Iran to cut subsidies to rich
By Sara Rajabova
Iranian government is mulling over measures to stop monthly cash subsidies to rich and overseas Iranian nationals.
Mohammad Baqer Nobakht, Head of Iran's Management and Planning Organization has said the government intends to cut cash subsidies to financially-fit Iranians and those who live overseas, IRNA news agency reported.
The elimination of state subsidies to rich Iranians was on the agenda of President Hassan Rouhani’s administration for some time. However, lack of a comprehensive database hindered efforts to identify the rich people who are receiving the payment. Therefore, implementing measures to regulate subsidies have been delayed.
Withholding the subsidies of high-income households has been on agenda for a few months, but there was no necessity to break the news to the public, according to Nobakht.
The administration of former president Mahmoud Ahmadinejad implemented the first stage of the subsidy reform plan toward the end of 2010.
The subsidy reform plan is aimed at easing pressure on state finances by cutting tens of billions of dollars from government subsidies on food and fuel. The government pays 45,500 rials (about $18) cash to each citizen as compensation for increased prices by cutting subsides.
Pointing out that the government cares about how the money saved is going to be used, Nobakht said 48 trillion rials (about $1.7 billion) of the sum will be used to subsidize the healthcare sector and 10 trillion rials (about $340 million) of this sum will be allocated to create job opportunities.
He further noted that next Iranian fiscal year (starting March 21), 13 trillion rials saved through the country’s subsidies reform plan will go into small banking facilities as real estate mortgage.
Last April Iran's President, Hassan Rouhani announced that the government spends about $1.4 billion (based on then official rate of 25,500 rials per each $) per month on the cash subsidies for citizens. The cash subsidies impose about $392 million deficit in the budget per month for administration, he noted.
The subsidy system has been inherited from the Iran-Iraq war era but never abolished. Iran is one of the largest gasoline consumers in the world, ranking second behind the United States in consumption per car. The government subsidy reform has been in the making for various reasons over several years. Earlier, Iran's Supreme Leader has backed the government's latest subsidy reform plan.
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Sara Rajabova is AzerNews’ staff journalist, follow her on
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