[R-G] Tehran Plans 17% Rise in Spending

[Yoshie Furuhashi]

<http://www.ft.com/cms/s/0/0bad1024-bd8b-11dc-b7e6-0000779fd2ac.html?nclick_check=1>
Tehran plans 17% rise in spending

By Najmeh Bozorgmehr in Tehran

Published: January 8 2008 02:00 | Last updated: January 8 2008 02:00

Mahmoud Ahmadi-Nejad yesterday proposed a 17 per cent spending
increase in Iran's annual budget in a move seen as an attempt to
bolster his government's populist policies ahead of presidential
elections in 2009.

The president presented the budget to Iran's parliament in a new
format that will give authority and flexibility to ministers and
governor generals in 30 provinces to decide how to spend their share
of the 274,500bn rials ($292bn, €199bn, £148bn) budget. The changes
made it more difficult to make a like-for-like comparison with the
current year's spending.

The president is under mounting pressure from his political opponents
and -ordinary Iranians over price rises and the failure - his critics
say - to deliver on previous promises to create jobs and distribute
record oil revenues.

Mr Ahmadi-Nejad said the "structural change" in budgeting included
narrowing down the number of state-owned organisations to receive
money from the budget to 69 instead of 610. As a result, the budget
bill was reduced from 2,400 pages to 600, eliminating many clauses
that used to detail expenses.

For decades, the government has had to present budget bills in full to
make supervision by parliament and audit bodies possible.

Analysts say the new -version, expected to be endorsed by the
conservative-dominated parliament, could help the government realise
its populist policies - in particular those formed on the president's
high-profile provincial trips which have been characterised over the
past two years by large spending promises.

Economists have accused the government of injecting surplus oil
revenues into different sectors, which has led to a rise in liquidity
and of inflation.

The budget's base for next year's oil revenues is $39.7 per barrel -
much below international prices. Windfall oil income should go into
the Oil Stabilisation Fund, which contains only about $8bn. The
government has been criticised for raiding the fund for daily
expenses.

Iran, sitting on the world's second largest oil and gas reserves, is
expected to earn more than $60bn in oil revenues by mid-March. This is
viewed as a double-edged sword for the government because it fuels
expectations.

Mr Ahmadi-Nejad urged parliament to give the government an extra
$1.2bn from surplus oil revenues so that people's daily needs could be
met before the Iranian New Year.

"Neither the government nor the parliament can be indifferent to this
[public] expectation . . . that now that oil is sold . . . on average
between $70-$71 [per barrel] it should have an impact on people's
lives." *Iran has blamed Turkmenistan for the decision to halt its
daily gas deliveries after heavy snowfall in some parts of Iran led to
a cut in gas and electricity supplies to some northern and
northwestern provinces, which can be as cold as -20°C.

Turkmenistan has halted its daily delivery of 24m cubic metres of gas,
after at least doubling the price. Iran has refused to pay.

The shortage could be the one of the reasons why the government has
announced two days of public holidays.

--
Yoshie
<http://montages.blogspot.com/>