×

Iran compensates subsidy cuts with almost $15B

Iran has paid nearly $15 billion into bank accounts of some 20 million families in the country as compensation for planned cuts in food and energy subsidies, state television reported Friday.

State TV said about 820,000 rials ($80) was deposited for every family member as a lump sum for the first two months of the subsidy cuts, which are expected to take effect by mid-March.

The recipients will not be able to withdraw the money until the cuts begin, and it's unclear whether the payments will continue after that period. The transactions were completed by midnight Thursday, state TV said.

The families that received payments registered in 2008 when the first stage of the government plan began. The estimated eight million Iranians who did not register then will be able to do so next month, and they will receive the funds before the cuts take effect, according to state television.

Iran says it is paying some $100 billion in subsidies annually, although experts believe the amount is about $30 billion. President Mahmoud Ahmadinejad has said Tehran cannot continue to afford the largesse.

Economists say the unpopular plan to cut subsidies could stoke inflation unofficially estimated to be over 20 percent. The cuts also are widely seen as placing added burdens on Iranians, whose country is already weighed down by sweeping international sanctions imposed on Tehran over its disputed nuclear program.

The subsidy cuts come as Iranian leaders try to boost the country's ailing economy, which is heavily dependent on oil exports. Some 80 percent of Iran's foreign revenue comes from exporting crude.

The country is also under growing international pressures over its refusal to halt uranium enrichment activities, which the West suspects it has aimed at weapon. Iran denies the charges, and says its program is for peaceful purposes.