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Iran aims to privatise 600 companies in current Persian year
by privatisation officials.
The government hoped the listing would raise around Iranian rial (IRR) 5.6 trillion ($2bn) for cash-strapped government coffers.
The head of the Iranian Privatisation Organisation (IPO) has announced that some 600 companies are to be fully or partially sold to private buyers in the 2019/2020 Persian calendar year (started March 21), IBENA reported on April 28.
The Rouhani administration is under growing pressure to allow more assets on to the market at a faster rate so that capital can move from the roiled currency markets and back into the local economy. With the Iranian rial (IRR) severely weakened by the US sanctions assault on Iran’s economy and Washington to launch its attempt at fully shutting down Iran’s oil exports on May 2, the government is under heightened pressure to increase efforts to deliver liquidity. IPO director Mir Ali Ashraf Abdollah Pouri-Hosseini said that of the current block of companies to go up for sale, all the shares would be available to buyers except for 20% in each case, except where otherwise stated.
However, it will be an uphill struggle to sell majority stakes in so many businesses, with Pouri-Hosseini noting that across six months of the previous calendar year, only 55 companies were privatised.
“If we can privatise double or triple this amount, still there would be many companies for sale,” he added.
6.1.3 Budget dynamics - subsidies
Raisi announces major reforms to Iran’s consumer subsidies system
Iran’s President Ebrahim Raisi has announced major reforms in the country’s subsidies system.
Hardliner Raisi, who entered office last summer, outlined how his reform plan would work during a televised late-night interview on May 9. His administration says that the subsidies system introduced by his predecessor, pragmatic moderate politician Hassan Rouhani, to bring price stability amid the pressure of heavy US sanctions ended up facilitating high levels of corruption.
“The prices of bread, medicine and petrol will not increase under any circumstances,” Raisi pledged in the interview.
Worries that the planned system was already allowing price jumps for consumer essentials such as bread were in circulation on May 12 with reports of street protests in the southwestern province of Khuzestan.
The shake-up includes cash subsidies for the vast majority of Iran’s population of 85mn, with the richest Iranians excluded. The subsidies, amount to Iranian rial (IRR) 460 trillion ($1.6bn at the open market rate) for a period of two months. Around one-third of the population are receiving a monthly IRR4mn ($13), while 60% are receiving IRR3mn ($10) per qualifying individual, according to local press reports. There are plans to introduce a digital coupon scheme within around two months to help keep prices on a leash. It will focus on subsidised bread, chicken and vegetable oil prices.
Raisi’s officials claim Rouhani’s implemented approach to restraining prices was faulty. Rouhani four years ago brought in an artificial official rate of 42,000 rial per dollar for imports, while on the open market the rial climbed to a rate of more than 300,000 as the US kept up the sanctions pressure with ex-president Donald Trump waging “economic war” on Iran, in the words of Tehran officials. The consensus is now that Raisi’s scheme failed to stop prices soaring (official
36 IRAN Country Report June 2022 www.intellinews.com