IMF hails Iran's subsidy reform success

[Bilal Mahmud المكافح المخلص]

IMF hails Iran's subsidy reform success

The International Monetary Fund has congratulated Iran on its early accomplishment in cutting energy and food subsidies without allowing higher prices to fuel inflation.

An IMF mission to Iran says Tehran has managed to contain the initial impact of energy price hikes on the country's inflation rate. The IMF team has also commended the Iranian government for redistributing revenues generated from the price hikes to households, AFP reported.

The subsidy reform plan allows the Iranian government to gradually slash energy subsidies over the course of five years, with low-income families being compensated with direct cash handouts.

The IMF mission also noted that the plan has reduced inequalities and improved living standards in the country.

The initial stage of the plan was implemented in October 2010 as the administration deposited cash payments into bank accounts of the Iranian heads of household.

Iran's President Mahmoud Ahmadinejad has called the arrangement as Iran's "biggest economic plan in the past 50 years."

President Ahmadinejad said the costly subsidy system in the past created huge socioeconomic gaps and led to an “economic injustice.”

The IMF team has further pointed out that the program will improve Iran's medium-term economic prospects by rationalizing domestic energy-use, and increasing export revenues.

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