Currently Iran is under tough sanctions set by the United States, United Nation and European Union on its economy. Accordingly Iran’s economy is not experiencing good time and the inflation rate is increasing on daily basis in the country. Since Iranian Rial has lost its spending power against foreign currencies including U.S. Dollar, GBP and Euro the employment rate has been increased dramatically due to closure of industrial plants and companies.
In this situation the government of Mahmoud Ahmadinejad has announced implementation of second phase of the subsidy reform plan. The Iranian targeted subsidy plan was passed by the Iranian Parliament on January 5, 2010. The government has described the subsidy plan as the “biggest surgery” to the nation’s economy in half a century and “one of the most important undertakings in Iran’s recent economic history”.
Members of Iran’s parliament have expressed their concerns about the negative results of this project in the current severe conditions.
“If government implements the next phase, people will face with hard situations. Some people will not be able to provide their living items and the conditions will become worse. Agricultural products will be skyrocketed and farmers will not be able to transport their products because of high price of gasoline and petrol.” Mohammad-Hassan Asfari, a member of Iran’s Majlis Committee on National Security and Foreign Policy Committee, said.
According to the government, approximately $100 billion per year is spent on subsidizing energy prices ($45 billion for the prices of fuel alone) and many consumable goods including bread, sugar, rice, cooking oil and medicine.