$368bn Iranian budget okayed

Iran"s parliament yesterday gave its final approval to a $368 billion (Dh1.35 trillion) budget for the year to March 2011, a week after it cut the outlay by $20bn, state media reported.

The final budget outlay for the year ahead is what was originally proposed by President Mahmoud Ahmadinejad. But last week MPs passed a $347bn budget by blocking a key proposal by Ahmadinejad to give the government $40bn in anticipated savings from a partial roll-back of subsidies on energy goods.

Lawmakers voted on March 9 to give the president only $20bn out of his proposed $40bn, saying the scrapping of subsidies would lead to a further rise in inflation.

It was unclear yesterday from where the government planned to generate the extra $20bn that helped hike the final budget outlay to $368bn.

Iran earns 80 per cent of its total revenues from oil exports. The budget for the 12 months to March 2011 is marked by the start of a major plan to scrap costly subsidies on energy goods that directly or indirectly cost the government as much as $100bn a year.

Economists have strongly criticised Ahmadinejad for policies they say have created a highly inflationary economy since his first term as president began in 2005.

Removing the subsidies is to be a gradual process due for completion by the March 2015 end of Iran's fifth five-year development plan.

Follow Emirates 24|7 on Google News.