Cash Subsidies Hit $60 Billion in 7 Yrs.

EghtesadOnline: Around 2,400 trillion rials ($60 billion at market exchange rate) have been paid as cash subsidies under the so-called "Subsidy Reform Plan" ever since the controversial scheme came into effect in 2010.

News ID: ۷۳۹۳۵۲

22 January 2017

Long before the plan's implementation, Iranians enjoyed food and energy subsidies. However, as per the plan, the subsidies were removed for the most part and, in return, it was decided that almost every Iranian citizen be paid 455,000 rials (about $12) on a monthly basis.

The plan, analysts believe, has brought nothing but inflation for the people and an economic burden for the government, a report by the Persian daily Iran claims.

According to a report by the Ministry of Economic Affairs and Finance, Iranian households' purchasing power declined by 25% since the plan was put into effect.

“Currently, 31% of Iranian households live below the poverty line,” the report said.

According to Financial Tribune, the Iranian Parliament’s Research Center believes the wasteful monthly distribution of over 34,000 billion rials ($850 million) among citizens has done little to improve productivity or reduce energy consumption.

With the government's tight budget in the light of reduced oil revenues, it has become increasingly difficult to sustain the controversial program.

The administration of President Hassan Rouhani has kept the plan it inherited from the government of former president, Mahmoud Ahmadinejad, going, albeit reluctantly. After all, an overnight cancellation of the scheme, as many experts have argued, could translate into political suicide as the recipients, mostly ordinary citizens from the low income population, have grown accustomed to the monthly stipend over the years. This is while the upcoming presidential election is also drawing close in May.

Nonetheless, the incumbent government has moved to restrict the number of cash subsidy recipients, slowly but steadily.

So far, about seven million people from a population of 80 million have been delisted, Eghtesad Online reported.

Earlier this month, Minister of Cooperatives, Labor and Social Welfare Ali Rabiei said a notice of discontinuance of cash subsidies will be sent to three million Iranians by text message.

He added that they can object upon receiving the message and their case will be reviewed by officials.

In April 2016, Mohammad Reza Pour-Ebrahimi, the head of Majlis Economic Commission, announced that the government has been tasked by the parliament to remove 24 million people from the list of cash subsidy recipients and spend the saved financial resources on job creation.