Report: Iran administration uses development budget to pay cash subsidies

Azerbaijan, Baku, Dec. 25 /Trend, F. Milad/

One year after starting the implementation of the Subsidy Reform Plan, the Iranian government announced that except for financial resources which had been allocated to the plan, development budgets have also been used to pay cash subsidies to the public. Although some members of the parliament and experts who preside over the plan warned several times that the government has violated some regulations, but the government did not accept the criticisms.

Both the reform plan's speaker and chairman had ensured people that the plan enjoys sufficient budget. But, in fact, the government faced budget deficit. So, it used development budget to cope with the problem.

First time, Abdolreza Rahmani Fazli, the Supreme Audit Court of Iran Abdol Reza Rahmani Fazli, revealed that the government has received loans and cash facilities from the Central Bank to pay subsidies.

But, the government paid no heed to the Supreme Audit Court's director. Just the economy minister, Shamseddin Hosseini, announced that the Central Bank loans will soon be settled. Behrouz Moradi, the head of the Subsidy Reform Organization said that the government used a portion of the development budget last year to pay the subsidies. According to him, the government has used 20 percent of its share in liberalizing prices to pay cash subsidies to the public.

According to the law for reforming payment of subsidies, money which is earned through liberalizing prices should be divided into 20 percent of the government's share, 30 percent of the production sector's share, and 50 percent of paying cash subsidies.

The share percentage, of course, was changed in the 2011 budget act and the share of the production sector decreased to 10 percent. But, no money has so far been paid in cash subsidies to the production sector.

The Supreme Audit Court's director had previously announced that the 2010 budget act has faced 18 percent deficit due to the fact that the government had expended over 148 trillion rials (some $14.8 billion) through receiving loans from the Central Bank, selling oil and drawing from the development budget. But, surprisingly the Subsidy Reform Organization's head claimed that the government had faced no budget deficit last year.

This year, 500 trillion rials has been allocated to the Subsidy Reform Plan, of which 400 trillion rials will be the share of the government and the public. Last year, the government's share was also 20 percent. But, it allocated its share to the development and current budgets. Considering that fuel prices have gone up, the government should have compensated the costs through using its 20 percent share. But, it followed the policy of saving as a makeshift.