Cash subsidy payments in Iran amount to $42.7b

TEHRAN,July 15(MNA) - The administration of President Mahmoud Ahmadinejad paid 1.06 trillion rials (about $42.7 billion based on the Tehran Forex Center’s USD exchange rate of 24,800 rials) in cash subsidies. The 29th cash subsidy payment was deposited to banking accounts of breadwinners of families on Tuesday night. The incumbency of president Ahmadinejad will be terminated in August. The subsidy reform plan pays out 455,000 rials (about $37) to every Iranian, while eliminating subsidies for fuels and some commodities. Nearly 74.5 million Iranians receive cash subsidies. When the plan started in December 2010, it was expected to cause about $32 billion in liquidity. But greater demand for the cash subsidies and the government's money borrowed from the central bank to pay for the subsidies led to $45 billion in liquidity. The government implemented the first stage of the subsidy reform plan towards the end of 2010 in an attempt to wean the country off food and fuel subsidies. At the time, Ahmadinejad called it the "biggest economic plan of the past 50 years". It allows the government to gradually slash subsidies on fuel, electricity, and certain goods over the course of five years, with low-income families being compensated with direct cash handouts.