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The World Bank’s MENA division has welcomed the relative success of the Iranian government’s drastic subsidies cuts to subsidies, which in 2008 were estimated to be the highest in the world amounting to 27% of Iran’s GDP. In its 1 September Iran Overview it notes that “preliminary reports suggest that the Government’s comprehensive cash transfer program accompanying the ongoing subsidy reform has reduced extreme poverty and income inequality significantly.” Phase 1 of the subsidy cuts, initiated in December 2010, is estimated to have increased state savings by $44bn in 2011 and $53.8bn in 2012, according to Iranian 2012-13 budget projections. The government paid out $33bn in direct cash handouts to the lowest and middle income classes last year. And according to the budget’s provision for this year it is expected to pay $40bn in cash rebates while also dedicating another $8.15bn and $4.9bn respectively to the industrial and health sectors (MEES, 21 May).
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