MPs in Iran on Monday scrapped a proposal in the budget which would allow the government to raise energy prices following protests that this would stoke inflation, a media report said. Under a 298-billion-dollar budget, whose outlines parliament approved on Sunday, the government had planned to earn 20 billion dollars in the year to March 2010 by hiking prices for heavily subsidised energy and utilities.
In the debate MPs "omitted the clause about the effect of targeted subsidies" which included raising these prices and making cash payments to low- and middle-income groups, the semi-official Fars news agency reported. Several MPs and a group of Iranian economists had earlier warned against the proposal, saying it would increase poverty and stoke already high inflation, press reports said. They said prices could rise fourfold if the proposal was approved by the parliament, which is currently reviewing details of the budget bill before giving its final approval.
The budget - lower than the current year's 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.
Oil revenue accounts for 80 percent of Iran's foreign currency receipts, making the economy highly vulnerable to shifts in global crude prices, which have sunk to around 50 dollars a barrel from a high last year of 147 dollars. In a letter carried by several reformist newspapers, 13 economists urged lawmakers "not to approve a sudden rise of energy prices," saying the measure was being taken "out of desperation" following the oil slide.
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