Iran to have bigger budget despite 19 percent inflation amidst massive oil subsidies

TEHRAN, Jan 7, 2008 (AFP) - President Mahmoud Ahmadinejad said Monday he was seeking a 17 percent spending increase in the budget for the next Iranian year, amid concerns the government's expansionary policies are stoking inflation.





Unveiling his budget plan to parliament, Ahmadinejad argued that ordinary people in OPEC's number two oil producer needed to see the fruit of the dramatic surge in crude prices.

"The government and the parliament cannot stay indifferent to this expectation. We need to redistribute the oil money to the people," the president said in a speech to parliament.

Ahmadinejad asked parliament to approve a 2,710 trillion rial budget (285 billion dollars) compared to last year's budget of 2,310 trillion rials (248 billion dollars).

The budget includes spending for the government and state firms.

The government budget was set at 715 trillion rials (75 billion dollars), up 10 percent from the year earlier.

Ahmadinejad said the budget assumes an oil price of 39.

7 dollars a barrel, a figure well below the current crude price on world markets of almost 100 dollars.

"We will be using 36 billion dollars in foreign currency, including for imports of petrol and developing public transport," he said.