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08/24/11

Iran saves over $8B from subsidy cut in 3 months

Source: Mehr News Agency

Iran saved around 8.6 trillion rials (some 8.12 billion dollars) in the first three months of implementing the subsidy reform plan, Economy and Finance Minister Shamseddin Hosseini announced in a press conference on Tuesday.

Iran's Economy and Finance Minister Shamseddin Hosseini
Iran's Economy and Finance Minister Shamseddin Hosseini

Iran started raising the prices of energy and bread sharply in December 2010, removing close to $60 billion dollars (about 15 percent of GDP) in annual product subsidies.

According to the parliamentary ratification brining energy prices to the market value is going to take place within five years.

The subsidy reform is expected to increase efficiency and competitiveness, improve income distribution, reduce poverty, and help Iran unlock its full growth potential.

Some international bodies such as IMF have praised positive effects of the plan on Iran's economy.

In an article published on August 3 IMF welcomed the early success in the implementation of the subsidy reform, which is a critical step in enhancing energy efficiency, supporting growth, and moving further towards a market-based economy.

IMF noted that cash transfers, financed out of the revenues arising from the energy price increases, were instrumental in supporting domestic demand, improving income distribution, and reducing poverty.

Related Article:

IMF Executive Board Concludes 2011 Article IV Consultation with the Islamic Republic of Iran
Iran has started implementing a major subsidy reform by raising sharply the prices of energy and agricultural products in December 2010, removing close to US$60 billion dollars (about 15 percent of GDP) in annual product subsidies. The subsidy reform is expected to increase efficiency and competitiveness of the economy, improve income distribution, reduce poverty, and help Iran unlock its full growth potential.

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