Subsidy cut saves Iran 20% on budget

Iranian Vice President for Parliamentary Affairs Mohammad Reza Mir Taj al-Dini says the country’s subsidy reforms would save 20 percent of the country’s budget.

“These savings equals to the credit set aside for national development in various fields and when added to the current figure would double this credit, increasing the rhythm of construction and progress more than two-fold,” he said.

Taj al-Dini added that it was important that all Iranians would assist the government of President Mahmoud Ahmadinejad in implementing the new law, which will see the Islamic Republic slash subsidies in place since the 1979 Revolution.

Tehran plans to gradually cut energy subsidies over the space of five years and has promised instead to compensate low income families with direct cash handouts.

During a trip to the northwestern Zanjan province last week, Ahmadinejad vowed to reveal the details of the subsidy reform plans in a national address.

The Iranian chief executive said 85 to 90 percent of the plans had been enforced, urging Iranians to save energy.

In a national address in late October, Ahmadinejad said the government would begin depositing payments into accounts opened for individuals two months before the implementation of the plan.

Some analysts have criticized the plan, saying it could trigger a hike in prices and stoke up inflation.

“The 78 dollars deposited into the people’s accounts is intended for two months and before the first installment is finished, the second one will be deposited,” Ahmadinejad said.