Goverment borrows $12.5 bln to pay Iranians
Azerbaijan, Baku, April 7/ Trend M. Moezzi
In the last 15 months, Iran's government has had to borrow about $12.5 billion (USD) as it paid out more than $37 billion in cash to Iranians under Iran's subsidies reform programme, Mehr news agency reports.
The targeted subsidies programme itself had enough funds for $24.5 billion of those payments.
Currently, Iran's year-old targeted subsidies programme pays each citizen about 455,000 rials (about $37) a month while eliminating subsidies for energy and commodities.
Under the original plan for removing subsidies, Iran's government was supposed to allocate half of its revenues from higher prices to make cash payments to its citizens. Thirty percent of the revenues were to be set aside for the manufacturing sector and the rest was to be used by the government.
But, the cash payments to 73 million Iranians have claimed 80 percent of what has been earned from higher prices for energy carriers and some commodities. That means the manufacturing sector's share has dropped to 20 percent and the government's share of revenues has been eliminated completely.
As stipulated in the targeted subsidies programme, a part of the revenues from higher prices had to be set aside for manufacturers so they could refurbish their production units, bringing down their energy consumption and expenses. But not only did the government fail to allocate any funds for manufacturers, it refused to allow price increases. This has forced some manufacturers to lay off employees and reduce production.