Iran’s system of direct cash handouts – introduced in 2010 to replace subsidies on energy and foodstuffs – is becoming untenable. Savings derived from cutting subsidies have proved insufficient to cover the cash handouts to the “eligible recipients” of the government’s cash transfers, the head of the Planning and Budget Organization Mohammad Baqer Nobakht warns.

The Targeted Subsidy Reform law introduced in 2010 under former president Mahmoud Ahmadinejad stipulates that 50% of savings from cuts to subsidies is to be allocated for the payment of direct cash handouts, with 30% going to fund development projects and the remaining 20% to be transferred to the government treasury. (CONTINUED - 767 WORDS)