Title: Iran Announces Major Shift in Subsidy Policy to Directly Support Citizens
In a significant move to stabilize prices and enhance social welfare, the Iranian government, in close coordination with the Parliament, is finalizing a plan to overhaul its subsidy system, shifting support directly to consumers.
A New Direction for Subsidies
The Minister of Cooperatives, Labour, and Social Welfare, Ali Maderi, announced that the government and Parliament have reached a consensus on the fundamental principle of the new “Electronic Voucher” system. The core objective is to redirect subsidies from production inputs to the end consumer.
“This ensures that the subsidy is paid directly to the people,” Maderi stated, emphasizing that this approach is designed to maintain price stability for essential goods for the consumer. He noted that this policy direction continues the path pursued by the late President Ebrahim Raisi’s administration.
Learning from Past Experiences
Officials are taking a measured approach to implement this change. Maderi highlighted that the government and Parliament are determined to utilize past experiences to ensure the subsidy transfer is smooth and avoids market fluctuations or price shocks that have been challenging in previous implementations.
“Extensive joint meetings between the government and Parliament have been held this week at the Planning and Budget Organization,” Maderi said. “The final plan is not yet solidified, but we hope a conclusive decision will be made in a meeting next week chaired by the First Vice President.”
Targeted Support and Implementation Timeline
The Minister provided initial details on the scheme’s coverage, indicating that the previous version of the electronic voucher did not include the top three income deciles. The new plan is likely to cover the first seven deciles of society, though the final decision on the exact coverage is still under discussion between the two branches of government.
Regarding the timeline, Maderi clarified that while the plan is set to be finalized in the Iranian month of Aban, its actual execution is contingent on securing agreements with the private sector. These contracts are essential for ensuring a stable supply of goods at fixed prices for a sustained period.
Ensuring Long-Term Stability
Maderi stressed that for price stability to be achieved, the government must sign two to three-month contracts with suppliers. This would allow them to provide goods at a specified rate over time.
“Otherwise, if the budget is simply allocated to the Ministry of Cooperatives and the plan is launched the following week, as was done before, price stability will not be achieved,” he cautioned.
The Minister concluded by underscoring that the successful implementation of the Electronic Voucher system requires close cooperation from the private sector, coordination with executive bodies, and a unified decision between the government and Parliament.