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6.0 Public Sector 6.1 Budget
Iran removes more ‘non-low-income’ citizens from “Subsidies Law” cash handout scheme
The Iranian government has removed another 400,000 citizens from the monthly cash-handout “Subsidies Law” scheme introduced by the Ahmadinejad administration eight years ago, ILNA reported.
The scheme pays out the equivalent of around €3.50 (at the unofficial exchange rate) to people deemed to be on low incomes to help with utility bill payments. However, there has been a lot of debate over whether many recipients cannot be objectively described as “low-income”. At the same time, the government’s budget is under severe pressure, thus officials are looking to make cuts that will not translate into substantial social pressure.
The past couple of months have seen the officials remove 1.1mn people from the list of those entitled to the subsidy. The government announced in July that it was planning to remove the top three deciles from the recipient group in a bid to cut costs.
The Rouhani administration is attempting to cut budget costs as part of an austerity plan in the face of the US sanctions exacting a heavy toll on the Iranian economy.
The “targeted Subsidies Law”, which is part of Clause 14 of the Budget Law for the 2019/2020 Persian year, aims to slice chunks of urban households from the monthly stipend offered since 2010.
When the scheme was first introduced, the monthly handouts were worth around €30 per person; however, the severe depreciation of the rial against hard currencies has slashed its value.
Many families have removed themselves from the list of those entitled to the payments, but, particularly in the more rurally deprived areas, many Iranians continue to apply annually to stay in the scheme.
In 2016, the Iranian government paid out a whopping IRR137tn ($3.87bn at the unofficial rate) in cash subsidies under the programme in the first four months of the 2016/2017 Iranian year (March 21–July 21).
It was at that time that Rouhani administration officials started taking people off
29 IRAN Country Report November 2019 www.intellinews.com
