Tehran, July 09: As President Mahmoud Ahmadinejad plans his second term activities, an Iranian parliamentary commission finishes work on a controversial bill to redistribute energy subsidies among various income groups.
“The parliament’s special commission will pass the subsidy redistribution bill by the end of the week,” the panel’s spokesman, Kazem Delkhosh, said Tuesday.
The move, which comes shortly after the re-election of President Ahmadinejad, will pave the way for Iranian lawmakers to vote on the bill in the near future.
The bill is part of a reform plan the government seeks to execute to generate economic growth by lowering the lofty annual sums it pays to keep energy prices down.
Under the bill, subsidies on energy carriers such as gasoline, gas and electricity will be cut and a portion of the recovered revenue will be distributed among lower income citizens.
According to Delkhosh, the parliamentary commission has decided to allow the government to spend 50 percent of the projects’ generated income on health insurance and pension programs as well as handouts to families in the two lowest income groups.
To put the plan to motion, the Iranian population will be divided into ten income groups through a nationwide survey conducted last year.
The aim was to identify the most economically vulnerable groups so that they could be given financial support against the side-effects of the planned subsidy cuts.
However, the subsidy redistribution plan did not enter the execution stage in 2009 because the parliament (Majlis) decided to exclude the bill from the budget, citing shortage of time for a necessary assessment of its details.
Although the government expressed strong objection to the move at that time, the Majlis pushed forward with the decision, leaving President Ahmadinejad with a large deficit to make up for.
However, the president’s parliamentary deputy Mohammad-Reza Rahimi has said recently that the bill would finally be approved at the parliament and submitted for execution by October.
Since its introduction in 2008, the bill has come under serious criticism from economic experts who warn of a tremendous inflationary impact it could have on the economy.
One of the most prominent critics of the plan is the former governor of Iran’s Central Bank, Tahmasb Mazaheri, who said in March that the implementation of the economic reforms plan could deliver a detrimental blow to the country’s economic system.
Mazaheri said that if the plan was put to hasty execution, inflation would skyrocket, possibly reaching highs of around 40 percent in the first year.
Supporters of the plan, however, say it is in line with the recommendations of global financial organizations that Iran get rid of a heavily subsidized economy if it wants to solve its economic problems.
–Agencies–