Jordan parliament approves controversial IMF-backed austerity measures

Jordan is set to embark on a series of punishing economic reforms after parliament voted to pass a controversial tax law, which should pave the way for IMF assistance to help the struggling kingdom.

The lower house approved a series of changes to the fiscal reforms on Sunday, which in their original form sparked angry protests in Jordan during the summer when details of the plans were first revealed.

The 36-article bill was altered to minimise the impact of tax hikes and other measures on lower and middle-earners, Prime Minister Omar al Razzaz said.

"The individuals who will be affected are the top 12 percent income earners, it won't affect middle and low income earners," Razzaz told deputies.

Razzaz warned parliament that the country would pay a heavy price if the bill was not passed, according to Reuters, as Jordan seeks to lower its huge debts through a combination of austerity measures and an IMF bail-out.

Many Jordanians disagree with Razzaz's assessment that the bill won't harm middle and low earners.

Jordan introduced sales tax and scrapped subsidies on bread earlier this year, as part of the IMF reforms for the debt-burdened country.

Razzaz also warned deputies that the interest on Jordan's loans were crippling the country and austerity was essential to trim the huge public sector and costly subsidies.

"We will pay a heavy price if we don't approve this law," he said before the vote.

Jordan has also been hit by high unemployment, disruptions to trade following fighting in neighbouring countries, and low investor confidence.

Amman has also sought help from its Gulf neighbours, including a $1 billion aid package from oil-rich Kuwait, Saudi Arabia and the UAE.