Iran’s parliament bans paying subsidies by selling currencies

Iran Materials 21 October 2012 12:12 (UTC +04:00)

Azerbaijan, Baku, Oct.21/ Trend G.Mehdi/

The Iranian parliament (Majlis) approved a bill on Sunday, according to which paying cash subsidies by selling foreign currencies will be stopped, ISNA reported.

The administration does not have the right to expend revenues of selling foreign currencies gained through exports of crude oil and gas condensates for the purpose of paying cash subsidies, MPs said.

The central bank is obliged to deposit these revenues to the treasury on the daily basis.

On October 7, the Majlis approved a bill to cancel the implementation of the second phase of the subsidy reform plan. The Majlis decided to increase the amount of subsidies to families in cash or in a way which allowed the administration to begin the implementation of the second stage of the subsidy reform plan.

Accordingly, the administration approved to increase the per capita cash subsidies by 275,000 rials to reach 610,000 rials.

The subsidy reform plan pays out $37 to Iranians while eliminating subsidies for fuels and some commodities.

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.