Azerbaijan, Baku, Dec.23 /Trend, A.Yusifzade /
Iran's unemployment rate over the summer and autumn will be announced at the same time, the head of Iran's Statistics Center Adel Azar was quoted by Mehr as saying.
The Economist has predicted in his September report that the unemployment rate in Iran in the current calendar year ending March 21, 2011 will reach 13.2 percent.
ISNA news agency quoted the report as citing the workforce in Iran last year being 25 million with 12.9 percent unemployed.
This year the workforce will rise to 25.7 million with 13.2 percent unemployment, the report said.
Iran says it has brought inflation from above 25% in 2008-a time of region wide overheating due to soaring oil prices-to under 10% this year. The IMF, too, estimates inflation is now about 10%, but warns that the subsidy cuts could send the rate to 30%.
President Ahmadinejad said that all subsidies would gradually be removed during a five-year period.
Under the new rationing system, the price of gasoline raised four-fold from 1,000 rials (10 cents) per liter to 4,000 rials (40 cents) per liter as of Sunday. Fuel beyond a person's quota -- which is 50 liters per month -- is now sold at 7,000 rials (70 cents) per liter, up from 40 cents.
The Iranian government also said in an announcement that it will also cut subsidies of diesel, kerosene, natural gas, electricity and water.
Supporters of the plan say it is in line with global financial organizations' recommendations that Iran get rid of a heavily subsidized economy if it wants to solve its economic problems. But, some analysts have criticized the plan, saying it could trigger a hike in prices and stoke up inflation in the country.
"Price correction is expected to dampen aggregate demand, further weakening economic growth, hence the likelihood of still greater unemployment," Hassan Hakimian, director of the London Middle East Institute and reader in economics at SOAS in London was quoted by Evronews as saying. That would be similar to the experience of oil-importing countries in the 1970s following the first oil price shock in 1973/74, he said.
President Mahmoud Ahmadinejad has promised a boost to the Iranian economy and eradication of poverty with the reform plans that his government began implementing on Sunday.
Food, natural gas and petrol are among the key consumer goods included in the plan, which aims at a "better distribution of wealth among the public," Ahmadinejad as saying. Energy subsidies have cost Iran $100 billion a year.
The abolition of price subsidies is considered a "structural challenge" for most oil-rich economies, Hakimian said. "Iran epitomizes this challenge best given the country's large population and decades of populist policies stressing redistribution rather than growth," he said. "The budgetary burden of the extensive subsidies, which exceeds Iran's annual oil revenues, as well as excess consumption and possible wastage associated with artificially low prices, have added to the urgency of price reforms although the timing of the programme as well as the manner of its implementation have raised many eye-brows".
"It has to be done, but this is the worst time," according to Ali Ansari, professor of Iranian Studies at the University of St. Andrews in Scotland. "The best time for cutting subsidies would be when the oil prices were very high," he said, adding that not only it is an inappropriate time to slash subsidies because of the economic and political situation, but also because it is the middle of the winter.
The implementation of the subsidy cuts carries "a huge amount of political risk" for a government that is not "popular," Ansari said.
Most economists support the need for price corrections, according to Hakimian, but there is more divergence on the timing and the manner of implementation. "A gradualist price reform package would have been preferred to the shock therapy approach adopted, which is expected to be highly inflationary in the short term." Iran's inflation rate was already above nine percent in November.
Iran is subject to Western economic sanctions and has been suffering from slow growth in the last two years. The economy has been sluggish since 2008, and the country's Central Bank has not been publishing figures for annual GDP growth rate. The International Monetary Fund , estimates Iran's economy has grown by one to two percent in the past two years, in contrast to the five to seven percent annual growth previously, Hakimian said.