Bloomberg News

Ahmadinejad Seeks to Cut Iranian Budget by 5.6 Percent

February 01, 2012

(Updates with details of proposed budget in second and third paragraphs, Ahmadinejad quote in fourth.)

Feb. 1 (Bloomberg) -- Iran’s President Mahmoud Ahmadinejad proposed cutting the government’s budget by 5.6 percent for the coming Iranian year while more than doubling military spending, state media reported.

Ahmadinejad presented a draft budget of 5,100 trillion rials ($450 billion) to parliament today for review, the state- run Mehr news agency reported. The plan for the Iranian fiscal year that begins March 20 includes the government or public budget as well as spending for state-owned companies of some 4,000 trillion rials, the official Islamic Republic News Agency said.

The proposed budget is 5.6 percent smaller than the plan for the current year while it allows for a 127 percent increase in spending on defense, according to Mehr. The main aim of this year’s budget is “to reach an economic growth rate of 8 percent, decrease the unemployment rate and the gap between social classes,” Ahmadinejad was reported as saying in the parliament today by the Iranian Students News Agency.

Ahmadinejad was first elected in 2005 after promising to distribute the country’s oil riches among the people of Iran. His country is now under increased pressure with a European Union Jan. 23 decision to freeze the central bank’s assets and ban Iranian oil imports from July, the latest in a series of measures by the United Nations, the U.S. and the EU over Iran’s nuclear program.

The government budget for next year is based on an average oil price of $85 a barrel, Mehr said in a Jan. 29 report. State media did not provide any confirmation of this in reports published today.

Lawmakers will be reviewing the budget in coming weeks. Once approved it must go before the Council of Guardians, a body with the power to veto legislation.

--Editors: Digby Lidstone, Ben Holland.

To contact the reporter on this story: Ladane Nasseri in Dubai at

To contact the editor responsible for this story: Andrew J. Barden at

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