TEHRAN (FNA)- Chief of the International Monetary Fund (IMF) Christine Lagarde praised Iranian President Mahmoud Ahmadinejad's subsidy-cuts plan, and described it as a brave move which should be followed by other countries.
Lagarde made the remarks in a letter sent to Iran's Executive Manager in the IMF Mohammad Ja'far Mojarrad. In her letter, she appreciated Iran's measures in reforming its subsidy system, and called on the other world countries, specially the oil-rich states of the Middle-East, to implement Iran's model to carry out reforms. Lagarde expressed the hope that the IMF could cooperate with the Iranian officials in using the country's experiences in the first phase of implementing the subsidy reforms and the necessary measures for the other phases of the plan.
On December 19, 2011, Iran began a long-awaited subsidy reforms plan after months of speculation regarding the timing or degree of the subsidy cuts. The plan included subsidy cuts on energy prices, including the heavily subsidized gasoline prices. The price of heavily subsidized gasoline (for the first 60 liters purchased by each motorist per month) was increased to 4,000 rials ($0.40) per liter, from 1,000 rials ($0.10) per liter, and all gasoline purchased above the monthly quota was priced at 7,000 rials ($0.70) per liter going forward. Ahmadinejad announced at the time that the launch of his economic reform plan is aimed at overhauling the country's economy by phasing out energy and food subsidies. Under the plan all subsidies are to be gradually removed during a five-year period. The subsidy cuts (also known as targeted subsidies) plan - encompassing key consumer goods such as gasoline, natural gas, and food - is said to be one of the most important undertakings in Iran's recent economic history. According to the outgoing President Ahmadinejad, the initiative would lead to a better distribution of wealth among the public. Officials say energy subsidies have cost the Iranian government around 100 billion dollars. Analysts say that the plan is in line with recommendations from global financial organizations which advised Iran to get rid of a heavily subsidized economy if it wanted to boost its economic power.