Iran MPs back outlines of subsidy reform plan
Reuters / Hashem Kalantari & Fredrik Dahl
12-Oct-2009 (one comment)

TEHRAN (Reuters) - Iran's parliament approved the outlines of a subsidy reform bill on Sunday, seven months after it threw out the plan from the annual budget proposal because of fears it would stoke inflation in the major oil producer.

Even though MPs can still reject aspects of the bill in voting due later this week, the clear margin of 188 votes for and 45 against in Sunday's session is likely to be welcomed by the government of President Mahmoud Ahmadinejad.

If the draft law is approved without major changes, it would be a further sign of the hardline president consolidating his position after his disputed re-election in June plunged Iran into months of political turmoil.

The government wants to raise energy and utility prices and compensate low-income families with direct cash payments.

Critics say this would push up inflation, now running at about 13 percent annually after it hit a high of nearly 30 percent a year ago.

In March, MPs dealt a political blow to Ahmadinejad by removing the subsidy reform plan from the 2009-10 budget bill. He accused them of violating the constitution.

Defending the proposal on Sunday, Economy Minister Shamseddin Hosseini told MPs that hefty fuel subsidi... >>>

Majid Zahrai

Subsidies, the Islamic Republic's undoing

by Majid Zahrai on

There is major trouble ahead for Iran's economy.  There is no good outcome from these measures which are being taken too late to help the Iranian economy.  Cutting subsidies will increase the inflation rates and further reduce people's buying power.  Keeping them will continue to break the government's back.  If inflation keeps growing at its already alarming rates, all those who didn't take to streets during the post election protests will come out to join the other protesters.  Mahmoud Ahmadinejad's stupid economic policies will backfire on him.  He deserves this for having fired all his economic advisors and for having run the Iranian economy into the ground over the past 4 years.