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Iran: Subsidy Cut Saves 20% on Budget
Source: iran-daily.com
Source Date: Monday, November 29, 2010
Focus: Institution and HR Management
Country: Iran (Islamic Republic of)
Created: Nov 29, 2010

The country’s subsidy reforms would save 20 percent of the country’s budget, Vice President for Parliamentary Affairs Mohammad Reza Mir Taj Al-Dini said。

“These savings equals to the credit set aside for national development in various fields and when added to the current figure would double this credit, increasing the rhythm of construction and progress more than two-fold,” he said, Presstv reported.

Taj al-Dini added that it was important that all Iranians would assist the government of President Mahmoud Ahmadinejad in implementing the new law, which will see the Islamic Republic slash subsidies in place since the 1979 Revolution.

During a trip to the northwestern Zanjan province last week, Ahmadinejad vowed to reveal the details of the subsidy reform plans in a national address.

The Iranian chief executive said 85 to 90 percent of the plans had been enforced, urging Iranians to save energy.

Addressing a national seminar on public transportation on Saturday, Ahmadinejad said the subsidy reform plan belongs to the society at large and once implemented, it will improve the financial status of the underprivileged strata of the society, IRNA reported.

“The government wants to implement this law in a manner that the economic conditions of the weak would improve and not subject them to pressure,” he noted.

The Iranian president also said that the country’s automobile drivers are the real supporters of the administration in enforcing the subsidy reform plan.

Ahmadinejad called for the optimal use of energy and said, “Energy consumption in Iran is four times the international average. By reducing this level only by one-fourth, the pace of growth and development will at least double.”

According to President Ahmadinejad, the costly subsidy system in the past created huge socioeconomic gaps and led to economic injustice.
“A review of 50 years of subsidy distribution shows that 30 percent of the society used 70 percent of the subsidies,” he stated.

The subsidy reform plan allows the government to gradually slash energy subsidies over the course of five years, with low-income families being compensated with direct cash handouts.

The initial stage of the government’s new subsidy plan started last month as the administration deposited cash payments into the bank accounts of people.

In a national address in late October, Ahmadinejad said the government would begin depositing payments into accounts opened for individuals two months before the implementation of the plan.

Some analysts have criticized the plan, saying it could trigger a hike in prices and stoke up inflation.

“The 78 dollars deposited into the people’s accounts is intended for two months and before the first installment is finished, the second one will be deposited,” Ahmadinejad said.
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