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Iran's Ahmadinejad urges subsidy cuts as sanctions bite

By REUTERS

JANUARY 16, 2013 13:20

DUBAI - Iranian President Mahmoud Ahmadinejad appeared in parliament on Wednesday, urging lawmakers to allow government plans to cut subsidies to go ahead as a way to revive the economy, struggling in the grip of tightening Western sanctions.

Parliament suspended the second phase of the government's subsidy reform plan in November, saying that reductions in subsidies, which began in 2010, had contributed to higher inflation. Further cuts would harm an economy already battered by Western sanctions on the banking and energy sectors, they said.

But Ahmadinejad on Wednesday defended the reforms, also called the targeted-subsidies plan, saying they had reduced income inequality between the rich and poor and were key to combating the effect of sanctions.

The reforms are aimed at easing pressure on state finances by cutting tens of billions of dollars from government subsidies on food and fuel, while offsetting the impact on Iran's citizens by giving them monthly cash payments.

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