Ahmadinejad. Forced to trim spending
צילום: AFP
Iranian president acknowledges economy is in bad shape
In unprecedented statement, Ahmadinejad says falling oil prices will force Iranian government to raise taxes just months before election; European diplomats say sanctions also had an effect
Iranian President Mahmoud Ahmadinejad is acknowledging publicly for the first time that tumbling oil prices are gouging the country's fragile economy.
The official IRNA news agency is quoting the increasingly unpopular president as saying Iran will be forced to trim spending and generous subsidies and raise taxes. It's a sensitive admission for the Iranian president, who is seeking re-election in June.
Ahmadinejad has rejected international demands that his country curb its nuclear program, and as a result Iran has been plagued with economic sanctions. The president has stated repeatedly that the sanctions have had no effect, but European sources told Ynet that they have succeeded in weakening Iran's economy considerably.
Other factors wreaking havoc on the country's finances are oil prices, which have plunged from $147 a barrel in July to under $50, adding to the pain of Iran's rising inflation and unemployment.
Wednesday's report quoted Ahmadinejad as saying the government budget would have to be readjusted to base it on an oil price of around $30 a barrel.
Iran's elections are scheduled for June 12, 2009. So far just one nominee, the reformist Mehdi Karoubi, has announced candidacy. Ahmadinejad has not yet officially stated that he will run.
Dudi Cohen contributed to the report
