Iran parliament passes $298 billion budget

Irans parliament on Sunday approved a budget of 298 billion dollars for the year to March 2010 that was submitted by President Mahmoud Ahmadinejad in January, the official IRNA news agency said. It said the lawmakers were discussing the details, including projected revenue and expenditure for the next year.
The budget - lower than the current years 307 billion dollars - comes at a time when Iran is battling high inflation of around 26 percent and reduced revenue because of the plunge in world oil prices.
Ahmadinejad presented the budget based on an oil price of 37.5 dollars a barrel, sharply lower than its peak of nearly 147 dollars in the middle of last year. The final budget deficit forecast for the next year was not immediately clear, but last month a parliamentary research centre report said Iran faced a deficit of 44 billion dollars for the year to March 2010.
The centre said the government plans to cover the hefty deficit from overdue taxes, dividend income from state-owned companies and 11 billion dollars from the Oil Stabilisation Fund.
It also warned that if oil prices stay low there will be a foreign currency shortage. Ahmadinejad has been strongly criticised by economists for inflation-stoking withdrawals from the Oil Stabilisation fund, which holds any oil revenue that exceeds budget forces and was set up to guard against oil price fluctuations and to finance private sector projects.
OPEC-member Iran, the worlds fourth largest producer of crude and a country where the state controls 80 percent of the economy, depends heavily on oil revenue for government spending.
Earlier on Sunday, the ISNA news agency quoted official figures saying that inflation in the Iranian month of Bahman ending on February 18 hit 25.9 percent, higher than the previous months figure of 24 percent. The February figure was still lower than the September 2008 peak of 29 percent.
Central bank chief Mahmoud Bahmani has vowed to cut inflation to around 22 percent by March 20, end of the current Iranian year, in a strategy of "increasing production and supplying goods proportionate to demand."
Central bank officials have cited growth in money supply as a prime cause of the surge in inflation, along with rising global prices. Analysts predict that the government injecting oil money into the economy will keep inflation considerably high for years to come, despite central bank efforts to reduce excessive liquidity.