Ahmadinejad praises Iran's subsidy reforms plan

Ahmadinejad referred to implementation of the second phase of the national targeted subsidy plan, and said the project was the start of a major economic development in the country. The president made the remark on Thursday, addressing a large group of local people in Khorassan Razavi province. Ahmadinejad also said that Iran's economy has the potentials to be considered as one of the world's major economies. On December 19, 2011, Iran began a long-awaited subsidy reforms plan after months of speculation regarding the timing or degree of the subsidy cuts. The plan included subsidy cuts on energy prices, including the heavily subsidized gasoline prices. The price of heavily subsidized gasoline (for the first 60 liters purchased by each motorist per month) was increased to 4,000 rials ($0.40) per liter, from 1,000 rials ($0.10) per liter, and all gasoline purchased above the monthly quota was priced at 7,000 rials ($0.70) per liter going forward. Ahmadinejad announced at the time that the launch of his economic reform plan is aimed at overhauling the country's economy by phasing out energy and food subsidies. Under the plan all subsidies are to be gradually removed during a five-year period. The subsidy cuts (also known as targeted subsidies) plan - encompassing key consumer goods such as gasoline, natural gas, and food - is said to be one of the most important undertakings in Iran's recent economic history. Ahmadinejad has also vowed that the Iranian government would tackle economic problems such as housing, unemployment and improve the banking system through his economic reforms plan. According to the president, the initiative would lead to a better distribution of wealth among the public. Officials say energy subsidies have cost the Iranian government around 100 billion dollars. Analysts say that the plan is in line with recommendations from global financial organizations which advised Iran to get rid of a heavily subsidized economy if it wanted to boost its economic power.