Iran’s main audit body has slammed the government’s plan to scrap subsidies from later this month and its policy of privatising state firms, Iranian media reported on Tuesday.

“The implementation of the (subsidy) plan will lead to rise in prices,” Abdolreza Rahmani Fazli, who heads the Supreme Audit Court of Iran, a body set up by parliament, was quoted as saying by ISNA news agency. He urged the government to inform the people of the “repercussions” of the plan, adding that implementing such a “dangerous” reform might “result in severe political disputes in the country.”

President Mahmoud Ahmadinejad has been severely criticised by various groups for the subsidy removal plan which begins later September. The government intends to phase out subsidies, which according to official estimates cost state coffers around 100 billion dollars annually. The government has not yet indicated what the new prices will be once the subsidies, the bulk of which are offered on energy goods, have been removed.

Part of Iran’s ruling conservative camp, led by parliament speaker Ali Larijani, says the plan would further stoke inflation up to 35 percent at a time when the economy is already reeling under high inflation and unemployment. However, the government has toned down the potential impact of the plan and maintains that inflation itself has already fallen to single digits. Parliament had also attempted to delay and limit the implementation of the measure by challenging the government’s sole authority to decide on how to distribute among the poor the savings generated from the scrapping of subsidies.

The government has so far not given a clear indication as to how much money it intends to distribute among the population.

Supreme leader Ayatollah Ali Khamenei has backed the plan despite the concerns of some conservatives.

Rahmani Fazli also slammed the government’s implementation of the privatisation policy, saying most state-run companies have “been handed over to semi-official companies.”

“The private sector has been involved in at most 15 percent of the transactions and handovers,” he said.

He further criticised that Iran was unable to compete with foreign companies even in “production of simple products” such as apples, pears and domestically bred chicken.

Since a fourth set of UN sanctions was imposed on Iran on June 9, the Iranian government has adopted a policy of cutting down on non-essential imports, saying that would help domestic manufacturers.

Rahmani Fazli claimed that the government’s fifth five-year plan to 2015 is “not cohesive” with the overall 20-year macroeconomic outlook laid down by Khamenei.

source: AFP

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