Last Updated: Wed May 16, 2012 16:48 pm (KSA) 13:48 pm (GMT)

Iran to boost state aid to offset soaring inflation

President Mahmoud Ahmadinejad’s government launched the controversial phased-in subsidy reform program to generate tens of billions of dollars in additional revenues. (File photo)
President Mahmoud Ahmadinejad’s government launched the controversial phased-in subsidy reform program to generate tens of billions of dollars in additional revenues. (File photo)

Iran’s parliament has voted to raise cash handouts by 60 percent to compensate for scrapped subsidies on energy products and essential commodities, media reported on Wednesday.

Some 65 million Iranians will each receive 730,000 rials ($44 on the free market) of direct monthly aid from the state, up from a monthly handout of 455,000 rials that was originally introduced 18 months ago.

The raise is designed to offset runaway inflation, which has caused growing discontent in recent months.

According to official figures, the rate of inflation has reached 21.8 percent since last May, but media and some lawmakers say it is much higher, with one MP estimating that inflation stands at 60 percent.

Around 10 million Iranians out of a population of 75 million are not eligible for the state aid, including wealthier members of society.

President Mahmoud Ahmadinejad’s government launched the controversial phased-in subsidy reform program to generate tens of billions of dollars in additional revenues.

The move has seen huge increases in the price of certain energy products, including gasoline and cooking fuel, with further rises expected in the coming months.

The program has been opposed by certain members of Iran’s ruling conservative camp, with critics saying it would further stoke inflation at a time when the economy was already reeling from high price rises and unemployment.

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