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01 March 2024

Iran okays less oil revenue-dependent budget

By Reuters

Iranian President Mahmoud Ahmadinejad said yesterday that the national budget for 2010-11 would be less dependent on oil revenues, a move aimed at making the Islamic state less vulnerable to any Western sanctions.

"We have paid special attention to reducing dependence on oil income, increasing non-oil revenue," Ahmadinejad told parliament in a speech broadcast live on state radio.

Ahmadinejad, who faces opposition protests seven months after his re-election in June, also said Iran would announce "good news" about its nuclear fuel production in February.

Critics accuse Ahmadinejad of squandering the windfall oil revenue Iran earned when crude prices soared in the first half of 2008, leaving it more vulnerable now that it faces possible UN sanctions over its nuclear programme. A senior official said the world's fifth-largest oil producer's budget for the next Iranian year, which starts on March 21, was based on an oil price of $60 (Dh220) per barrel, higher than last year's $37.5 per barrel.

"The budget is based on the average price of around $60 per barrel," said Rahim Membini, the president's deputy in charge of Iran's budget affairs, the official news agency reported.

Oil prices fell to four-week lows on Friday, with US crude settling at $74.54 per barrel and ICE Brent crude at $72.83. Prices are at roughly half the peak seen in July 2008 but double the level oil had sunk to by that year end.

The president described the new budget as "transparent, integrated and flexible", but did not offer any overall figures. To ease the impact of sanctions on, for example, petrol imports, parliament approved in December a bill to phase out energy and food subsidies.

By carrying out the plan, the government will save up to $100 billion annually from subsidies on petrol, natural gas, electricity, water, food, health and education.

"The inflation will drop to five per cent by implementation of the subsidy bill," Ahmadinejad said. The official inflation rate in Iran stands around 13 per cent. The plan is expected to be implemented in the next Iranian year.

Critics say the plan will increase inflation and may ignite social unrest, when the establishment still faces street protests after the June 12 vote that plunged the country of over 70 million into its worst unrest in the past thirty years.


Iran plans to issue bonds worth up to €5 billion (Dh25.96bn) from March 2010 to help finance development of its key energy industry, the semi-official Mehr news agency reported yesterday.

"Based on next year's budget bill, which was presented by President Mahmoud Ahmadinejad early yesterday, the government permits the oil ministry to issue up to €5bn bonds to help finance development of the country's oil, gas and petrochemical sectors," the agency reported.

It said the bonds would be issued during the next Iranian year, starting on March 21, but gave no further details. Iran has struggled for years to find the cash and the technology to develop its energy industry as sanctions and political pressure have kept foreign firms away.

Iranian officials have previously announced plans to issue such bonds, but did not give a specific date.

In September last year a senior official at Iran's Pars Oil and Gas Company (POGC) said a €1bn bond was planned for the development of the South Pars natural gas field in the Gulf.


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