It said the government has paid 58 percent more in welfare than it has saved from phasing out subsidies on fuel, bread and utilities. Under the law, the government was supposed to pay out less in welfare than it was saving from the phasing out of subsidies.
Abdol-Reza Rahmani-Fazli, the chief of the Audit Court, said last week that the government has paid out 403 trillion rials ($38.4 billion) in welfare payments since last December. Of that money, 63 percent or 255 trillion rials has come from phasing out subsidies, he said.
The other 37 percent or 148 trillion rials was scarfed up from elsewhere-meaning the program is very deeply in the red and nowhere near being a simple transfer of subsidies to welfare as intended.
The welfare program pays about $44 a month to every Iranian citizen. President Ahmadi-nejad last week said he wanted to triple those payments. He didn’t say where he would get the money.
Rahmani-Fazli detailed where the president has gotten the funds to keep the program going at the current payment scale. He said the extra 148 trillion rials ($14.1 billion) needed to plug the gap was comprised of:
¥ 50 trillion rials or 34 percent borrowed from the Central Bank under a loan that was to be paid back by March 19, 2010. He said it has not yet been paid back.
¥ 50 trillion or 34 percent drawn from public funds. He didn’t say what other government programs had been cut back because of that diversion. Usually, when the government runs short of funds, development programs-that is, construction projects-are short-changed.
¥ 30 trillion or 20 percent drawn from revenues earned from the export of oil. Oil revenues either go to the Oil Ministry to fund exploration and development or are paid into the treasury. Since Rahmani-Fazli said 50 trillion was taken from the treasury, this 30 trillion was presumably taken from the funds the Oil Ministry planned to use to boost oil and gas output, which would delay those projects.
¥ The remaining 18 trillion rials or 12 percent was “lent” to the government by oil and energy companies, almost all of which are state-owned.
If what Rahmani-Fazli said is accurate, the government is going deeper into debt by $1.4 billion each month or almost $17 billion a year to keep the welfare program going.
There has been no reaction thus far from the Majlis, which designed the program to be self-sustaining.
The shift from subsidies to welfare was driven by the fact that more of the subsidies went to the rich than the poor. That was especially noticeable with gasoline, where many villagers never drove a vehicle while urban wealthy families often owned multiple cars. But it was also true with such things as electricity, where many a villager had a light bulb and a television, while an urban family had many electrical gadgets, not to mention air conditioning.
Furthermore, huge quantities of subsidized gasoline were being siphoned off to the black market in neighboring countries where gasoline was expensive, and many farmers were buying cheap subsidized bread with which to feed their animals instead of using costly fodder.
Originally, the Majlis designed the program to pay larger welfare sums to poorer families. But the government couldn’t figure out how to do that. Its only information on family wealth was based on what families told it. So, in the end, Ahmadi-nejad decided to override the Majlis legislation and make equal payments to all.
But the Majlis also provided that not all the savings from phasing out subsidies should be paid out as welfare. Rahmani-Fazli’s figures show that Ahmadi-nejad ignored that part of the law as well and has so far actually paid out 58 percent more than has been saved from subsidies.
