Title: Budget 2025: A Strategic Shift from Cash Subsidies to Electronic Vouchers
In a pivotal move for Iran’s economic policy, the government is finalizing the national budget bill for the upcoming Iranian year (starting March 2025), with a pronounced focus on reshaping the country’s subsidy system. The central theme is a transition from direct cash payments to a targeted electronic voucher program, a shift personally championed by the President to bolster household purchasing power.
Budget Timeline and Key Priorities
The initial draft of the budget bill is scheduled for review by the Cabinet in the Iranian month of Azar (November-December). Following final government approval, the bill will be formally presented to the Islamic Consultative Assembly (Parliament) by the end of that month, adhering to the standard legislative procedure.
This year’s budget formulation is centered on two critical and interconnected issues:
- Determining the official exchange rate for essential imported goods.
- Allocating resulting revenue to fund the new Electronic Voucher Scheme.
The Core Mechanism: Exchange Rates and Voucher Funding
A significant policy decision underpins the new budget. Unlike previous years, where revenue from adjustments to the official exchange rate for essential goods was partially used to cover the budget deficit, the Plan and Budget Organization is now mandated to direct all additional income from this source exclusively to the Electronic Voucher Scheme.
This strategic reallocation signals a clear intent: to use state resources for direct household support rather than fiscal gap-filling. The government is actively revising the exchange rate, weighing the pressures of inflation and import costs against the potential impact on consumer prices for lower-income families.
The Electronic Voucher Scheme: A New Era of Support
The government is moving decisively to replace a portion of the existing cash subsidy with a monthly Electronic Voucher. This system, which has been under pilot testing for several months, is designed to ensure the direct provision of essential goods to citizens.
This transition is part of a broader structural reform of the subsidy system, which includes the ongoing removal of high-income earners from the recipient lists. To date, approximately 6 million individuals have been delisted, a process set to continue into the next year to enhance the program’s targeting and efficiency.
Balancing Economic Challenges
As the budget enters its final drafting stages, the decision on the essential goods exchange rate remains a delicate balancing act. Maintaining the current rate could strain public resources, while increasing it risks fueling inflation.
The 2025 budget bill is more focused on livelihood issues than ever before. The government aims to protect citizens’ purchasing power through the intelligent redistribution of subsidies and supportive policies. However, the enduring challenges of curbing inflation and securing stable financial resources remain paramount. The final decisions made in the coming weeks will significantly influence Iran’s economic direction in the second year of its Seventh Development Plan.