Electoral Subsidy Pledges of Presidential Candidates Questioned

A senior lawmaker doubted the feasibility of electoral promises made by two principlist presidential contenders to raise monthly cash subsidy payments manifold, urging them to be honest with the electorate and avoid pledges that make no fiscal sense.

"Obviously, there are no resources for increasing cash subsidies and the government is facing severe difficulties in paying even the current amount," Deputy Majlis Speaker Masoud Pezeshkian also told ICANA on Friday.

Ebrahim Raeisi and Mohammad Baqer Qalibaf are hopefuls promising to double or triple the cash subsidies paid to the lowest income deciles of the Iranian society, should they win the office.

The former, a longtime judge who is currently the custodian of the holy shrine of Imam Reza (PBUH), and the latter, the former police chief and incumbent Tehran mayor, are leading challengers to Hassan Rouhani's reelection bid in the six-man marathon.

The government started giving people handouts in 2010, under the Subsidy Reform Plan initiated by Rouhani's predecessor Mahmoud Ahmadinejad.

The plan decreased indirect subsidies on food and energy, as all Iranians were paid 455,000 rials on a monthly basis.

A slump in global oil prices has prompted Rouhani's administration to seek ways of restricting the number of cash recipients.

Currently, more than 90% of all Iranians receive the direct subsidy, but its real worth has declined from around $45 at the beginning to just $12 now.

Pezeshkian said the two presidential candidates ought to clarify where the money needed to increase subsidy payments would come from.

"The candidates say tax should not be imposed on some people and oil incomes should not be included in the budget, so how would they run the country?" he said.

Pezeshkian said the only imaginable options ahead for the prospective government of Raeisi or Qalibaf would be either borrowing from the central bank or selling the country's assets.

"The sale of national assets would burn the future and printing money would create a massive inflationary impact," he said.

Quite a few economic experts and officials have come down hard on the electoral pledges, describing them unrealistic and populist electioneering.

The spending pledges have also drawn the ire of Majlis Speaker Ali Larijani, under whose watch the legislature is in charge of setting the annual budget for all spending, including the cash subsidies.

Earlier this month, Larijani announced that considering the country's economic situation, the next government would be incapable of increasing cash handouts.