Ahmad Tavakoli

The Ahmadinejad administration is in violation of the legislation for restructuring government subsidies and is facing a budget shortfall of 16 trillion toumans, the special economic committee of Iranian Parliament reports.

Ahmad Tavakoli told the Fars News Agency that according to a February report by the Ministry of Economics, government revenues from raising the price of energy delivery were 29 trillion toumans. However, the restructuring of subsidies cost the government 45 trillion toumans in expenses in the same period, which leaves it facing a 16-trillion-touman budget deficit.

Tavakoli also notes that the government has failed to deliver the 30 percent share to manufacturers and the 20 percent share to power-generation companies and other government companies. Tavakoli maintained that the money has been used instead for cash handouts to households.

Tavakoli added that the administration has used loans from the Central Bank to make these payments, and it was supposed to settle those loans by the end of the last Iranian year but failed to do so.

The Ahmadinejad administration has scrapped the government subsides on energy and food staples and instead has given cash handouts to households to deal with the sudden rise in prices.

Tavakoli told Fars that the administration has provided for the 16-trillion-touman budget shortfall through the sale of foreign currency obtained from oil sales, which in turn has caused inflation.

Meanwhile, the administration is still trying to increase the amount of cash handouts stipulated in the second phase of subsidy restructuring. Parliament, however, has opposed this move, and the head of Parliament, Ali Larijani, has even written to Iran’s Supreme Leader Ayatollah Khamenei about the administration’s refusal to follow Parliament’s rulings.

Parliament’s economic analysts say the administration’s handling of the restructuring of subsidies has resulted in rising prices and inflation, but the administration rejects these assessments and claims that its actions are instrumental in “bridging gaps and creating a leap in the country’s prosperity.”