Official: World States Eager to Use Iran’s Experience in Subsidy Reforms

Iranian Deputy Interior Minister Seyed Yahya Mahmoudzadeh lauded the successful implementation of economic reforms plan in Iran, and said many world states have asked Iran to help them with subsidy reform plans after Tehran’s success in staging a similar plan in the country earlier this year.
Addressing a conference here in Tehran on Monday, the Iranian Deputy Interior Minister for Planning and Economic Affairs pointed to the pressures exerted on Iran to undermine the country’s economy, and noted that world powers’ struggle to hit a blow at Iran’s economy signifies Tehran’s power in the world.

“Enemies cannot imagine that Iran has been so successful in implementing the ‘Targeted Subsidies Plan’ that other countries invite the executives of the Islamic Iran for consultation (about their subsidy reforms plans),” the official noted.

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.