Iran: Ahmadinejad’s Subsidy Reforms To Be Dropped

The Iranian Parliament is planning to suspend Mahmoud Ahmadinejad’s restructuring of government subsidies, which the administration has seen as the cornerstone of its economic policies.

The blow to the Ahmadinejad administration was further exacerbated as the plan was approved 179-17 with 20 MPs abstaining, showing that the majority of lawmakers are opposed to implementing the second phase of the government’s subsidy reforms.

The head of Parliament’s economic commission, Gholamreza Mesbahi Moghaddam, said the inadequate implementation of the first phase of the reforms and the country’s poor economic conditions are the main reasons for Parliament’s move.

“Today we are in a situation that we have to sadly halt the second phase of subsidy reforms,” Mesbahi Moghaddam said.

Phase one of the reforms cut government subsidies on energy and food staples. replacing them with cash handouts to households to help them adapt to the adjusted market prices.

In the second phase, the cost of fuel would have risen further as would the amount of cash benefits.

The Iranian government is faced with a plummeting national currency which has made prices and the market highly unstable.