In early May, the Iranian government announced a substantial economic reform program. Dubbed as “economic surgery,” the measures include a revamping of subsidies and the discontinuation of the lower exchange rate used for imports of essential goods such as food.

Despite the heavy criticism and street protests, the ideas behind the reforms make sense. However, the question is whether the implementation of the changes will generate positive results. To fully assess the reforms, it is important to unpack their components, upsides and downsides as well the reactions from experts.

Discontinuation of the subsidized exchange rate

From Apr. 2018 until March this year, Iran used a subsidized exchange rate of 42,000 IRR per USD to import a number of basic goods, mainly food and pharmaceuticals. Given that the main exchange rate used for commercial imports values the USD six times higher at some 260,000 IRR, the change has pushed up consumer prices, much to the detriment of the average citizen...