Iran Vice President Laments Ahmadinejad Cash Handouts Legacy

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Iran needs to refine the system of cash payments it introduced to replace subsidies on staple goods, as it places growing strains on the country’s public finances, the vice president said.

Iran is currently obliged to dole out 420 trillion rials ($15 billion) a year under the program, introduced by former President Mahmoud Ahmadinejad in 2010, Eshagh Jahangiri said, according to the official Islamic Republic News Agency. The payments are eating up a bigger share of the budget than foreseen in the original plan, which won praise from the International Monetary Fund, he said. It’s equivalent to 3.8 percent of gross domestic product, according to IMF figures.

The payments of 455,000 rials a month, or $16, to each of Iran’s 77 million people were intended to cushion the impact as the government withdrew food and energy subsidies. Ahmadinejad promoted the plan as a way of distributing oil wealth to ordinary Iranians.

The government planned to target the handouts, and ensure they only go to poorer people, according to Mehr news agency. The challenge is that it lacks data about income levels to base such decisions on, Jahangiri said.

‘Serious Decision’

In the absence of numbers, officials appealed to altruism, calling on the more affluent Iranians to forgo payments. Last year, though, only 2.4 million people volunteered not to receive the benefit, less than a third of the number the president had targeted -- even after a public campaign featuring sports stars and influential clerics.

The oil revenue that Ahmadinejad envisaged handing out to the public has slumped along with the price of crude. Jahangiri signaled that the situation may not be sustainable.

The government has begun eliminating as many as 200,000 beneficiaries, the Tehran-based Shargh newspaper reported April 26, citing Labor Minister Ali Rabiei.

Cash payments to those living abroad, doctors, owners of luxury cars, owners of currency exchange houses and banks board members have stopped since the start of the Iranian year on March 21, Tehran-based Hamshahri newspaper said April 19.