Azerbaijan, Baku, April 24/Trend M. Moezzi
As Iran's executive branch and the parliament continued to wrangle over commissioning the second phase of the country's subsidy reform plan, deputy economic minister said that the program is effective. But launching subsidy reform plan resulted in $5.1 billion debt for the Iranian government, Mehr news agency reports.
Started in December 2011, the subsidy program pays out $37 to Iranians while eliminating subsidies for energy carriers and some commodities. The program, which was supposed to pay for itself, has a $16 billion deficit. Recently, the Iranian government transferred about $23, to Iranians' accounts for the second phase of the program without approval from the Majlis (parliament).
Deputy Minister of Economy and head of the reform plan, Mohammad Reza Farzin insisted that getting money from the Central Bank of Iran (CBI) wasn't illegal and denied that the subsidy reform plan had caused a sharp hike in inflation.
Farzin rejected charges that the subsidies program is the cause of steep inflation, contending that all of Iran's foodstuff is imported-90 percent of its oil and butter, 20 percent of the consumed meat, and 70 percent of the used soy, and their higher prices have nothing to do with the subsidies plan. They reflect higher food prices worldwide.
A $5.1 billion cash advance can't cause inflation when Iran's liquidity is nearly $196 billion. Six months after the reform plan started, the inflation it caused had stopped and prices were stable, deputy minister said. He reminded members of the Majlis (parliament) that two-thirds of them had voted in favor of the reform plan.
Farzin said that if the first phase of the program hadn't been put in place, Iran's daily petrol consumption would be 120 million liters instead of the current 59 million liters.
The program has also been successful in making the lives of lower income Iranians better. When the subsidies reform plan started, 40 percent of lower income families claimed 16.49 percent of the national income. Now they account for 17.27 percent of the national income.