Iran has adopted a $484 billion budget for the year to March 2012, an increase of 31 percent over the previous year, on the back of rising oil prices and domestic subsidy cuts, reports said Wednesday. The parliament adopted the budget after a delay of nearly two months on an average crude oil price of 81.5 dollars a barrel.
Iran, Opec's second largest crude exporter, is expected to pocket during the year oil revenues of $65 billion, up by 20 percent. The bulk of the hike in the budget comes from a hefty cut in subsidies on energy products and several essential commodities which was initiated by the end of 2010. The subsidy cuts are expected to bring in between $50 to $60 billion of additional revenue for Iran, according to estimates by experts.
The government will, however, spend $38 billion in direct cash-handouts to partially compensate citizens for the scrapped subsidies. The budget comprises of $162 billion for the government and $338 billion for the public sector, mostly state banks and companies. This year's budget was calculated on the basis of a fixed parity of the dollar to 10,500 Iranian rials, which the central bank has announced it wanted to keep despite accelerating inflation officially said to be 13.2 percent in April.