Iran's defense spending would more than double under plans set out by President Mahmoud Ahmadinejad on Wednesday, but critics said his overall draft budget took too little account of economic pressures posed by mounting international sanctions.
Ahmadinejad presented to parliament a budget based on a 20 per cent rise in tax revenues, but some analysts thought this unrealistic as Iran struggles with threats to key oil revenues from sanctions linked to its disputed nuclear ambitions.
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The president said the public budget for 2012-13 was worth around $90 billion, with an increase of 127 per cent in the defense budget. The public budget covers items like wages, subsidies and development projects.
"The total budget is around 510 trillion tomans (around $415 billion), of which 400 trillion tomans covers state firms and entities," Ahmadinejad told lawmakers in a speech broadcast live by state radio.
Iranians fire rocket in Persian Gulf (Photo: Reuters)
Tension with the West rose last month when Washington and the European Union imposed the toughest sanctions yet in a drive to force Tehran to curb its nuclear work. The measures target the ability of OPEC's second biggest Oil producer to sell its crude.
Iran has suggested it will fight sanctions with sanctions, with the oil minister saying the Islamic state would soon stop exporting crude to "some" countries.
Iran has repeatedly said it could close the Strait of Hormuz shipping lane if sanctions prevent it from exporting crude, a move in the vital waterway which Washington said it would not tolerate.
Oil field in Iran (Photo: MCT)
Ahmadinejad said the draft budget proposed a 5.6 percent drop in government spending. Parliament has often criticised Ahmadinejad for allowing government spending often to exceed what was initially planned.
"The budget is aimed at securing a growth rate of eight percent, higher than 7.3 percent growth in the current year. The budget bill for 1391 (the Iranian year starting on March 20) has been drawn up by taking into account the price of oil and the international economy," Ahmadinejad said,
without giving a figure.
Iranian media said the budget was based on an oil price of $85 a barrel, which is below international crude prices. Brent crude rose above $111 a barrel on Wednesday, gaining for a second straight session on fears that tensions between Iran and the West may escalate further.
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