinat professor of economics at the University of Jordan, Said timing of the decision was not appropriate, confirming the presence of several alternatives for the removal of subsidies at the current time.
Adinat added that the lack of clear mechanisms and policies to bridge the budget deficit would definitely lead to economic inflation and the government will stand helpless in front of financing the budget deficit.
Aladinat called the government to exert more effort to enhance local revenues and fight tax evasion and organize tender mechanisms and called for the issuing of Islamic Bonds law and end support of the inefficient Petroleum Refinery.
And on the subsidy mechanisms, Dr. Taleb Awad the Director of the Economic Observatory at the University revealed that government neglected the impact of the removal of subsidies on the industrial sector in Jordan, particularly competitive enterprises which rely on intensive energy and exposed to intense international competition.
In light of the wide compensation coverage the good part went to non-target groups due to the inaccuracy of information about household incomes, added Awad.
For his part, Dr. Ahmed Salaymeh, Director of the Center for Water, Energy and Environment at the University, displayed possible energy alternatives for Jordan, noting that Jordan is still importing 96% of its energy needs.
Salaymeh called for a national dialogue involving all competent authorities to compose recommendations to help solve the energy problem and the need to intensify efforts to explore new sources of energy.
Also, there is a need to reconsider the national strategy for the energy sector to become more adapted to reality and resolve the issue of the Jordanian nuclear program and provide the right climate to attract foreign companies to explore for oil and gas, he stressed.
Salaymeh pointed to the possibility of approving legislation to reduce energy consumption and find the appropriate mechanism for the application of national codes and buildings classification and according to their energy consumption, In addition to the application of night-time electricity tariff on the housing sector.
It is noteworthy that UJ will hold a press conference to announce the recommendations of the seminar at 3 PM on Wednesday, at Muhammad Ali Bdair Auditorium at the administration building.
Dr. Rula Hroob the Director of Information and Public Relations Unit steered the seminar.
The seminar was attended by Vice Presidents and several deans and representatives of ministries, institutions and a number of interested persons.