Iran’s parliament approves cash subsidies not to be cut

Business Materials 3 November 2013 14:45 (UTC +04:00)

Azerbaijan, Baku, Nov.3/ Trend F.Karimov/

Iran's parliament (Majlis) has approved today that cash subsidies will not be cut, the Fars News Agency reported today.

MPs voted 125 in favor, 51 against, and 6 abstained to approve a bill not to reduce the number of cash subsidy receivers.

This is while the budget and planning committee of the Majlis approved on October 20 cutting cash subsidies of rich families.

On October 13, the website of the Iranian parliament (Majlis) quoted MP Abbas Rajaee as saying that more than 30 percent of cash subsidies, which are paid to people in Iran, should be cut.

Meanwhile, Iranian economy minister Ali Tayyebnia said that no reliable and logical way has been found yet to identify rich families to cut their cash subsidies.

The administration should pay 420 trillion rials (about $16.8 billion) in cash subsidies per year, but the law allows it to use just 140 trillion rials of its internal sources. So, the administration has to use development budget to pay cash subsidies, he said.

Through cutting cash subsidies of high-income strata of the society, the problem of budget deficit can be resolved, he added.

Paying cash subsidies to people is poisonous for the national economy, he said. Cutting subsidies of all but villagers and pensioners and those who are under coverage of welfare organizations will not be problematic, he explained.

Meanwhile, the Fars News Agency quoted Mohammad Baqer Nobakht, the presidential advisor for planning affairs, as saying that the administration is facing 10 trillion rials (about $400 million based on the US dollar exchange rate of 24,800 rials) to pay the cash subsidies this month.

Each month, 35 trillion rials (about $1.4 billion) is paid as cash subsidies to 76 million Iranians. This issue is the cause of a number of problems, he said. In fact, the wealthy do not need financial assistance of the administration, he noted.

The subsidy reform plan pays 45,500 rials (about $18 based on the U.S. dollar official exchange rate of 24,800 rials) to Iranians, eliminating subsidies for fuels and some commodities.