Iran says can't afford Ahmadinejad cash handouts

Iran can no longer sustain the billions of dollars needed to pay cash handouts enacted by former president Mahmoud Ahmadinejad, a top official said Tuesday, signalling plans to halt them. Since coming to power in 2013, Hassan Rouhani, Ahmadinejad's successor, has sought to put Iran's economy back in order after it plunged into recession and was hit hard by inflation.
Tackling the handouts - a partial replacement after subsidies on staples such as electricity, gas, water and bread were cut - has proved politically difficult.
But Ali Rabii, Rouhani's minister of labour and social welfare, wrote in an open letter that change was needed as the bill for the individual monthly payments of 455,000 rials (about $15) was too high.
"We should face reality. Reforming the current allowance payment system is a major step toward increased social justice," he said, noting all Iranians receive the money whether rich or poor.
Accused of economic mismanagement, Ahmadinejad, in office from 2005 to 2013, used funds gained from a then high oil price to finance populist policies.
He spent Iran's petrodollars on the controversial scheme at a time when sanctions imposed as punishment for the Islamic republic's disputed nuclear programme deepened its economic difficulties.
Inflation soared to over 40 percent and the rial plummeted against other currencies, chiefly the dollar.
Despite repeated calls from Rouhani's government, which has cut inflation to under 15 percent, for affluent families to refuse the allowance only 2.4 million from a population of almost 80 million have opted out.
Economy Minister Ali Tayebnia on Monday said national debt stood at about $88 billion, noting: "No one knows the exact figure."
Ahmadinejad, in two terms, "had $800 billion in oil revenue and gained $52 billion - at the current exchange rate - from selling assets. But all we have inherited is large debts," Tayebnia said.
Rabii said the subsidy reform plan ordered by Ahmadinejad "should have been based on people's eligibility," rather than being universal.