Baku, Azerbaijan, May 27
By Fatih Karimov - Trend: Iran 's Vice President for Planning and Strategic Supervision Mohammad Baqer Nobakht said the recent rise in fuel prices will not lead to an increase in commodity prices.
On May 25, Iran raised fuel prices by 40 percent and scrapped an eight-year-old rationing program for private motorists as President Hassan Rouhani's government seeks to shore up public finances.
Nobakht said the decision would increase government's revenues by $1 billion (based on the USD official exchange rate), Iran 's Fars news agency reported May 27.
He added that $110 million has been paid in subsidies to the production sector over the past two months.
"This is a 5-year law which was ratified in 2010. We were obliged to implement the law. The law stipulates that the government can earn $11 billion through freeing up fuel prices, half of which should be paid in cash subsidies to people, 30 percent should be paid to the production sector, and 20 percent should be in the hands of the government," Nobakht explained.
The current year's budget law allowed the government to increase the revenues to $17 billion, but the president did not approve of that, Nobakht said.
"We are under the pressure of sanctions and the government's revenues have fallen sharply. We should restrict the irregular consumption of fuel in order to curb imports," he noted.
Gasoline rationing was a legacy of former President Mahmoud Ahmadinejad, who introduced the plan in 2007 to cut consumption of subsidized fuel and limit smuggling to neighboring countries. At the time, Iran spent some $5 billion a year to import gasoline.
Three years later, Ahmadinejad started phasing-out food and energy subsidies, replacing them with monthly cash handouts to almost every Iranian.
Rouhani's government is attempting to restrict the handouts to the nation's poorest by eliminating those deemed less needy.
Edited by CN