Azerbaijan, Baku, Feb.19 / Trend F.Mehdi/
The administration of Iranian President Mahmoud Ahmadinejad may face up to 171 trillion rials (about $13.8 billion) deficit for paying cash subsidies in line with the subsidy reform plan in the current Iranian calendar year which ends on March 20, the Mehr News Agency reported.
During the first half of the current year, the administration faced 47.701 trillion rials (about $3.8 billion) deficit.
If the same situation continuous, its budget deficit will amount to 171 trillion rials, according to reports released by financial supervisory organizations.
Based on the reports, the subsidy reform organization has earned some 240 trillion rials in the first half of the year and paid 205 trillion rials in cash subsidies.
This is while the organization had been obliged to earn 660 trillion rials according to the subsidy reform law.
Implementing the second phase of the subsidy reform plan in Iran would contribute to more unemployment, economic recession, liquidity accumulation, and would significantly raise fuel prices, the Fars News Agency quoted the chairman of the Iranian parliament (Majlis) planning and budget committee Esmaeel Jalili as saying.
The subsidy reform plan pays out $37 to Iranians while eliminating subsidies for fuels and some commodities.
Nearly 74.5 million Iranians receive cash subsidies.
When the plan started in December 2010, it was expected to cause about $32 billion in liquidity.
But greater demand for the cash subsidies and the government's money borrowed from the central bank to pay for the subsidies led to $45 billion in liquidity.
The government implemented the first stage of the subsidy reform plan towards the end of 2010 in an attempt to wean the country off food and fuel subsidies.
At the time, Ahmadinejad called it the "biggest economic plan of the past 50 years".
It allows the government to gradually slash subsidies on fuel, electricity, and certain goods over the course of five years, with low-income families being compensated with direct cash handouts.
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