Iran on Sunday announced an upward revision of its annual budget, as a rise in oil prices appeared to mitigate the impact of international sanctions on its economy.
The Islamic republic’s Guardians Council approved the budget for Iran’s calendar and fiscal year to March 2013 at 5,560,000 billion rials ($453 billion at the official rate), the official IRNA news agency reported.
President Mahmoud Ahmadinejad presented his government’s annual budget to parliament in February, asking for 5,100,000 billion rials ($410 billion).
The budget bill revised by lawmakers was endorsed by the Guardians Council on Sunday, without an explanation for the reassessment.
Iran, the oil cartel OPEC’s second-biggest producer, has benefited from historically high oil prices which rose steadily in the first quarter of 2012 due to the European Union announcement of its plans to embargo Iranian crude.
The budget, however, remains lower than that of the 2011-12 fiscal year, which was set at $484 billion.
The official exchange rate is set at 12,660 rials against the dollar, up from 11,000 the previous year. The rate remains well below the free market where the rial fluctuates between 16,000 and 18,000 to the greenback.
The government’s budget is set at $113 billion, which counts for only a small percentage of the national budget, mostly represented by the state sector of the economy, including banks, industries and semi-governmental bodies.
Iran has allocated $49 billion of oil revenues to the government’s budget, with the forecast price of $85 a barrel, up from $81 last year.
Under severe Western sanctions on its banking and oil sectors, Iran says it has built up large reserves of gold and currencies to withstand the punitive measures over its disputed nuclear programme.
The sanctions have led to higher import prices, increased inflation, lower foreign investment and difficulties in repatriating currency, in particular in the oil sector, experts said.
According to international oil circles, Iran is also beginning to have difficulties in exporting its crude, despite its repeated denials.
OPEC estimates, meanwhile, show Iran’s crude production has declined steadily since 2008, dropping to 3.2 million barrels per day in April — its lowest level in two decades. Iran denies the report.
Iran’s oil sector will take another hit on July 1 when the European Union is poised to fully implement an embargo on Iranian crude.