The vast majority of Iranians will soon be receiving around $60 in direct monthly cash payments  [Reuters]

Iran is boosting the monthly cash payments it gives to its citizens by more than 50 per cent, the Iranian labour news agency has reported, as soaring inflation and the depreciating rial continue to bite deep into the national economy.

The increase will soon be deposited in recipients' accounts, the head of the organisation for targeted subsidies, Behrouz Moradi, was quoted as saying on Sunday, but cannot be used until the second phase of the government's subsidies plans is launched.

The Iranian government implemented the first-stage of its targeted subsidies plan towards the end of 2010 in an attempt to wean the country off more generous food and fuel subsidies, which guranteed basic staples at low prices, in order to cut government spending.

At the time, President Mahmoud Ahmadinejad called it the "biggest economic plan of the past 50 years".

After the additional payment, the vast majority of Iranians will receive around $60 in direct monthly cash payments.

The next stage is expected to be introduced in April with the goal of reducing payments from 90 per cent to 80 per cent of the population.

It is unclear from the report if the additional amount will be paid on a monthly or fortnightly basis.

The country has been largely cut off from global commerce after the company that handles worldwide financial transactions said it was severing ties with many Iranian banks.

The Society for Worldwide Interbank Financial Telecommunication [SWIFT]  said it was doing so to back European Union sanctions imposed on Iran for its alleged nuclear weapons programme.

Staggering inflation

Critics of the plan have accused Ahmadinejad of embarking on a programme of wasteful public spending that has resulted in soaring inflation.

Food and fuel prices have spiralled since the reforms were introduced, causing deep financial problems for millions of
people across the country. The price of petrol has risen three-fold and the cost of gas has soared by 500 per cent.

Last week Iran's most powerful authority, Ayatollah Ali Khamenei, gave his full backing to the targeted subsidies plan
which he say was an important means of distributing subsidies in a more balanced way.

Last year, the International Monetary Fund commended the Iranian government for the policy which it said had led to a reduction in fuel consumption and inflationary pressure. 

According to official figures, inflation has decreased to around 20 per cent but critical MPs say the real figure is closer
to 50 per cent.

New measures imposed by the United States and its allies targeting Iran's financial and energy sectors have resulted in a dramatic devaluation of the rial since the beginning of the year.

Source: Agencies