DUBAI: Iran’s parliament has approved politically sensitive plans to slash subsidies on fuel and food, but delayed implementation for several months while authorities try to soften the blow to consumers by handing out food packages.
A clause in the budget bill for next fiscal year, which starts in late March, calls for steep price increases to save 630 trillion rials ($25.3bn at the official exchange rate) annually in subsidy payments.
The clause was passed by members of parliament on Tuesday, Iranian media reported, marking a political victory for President Hassan Rowhani, who took power last August after elections.
Rowhani’s predecessor, Mahmoud Ahmadinejad, began a programme of cutting subsidies but was forced to suspend plans for further reductions in 2012 because of opposition in parliament.
Iran’s finances have been under heavy pressure because of international economic sanctions imposed over its disputed nuclear programme and also, Ahmadinejad’s critics say, because of his erratic management.
Last August, officials said the government faced a shortfall of one-third in the current fiscal year’s budget because of lower-than-expected revenues.
Parliament’s vote on Tuesday gave the government until the end of June to push through its subsidy reforms. About 83 percent of the money saved would come from fuel price rises.
“With implementation of this bill on June 20, fuel prices will be multiplied,” member of parliament Nader Ghazipour was quoted by Iranian news agencies as saying.
To soften the blow, the government has started handing out food packages — including two frozen chickens, 36 eggs and two packs of processed cheese — to over 15 million families earning less than five million rials a month, Iranian media reported this week.
REUTERS
