Officials of the International Monetary Fund say Iran has cut inflation in half and sharply reduced the money it spends subsidizing energy, wheat, transportation and other goods needed by consumers.

After a visit to Teheran, IMF experts said Iran's inflation rate has fallen to a bit over 12 percent. The government has also made deep cuts in subsidies for energy, which will encourage Iranian companies to adopt more energy efficient practices. That will make more energy available for profitable exports and help the economy.

Officials from the global lender said Iran's economic growth sped up and rose to 3.5 percent in 2009 and 2010, even though prices for its crucial oil exports faltered.

But the IMF warned that the government should consider raising interest rates and cutting spending to keep inflation under control.

An expert on Iran's economy, Professor Farrokh Zandi of York University in Toronto, says cutting inflation and subsidies are good for the economy in the long term. But Zandi says reducing subsidies is difficult politically because it causes price increases in the short term.