The Iranian government will be allowed to dispense fresh cash handouts and spending coupons in the calendar year starting late March to compensate for the economic impacts on people of a plan to dismantle foreign currency subsidies given to imports of foods ad staples.
A member of the Iranian’s parliament’s budget appropriation committee said on Tuesday that the administrative government will definitely dismantle a system in the Persian year 1401 budget under which the US dollar is provided to importers on a heavily subsidized price of 42,000 rials.
Rahim Zare said that the official price for changing foreign currencies into Iran’s rial in the next calendar year’s budget will be based on rates used in the Electronic Trading System (ETS), a secondary foreign currency market controlled by Iran’ central bank where exporters supply their hard currency proceeds to importers of goods into Iran.
The removal of the so-called Preferential Currency Price is aimed at preventing massive wastes and corruption cases in an economy where the free market price of the US dollar is currently at nearly 280,000 rials.
The ETS price is normally 10% or more lower than the unofficial market price of foreign currencies in Iran.
Zare said the government will be allowed to dispense 2,500 trillion rials (nearly $9 billion) worth of direct cash handouts and spending coupons to compensate people in the country for price hikes that could be caused by removal of foreign currency subsidy.
Head of Iran’s Association of Meat Chicken Breeders Habib Assad Nejad said on Tuesday that the agriculture ministry is preparing spending coupons that people can use to buy meat and dairy products after subsidies are removed.