Iranian president puts blame for inflation on sanctions

Business Materials 5 May 2012 11:54 (UTC +04:00)

Azerbaijan, Baku, May 5/Trend M. Moezzi

President Mahmoud Ahmadinejad blames international sanctions, not his administration's shortcomings as the reason for Iran's surging inflation and the devaluation of its currency.

At a meeting with members of the Majlis' (parliament) Economic Development Commission Ahmadinejad admitted some failures on the part of his team but insisted that sanctions have cause the devaluation of the rial against the dollar and the resulting inflation, Moj news agency quotes the commission's head, Gholamreza Mesbahi Moghadam, as saying.

The president asked to use Iran's foreign exchange reserves and that changes be made to the fund's regulations so he could use it for the manufacturing sector. Mesbahi Moghadam said that request will most likely be rejected.

The commission members also expressed their worries over implementing the second phase of Iran's subsidies reform plan and how the program will have any income to pay for expenses.

Started in December 2011, the subsidy program pays out $37 (USD), to Iranians while eliminating subsidies for energy carriers and some commodities. Recently, the Iranian government transferred about $23, to Iranians' accounts for the second phase of the program without approval from the Majlis (parliament). Thirty percent of the income from the subsidies reform program was to be routed to the industrial sector to help offset higher energy costs. The subsidies program, which was supposed to pay for itself, has a $16 billion deficit.