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Iranians deliver Rouhani's first political defeat

Published on Apr 25, 2014 10:45 AM

TEHRAN (AFP) - Eight months after taking office, Iranian President Hassan Rouhani has suffered his first major political defeat, with the public overwhelmingly brushing aside appeals to forgo direct government aid.

The 455,000-rial (S$22.39) monthly handout scheme, initiated in December 2010 by Rouhani's predecessor Mahmoud Ahmadinejad, is part of broader economic reforms aimed at overhauling the country's massive subsidy system.

The reform - which phases out parts of remaining subsidies on energy, utility bills and basic food costs - is forecast in this year's budget to save the cash-starved government US$18 billion (S$22.7 billion).

Encouraged by economists as a way of regulating Iran's economy, which is stretched thin with debilitating sanctions and mismanagement, the plan's second phase is expected to begin this week.

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