$508 billion have been allotted in the Iran budget 2012, an addition of 40 percent on the 2011 budget. The Irani President Mahmoud Ahmadinejad had earlier on proposed a budget of 540 billion US dollars but the legislators have reduced it due to fears of inflation.
The Iran 2011-12 budget has been consented to by the national parliament with 149 votes in its favor and 61 votes against the same.
Highlights of Iran Budget 2012:
Iran has been able to increase its budget for the upcoming fiscal due to the substantial reduction in food and energy subsidies. This reduction is a part of a five year subsidy reform plan of the Iranian government.
The quick increase in oil prices has also assisted Iran to create a bigger budget for 2012.
At present, every barrel of oil is being sold at more than 100 dollars a rate that is applicable for several other leading producers of oil.
In Saudi Arabia one barrel of oil is sold at around 50 to 55 dollars but in Iran the prices will be approximately $81.50. The 2012 budget is also based on these prices.
For the 2011-12 fiscal Iran will spend approximately US$ 513 billion in all areas.
Majority of the money will be spent for the publicly held companies and the banking sector.
It is expected that by 2012 fiscal Iran will be able to refine 3 million barrels of oil per day.
The government will also look to add to its tax revenues by implementing an economic reform plan that will primarily generate more tax revenue from the business houses.
Expectations from Iran Budget 2012:
The OPEC (Organization of Petroleum Exporting Countries) manager for Iran, Omar Khatibi, has said oil prices can pick up during the coming summer. He feels that the main reason behind that is the fact that during the summer season people go for long vacations on cars and that leads to increase in the demand for petroleum.
In recent times Iran has seen an unprecedented decrease in oil prices more than 16 dollars per barrel. Much of this has happened because of demand related problems and the decision of investors to reduce the levels of commodities exposures.
Ahmad Tavakoli, the head of Iranian parliamentary research center, has stated that in 2011 fiscal inflation could touch the 40 percent mark. He has criticized the budget saying that it is not beneficial for Iran. The Department of Statistics of Iran has stated that if the government can implement a fiscal plan it can save a minimum of 30 to 35 percent of its expenditure.
One criticism that has often been leveled against Ahmadinejad by the Iranian legislators is that he is keeping too much power in his hands with the budget. Iran is facing some problems due to the sanctions that have been placed on them several international companies who were willing to operate in its energy sector are being discouraged due to the sanctions.
Analysts opine that at present Iran is undergoing a phase of economic recovery and is reducing its subsidies that have run up to several billion dollars and have been instrumental in limiting the prices of food, fuel and other necessary goods.
He has stated that this budget could reduce the rights of the national parliament. 50 percent of Iran s budgetary expenses are dedicated towards subsidizing basic goods and services such as fuel, bread, electricity and rice.
It is assumed that if the oil prices continue to do well then the possible financial impact of the sanctions on Iran can be offset to a significant extent. The performance of oil prices are also expected to create a buffer for consumers in case there is any inflation. Iran presently makes several cash payments in order to cover up for the subsidy cuts.