Azerbaijan, Baku, Dec. 25/ Trend G.Mehdi/
Implementing the second phase of the subsidy reform plan in Iran would significantly raise fuel prices, the Fars News Agency quoted the chairman of the Iranian parliament (Majlis) planning and budget committee Esmaeel Jalili as saying.
"The issue will contribute to more unemployment, economic recession, and liquidity accumulation," he added.
The administration's revenues from liberalizing prices according to the plan were less than the cash payments, he noted.
Following Iranian president Mahmoud Ahmadinejad's televised interview on Saturday, MP Ahmad Tavakoli accused Ahmadinejad of diverting the public's attention and called for a closed-door session to discuss his comments.
"People should know that what he wants is to sharply increase the energy carriers' prices in order to make 250 billion U.S dollars. For example he wants to raise the gasoline price up to 50,000 rials (some $4 based on the official dollar rate) from the current price of 7,000 (some $0.5) rials," he said.
The subsidy reform plan pays out $37 to Iranians while eliminating subsidies for fuels and some commodities.
Nearly 74.5 million Iranians receive cash subsidies. So, the government has paid around 746 trillion rials (about $61 billion) as cash subsidies within the past 22 months, equaling 15 percent of the national budget for the current Iranian fiscal year.
When the plan started in December 2010, it was expected to cause about $32 billion in liquidity. But greater demand for the cash subsidies and the government's money borrowed from the central bank to pay for the subsidies led to $45 billion in liquidity.
Last week, President Mahmoud Ahmadinejad criticized the Majlis for passing a bill temporarily preventing the administration from implementing the next stages of the subsidy reform plan.
The government implemented the first-stage of its targeted subsidies plan towards the end of 2010 in an attempt to wean the country off food and fuel subsidies. At the time, Ahmadinejad called it the "biggest economic plan of the past 50 years".
It allows the government to gradually slash subsidies on fuel, electricity, and certain goods over the course of five years, with low-income families being compensated with direct cash handouts.
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