Title: Iran’s 2026 Budget Blueprint: A Strategic Shift from Subsidized Imports to Direct Cash Support
In a significant policy pivot, the Iranian government’s budget directive for the upcoming Persian year 1405 (2026) outlines a fundamental restructuring of the nation’s subsidy system, moving decisively away from a generalized import subsidy towards a more targeted cash-based support mechanism for citizens.
Phasing Out the Preferential Exchange Rate
A central pillar of the new budget directive is the planned elimination of the preferential foreign exchange rate, historically set at 28,500 tomans per U.S. dollar. This rate has long been used to subsidize the import of a range of essential goods, from specific fruits like bananas and mangoes to staples such as meat, poultry, oil, and rice.
Government analysis, as cited in the directive, concludes that this blanket subsidy has proven ineffective in its primary goal of supporting vulnerable populations and improving public livelihoods. Officials argue that the system’s inefficiencies and its susceptibility to market distortions, including smuggling, have diminished its overall benefit to the economy and the intended recipients.
A New Focus on Targeted Cash Transfers
In its place, the administration is charting a course for a gradual transition to direct cash subsidies and electronic commodity vouchers. This strategic shift is designed to re-allocate state resources more efficiently, allowing for more precise and effective financial support for lower-income households.
The government’s position is that this targeted approach will empower families to make their own purchasing decisions in the open market, thereby fostering a more streamlined and equitable distribution of state aid. This policy direction is consistent with the broader economic reforms, often termed “economic surgery,” initiated by the 13th administration in 2022.
Navigating Economic Transitions
The budget directive acknowledges that the removal of the preferential exchange rate will lead to a gradual increase in the general price level for certain imported goods. This anticipated inflationary effect underscores the critical need for the parallel rollout of the enhanced cash transfer system to cushion the impact on household budgets.
The government’s economic planners are drawing on lessons from previous reform cycles to manage this transition. The directive emphasizes the importance of meticulous planning to mitigate potential side effects and ensure the stability of the market, aiming for a controlled and purposeful economic recalibration.
This move represents a continued commitment to structural economic reforms, with the stated objective of creating a more resilient and targeted social safety net for the Iranian people.