Targeted Subsidies Reform Act
Basic Information
Country
Geographic area
Institutions and agencies involved
Programme type
Programme Details
Programme objectives
To replace direct price subsidies with universal cash transfers to households and absorb the increase of the prices of all major petroleum products and natural gas as well as electricity, water and bread;
IMF. 2014. Islamic Republic of Iran—Selected Issues. Washington, DC: International Monetary Fund. Accessed on 19 March 2024. <https://www.imf.org/external/pubs/ft/scr/2014/cr1494.pdf>.
Silva, J., V. Levin, and M. Morgandi. 2013. Inclusion and Resilience: MENA Development Report. Washington, DC: World Bank. Accessed on 19 March 2024. <https://openknowledge.worldbank.org/bitstream/handle/10986/14064/9780821397718.pdf?sequence=1&isAllowed=y>.
Programme components
The Reform Act envisaged the replacement of product subsidies with targeted transfers to the population, with some assistance to Iranian companies and the government. The Reform Act stipulated that households would receive at least 50 per cent of the increase in revenues derived from the reform. Initially, the benefits were to be paid in cash, while in a second phase, some of the additional revenues were to be used to support higher social benefits and public goods. 30 per cent of the additional revenues were to be used to assist Iranian companies restructure to adjust to the new, dramatically higher energy costs. The remaining 20 per cent of the additional revenues would go to the government to cover its own higher energy bill
UNICEF Iran. 2017. Personal communication.
Coverage
77.45 million people - 93% Iranian households in 2020
Programme expenditure
IRR 3.15 Trillion
Source of funding: Government, through the income from the sale of oil, extracted petroleum products, natural gas, LPG, minerals, among others.
Targeting and eligiblity
Targeting methods
Targeted areas
Target groups
Gradually becoming a targeted programme as the highest income deciles are being excluded through direct means-testing. Since May 2022, the tenth decile has been omitted from the lists of beneficiaries.
UNICEF Iran. 2017. Personal communication.
Iranian Students' news agency. 2022. The high-income tithe was removed from the cash subsidy list. Available at: isna.ir/xdLCd3. Accessed on 19 March 2024.
Eligibility criteria
All Iranians were eligible; the application could be completed electronically ;
IMF. 2014. Islamic Republic of Iran—Selected Issues. Washington, DC: International Monetary Fund. Accessed on 19 March 2024. <https://www.imf.org/external/pubs/ft/scr/2014/cr1494.pdf>.
Salehi-Isfahani, D., B. Wilson Stucki, and J. Deutschmann. 2015. “The reform of energy subsidies in Iran: The role of cash transfers.” Emerging Markets Finance and Trade 51(6):1144–1162. Accessed on 19 March 2024. <http://www.tandfonline.com/doi/abs/10.1080/1540496X.2015.1080512>.
Eligibility reassessment (if any)
It is an ongoing and phased process; the government has phased out the highest income decile through means-testing since 2010
UNICEF Iran. 2017. Personal communication.
Coverage and other information
Type of benefits
Cash
IMF. 2014. Islamic Republic of Iran—Selected Issues. Washington, DC: International Monetary Fund. Accessed 28 July 2017. <https://www.imf.org/external/pubs/ft/scr/2014/cr1494.pdf>.
Amount of benefits
Since May 2022, the amount of benefits has been increased to IRR 4 million (about USD 14) per month for each person in the household of the first three deciles, and IRR 3 million (about USD 10) per month for each person in the household of the fourth to ninth deciles.
Payment/delivery frequency
Benefit delivery mechanism
Benefit recipients
Head of household, commonly a man; a widow’s certificate was required to register a woman as the head of the household
Salehi-Isfahani, D., B. Wilson Stucki, and J. Deutschmann. 2015. “The reform of energy subsidies in Iran: The role of cash transfers.” Emerging Markets Finance and Trade 51(6):1144–1162. Accessed 28 July 2017. <http://www.tandfonline.com/doi/abs/10.1080/1540496X.2015.1080512>.
Legal Framework
MIS
Integrated Iranian Welfare Information System: a comprehensive information system that covers and links all forms of social transfers and benefits as well as income and assets (except for bank accounts) with the unique national ID of individuals; it covers almost the whole population of the country, as it is based on the vital databank of the Civil Registration Organisation and national ID numbers
UNICEF Iran. 2017. Personal communication.