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Iran Saves Billions of Dollars through Subsidy Plan

Source: Fars News Agency

Senior Iranian officials said Tehran has saved over $22bln in less than a year since it started implementing the subsidy reforms plan last December.

The Iranian government has saved 254,601bln rials (approximately over $22bln) since late December by gradually removing energy and food subsidies, MNA quoted head of Iran's Supreme Audit Court Abdolreza Rahmani Fazli as saying.

The figure covers savings through the end of the Iranian month of Mordad, on August 22, Rahmani Fazli said.

On December 19, Iran began a long-awaited subsidy reforms plan after months of speculation regarding the timing or degree of the subsidy cuts.

The plan included subsidy cuts on energy prices, including the heavily subsidized gasoline prices.

The price of heavily subsidized gasoline (for the first 60 liters purchased by each motorist per month) was increased to 4,000 rials ($0.40) per liter, from 1,000 rials ($0.10) per liter, and all gasoline purchased above the monthly quota was priced at 7,000 rials ($0.70) per liter going forward.

Iranian President Mahmoud Ahmadinejad announced at the time that the launch of his economic reform plan is aimed at overhauling the country's economy by phasing out energy and food subsidies.

Under the plan all subsidies are to be gradually removed during a five-year period.

The subsidy cuts (also known as targeted subsidies) plan - encompassing key consumer goods such as gasoline, natural gas, and food - is said to be one of the most important undertakings in Iran's recent economic history.

Before the official announcement of the plan, every family member received a sum of 890,000 rials (approximately $89) in cash subsidies for a two-month period.

Ahmadinejad has also vowed that the Iranian government would tackle economic problems such as housing, unemployment and improve the banking system through his economic reforms plan.

According to the president, the initiative would lead to a better distribution of wealth among the public.

Officials say energy subsidies have cost the Iranian government around 100 billion dollars.

Analysts say that the plan is in line with recommendations from global financial organizations which advised Iran to get rid of a heavily subsidized economy if it wanted to boost its economic power.

... Payvand News - 09/14/11 ... --

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