The Economy of Iran
Subsidies and Reform Attempts
Iran heavily subsidised fuel and food, replaced some with cash transfers in 2010, and faced unrest when fuel prices were raised sharply in 2019.
Cheap goods, costly system.
Old subsidies
Petrol, electricity and bread were priced far below cost.
2010 reform
The government cut subsidies and paid monthly cash to households.
Erosion
Inflation cut the value of cash transfers.
2019
A sudden petrol price increase triggered nationwide protests.
A petrol queue
Drivers protest when fuel prices jump overnight.
Ignoring the political cost of subsidy reform
Sudden changes provoke unrest.
Key takeaways
- Subsidies were large.
- Cash transfers replaced some.
- Inflation eroded transfers.
- Price hikes sparked protests.
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