Iran's President: Cash Subsidies Are Not Permanent

Hassan Rouhani, the President of Iran, described the period of cash subsidies as 'temporary' on Wednesday night, February 4, stating, 'Subsidies are not permanent, and the effort is to direct subsidies towards energy carriers and production.' According to the Iranian President, cash subsidies will cease once energy carrier prices reach their actual rates. Rouhani announced that the aim of cash subsidies is to assist the 'vulnerable class' so that, as he put it, 'this class can stand on their own feet.' The Iranian President emphasized that the core work of his government is to create economic prosperity so that 'poverty is eradicated and people's conditions improve.' According to the President of the Eleventh Government, 'The country's economic situation must move towards a point where people achieve relative welfare and experience life without subsidies.' Since the implementation of the subsidy targeting law in 2010, the incomplete execution and payment of cash subsidies to all Iranians have been criticized by many experts and analysts. Last week, during the review of the 2015 budget bill in the Joint Budget Commission of Parliament, the representatives of this commission reduced the government's proposed revenue from subsidy targeting from 42 trillion tomans to 37 trillion tomans. If this reduction of five trillion tomans in the subsidy targeting budget is approved in the public session of Parliament and becomes law, next year the Eleventh Government will have to remove about 10 million people from the list of subsidy recipients. According to statistics provided by government officials, over 73 million people in Iran receive subsidies. The Eleventh Government, in its early months, tried to dissuade some subsidy recipients from receiving subsidies but did not achieve much success. Ali Tayebnia, the Minister of Economic Affairs and Finance of the Eleventh Government, announced in August of this year that about 10 million high-income individuals had been identified who would be removed from the list of subsidy recipients. It seems that the agreement between the government and Parliament regarding the removal of some subsidy recipients is based on that identification. Both the government of Mahmoud Ahmadinejad and the current government cite the inability to identify high-income individuals as the main reason for the incomplete and imperfect execution of subsidy targeting. Previously, the Research Center of the Islamic Consultative Assembly emphasized in a report that 'the current form of subsidy payments not only does not help improve income distribution but can also worsen it.'