Costing
Iran’s Treasury $1.3 Billion Monthly - Rouhani’s First Political Defeat
After
weeks of unrelenting and aggressive media campaign, enlisting celebrities,
sports heroes and religious figures, Rouhani administration could not convince
Iranians to forego the 445,000-rial ($18) monthly cash handouts to help the
country with its financial crisis. Fully 95 percent of citizens, 73 million
people, have asked to receive the cash, which will amount to $1.3
billion monthly bill for the government.
Former
president Ahmadinejad started the monthly cash handouts in a populist move to
supposedly soften the blow of cutting energy and food subsidies. But the
program produced 45 percent inflation; eating considerably into the purchasing
power of the people it was intended to help. Rouhani, highlighting the fact and figures, hoped
to convince people that the program was a bad idea. But neither his charm
offensive, nor those of the celebrities whose help he enlisted, could convince the people to forego handouts. The citizens by
their choice in effect handed Rouhani his first major political defeat.
The bad
news came on the day the government's second phase of subsidy
reform went into effect, practically increasing gasoline prices to $1.50 per gallon. The
continuation of cash handouts to 95 percent of population and higher gasoline
prices could now push the inflation much higher.
The rial,
reacting to fear of high inflation, is losing its value against dollar.
Meanwhile, the Central Bank of Iran (CBI) announced today that the cost of its
basket of consumer and industrial goods is rising at a 32 percent annual
inflation rate.
13 comments:
Actually, Nader, this represents his second domestic defeat. The first occurred when he attempted a revision of the food distribution plan roughly three months ago.
http://iranmatters.belfercenter.org/blog/rouhani’s-spoiled-food-iranian-aid-program-raises-questions
The Iran Government do it wrong,
like all other countries the Wellfare check should go only to the People who are jobless
not every People is eligible to receive wellfare
All this over a measly$18. That should tell you what a Hell Iran is and what liars people are when they sit comfortably in the u.s. and tell you otherwise.
$ is rasing about 350 Rial , that is a Little more than 1%
a true disaster
http://www.farsnews.com/newstext.php?nn=13930206000870
The exchange rate had reached 40,000 rial to a dollar during last months of Ahmadinejad administration. After the June election of Rouhani, its value rose to around 28,000 per dollar. It did stabilize at around 30,000 for the first eight months of Rouhani administration, but now losing ground mainly due to the start of the second phase of subsidy reforms and the fears of inflation; with value at around 33,000 rials a dollar, a 10% decline in value.
The use of the word "true disaster" is yours. But there is a true problem, the inflation, that needs to be addressed sooner than later.
The sooner the anti-Iran regime commits suicide the better. Good riddance to bad rubbish.
Does this really matter that much Mr Uskowi? Regardless of the current inflation rate the people in Iran with average earned income don't have any trouble buying foodstuffs, household items, electronic products and cars. Words like disaster is out of someones imagination. Where is this widespread hardship and poverty that some speak of?
Actually subsidies are generally bad for an economy. Its a temporary solution to economics with long term harm. They also make people more wasteful and inefficient. . Unfortunately Iran has been using subsides for well over 60 years. Economists, the world bank, and the IMF have been urging Iran to get rid of them for years. In the short run it will cause more inflation but in the end they are better for the economy as a whole.
Why it matters: When prices rise some 35% each year and the GDP contracting at the same time, a situation called stagflation, then you have a serious problem that needs to be addressed, and cannot be wished out. Add to the malaise the high unemployment and under-employmnet, especially among the youths, and at best stagnant wages/salaries, then the situation becomes economically and politically volatile.
The state of economy is the most serious problem the current government faces, and its future, starting with Majlis and Assembly of Experts elections, would depend on how it could handle the economic issues in the next year or so.
Annon 1:11PM stated:
"... Regardless of the current inflation rate the people in Iran with average earned income don't have any trouble buying foodstuffs, household items..."
I cannot believe what sort of nonsense this is! Even according to Iran Governemnt own statistics at least 40% of iranians live under poverty line and this guy saying that all is OK.
Either the guy does not undersdtand simple economics or is someone who thinks everyone else is a fool!
Let us face it, if an average Iranian has to have two jobs to make end meet, how can one justfiy these irresponsible statements! What a fool!
AnonymousApril 26, 2014 at 5:26 PM
well-said
Well then Iranians are doing better than New York (especially interesting are the comments at the bottom of this article, sounds like the posters here). What's New Yorks excuse being the financial capital of the US that it is? 50% of new york is also at poverty levels.
http://www.huffingtonpost.com/2014/04/30/nyc-poverty_n_5240355.html?ncid=fcbklnkushpmg00000073&mid=facebook_nymag
Anon 6:09 PM
Yeah sure,it's better to live under a crane hanging,women beating oppressive theocratic fascist regime in poverty and under subjugation by religious fanatics with their moronic brigades than walk the streets of New York in poverty but relitive freedom. It makes me laugh when people like you compare a tinpot fascist islamic state to any advanced democratic nation. If US is so bad why don't you go and live under the bosom of the Ayatollah's?
No? I thought so.
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