Rahim Mombini, the president’s budget deputy, revealed the figure last week.
He also announced that civil servants will receive a pay raise of 6 percent at Now Ruz, half the inflation rate in the past year. The pay raise last Now Ruz was also 6 percent; inflation then was just a hair over 10 percent.
The monthly welfare payment was set almost a year ago at 445,000 rials ($43) per person per month. But inflation is now well above 10 percent annually and has been rising for six straight months after bottoming out last summer.
Measured as the average increase over the previous 12 months, inflation is now 11.6 percent. Compared to the same month of the preceding year, the inflation rate is currently 15.8 percent.
Many people have been saying that inflation would soar once the government began to remove subsidies from fuel, bread and other goods. The subsidy-to-welfare shift was made December 19—but inflation began rising months before that.
Mombini said the budget for the coming year includes 340 trillion rials for welfare payments. At 445,000 rials per person per month, that means the government is making payments to 63.7 million Iranians. Given the official population estimate of 74.7 million last October, that means 11 million Iranians or 15 percent of the population is not receiving welfare.
Under the law, every citizen is eligible for a payment, but President Ahmadi-nejad has asked the wealthy to forego the payments. However, it isn’t known if the 11 million not on welfare represents the richest 11 million or includes multitudes of villagers who know nothing about the program.
Mombini said the total amount of subsidies being eliminated from the coming year’s budget is 560 trillion rials or about $54 billion—which is nowhere near the $100 billion government officials have been saying they spent on subsidies. The $100 billion is actually what economists call “opportunity cost.” For example, it includes not just what the government spent over and above revenues when it sold gasoline cheaply, but also the profit that was foregone by not selling that gasoline at the market rate.
That 560 trillion savings will be divided, with 340 trillion rials going to welfare, 160 trillion to “support production,” and 60 trillion reverting to the general budget, Mombini said.
The monthly welfare payment is based on 405,000 rials for fuel subsidies that have been eliminated and 40,000 rials for the bread subsidy that has gone by the boards.
