Ahmadinejad says new budget less dependent on oil

TEHRAN (Reuters) - Iranian President Mahmoud Ahmadinejad said on Sunday the national budget for 2010/11 would lessen reliance on oil revenues, a move aimed at making the Islamic state less vulnerable to any Western sanctions.

Iran's President Mahmoud Ahmadinejad speaks at a news conference during the session of United Nations Climate Change Conference 2009 in Copenhagen December 18, 2009. REUTERS/Christian Charisius

Ahmadinejad, who faces opposition protests seven months after his re-election, also said Iran “will have good news over production of 20 percent enriched fuel in February.”

“This news will make the Iranian nation and other independent nations happy,” he told reporters in parliament after presenting the budget to parliament.

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 U.N. sanctions over its nuclear work.

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

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 per barrel, much higher than last year’s $37.5 per barrel.

“The budget is based on around $60 per barrel,” said Rahim Membini, the president’s deputy in charge of Iran’s budget affairs, the official IRNA news agency reported.

Oil prices fell to four-week lows on Friday, with U.S. 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 the end of that year.


The United States and its European allies plan to impose further sanctions on Iran after its failure to meet a December 31 U.S. deadline for accepting a U.N.-brokered proposal to send its uranium abroad for processing.

Tehran has sought amendments to the deal, under which it would transfer stocks of low-enriched uranium (LEU) abroad and receive fuel in return for a medical research reactor. Tehran says it could produce the fuel itself if it is not able to obtain it from abroad.

The West says Iran is trying to develop nuclear weapons under the cover of its civilian atomic program. Iran denies the claim, saying it needs the technology to generate power.

The U.N. Security Council has imposed three rounds of sanctions on Iran since 2006 for Tehran’s failure to suspend its sensitive enrichment work.

Ahmadinejad said the new budget was “transparent, integrated and flexible,” but did not offer any overall figures.

The semi-official Mehr news agency said the allocated budget for the next Iranian year was $368 billion.

To ease the impact of sanctions on, for example, gasoline 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 gasoline, natural gas, electricity, water, food, health and education.

“The inflation will drop to five percent by implementation of the subsidy bill,” Ahmadinejad said. The official inflation rate in Iran stands around 13 percent. 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 30 years.

Additional reporting by Hashem Kalantari, Editing by Diana Abdallah