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Can Iran finally pass subsidy reform?

Past reform efforts have been hindered by inefficiency and corruption, and the challenge of implementation remains.
EDITORS' NOTE: Reuters and other foreign media are subject to Iranian restrictions on leaving the office to report, film or take pictures in Tehran.

A vendor hangs vegetables in front of a shop in a bazaar in northern Tehran February 29, 2012. For months now, Iranians have endured economic hardship, political repression and international isolation as the authorities refuse to halt sensitive nuclear work as demanded by the U.N. Security Council. REUTERS/Morteza Nikoubazl (IRAN - Tags: POLITICS ELECTIONS SOC

Iran is preparing to implement the second phase of its subsidy reforms, generating anxiety among politicians, businesspeople and society at large. 

The Iranian government has approved the executive bylaws that determine the implementation of the second phase of removing the blanket subsidies on energy and foodstuffs in return for cash handouts to the vulnerable social classes. The first phase of the reforms was introduced in December 2010 by the previous government and caused major inflation over the past three years. Critics of former President Mahmoud Ahmadinejad accused his administration of neglecting legal provisions such as the allocation of only 50% of the new revenues from price increases for cash handouts to society. Consequently, the administration of President Hassan Rouhani has committed to structuring the new phase of price adjustments more in line with the original law and with less inflationary impact. The government also made preparations to discontinue payments to a large segment of the middle and higher-income Iranian families.

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