Despite economic pressures posed by mounting international sanctions, the Iranian president sees more than a double increase in the defense budget and 8 percent economic growth for the next 12 months. ‘Considering threats against Iran, it was necessary to increase the defense budget,’ says an Iranian MP.
President Mahmoud Ahmadinejad predicted yesterday that Iran’s economy would grow eight percent over the next 12 months despite severe Western sanctions, as he presented his government’s annual budget to parliament. Iran’s defense spending would more than double under plans set out by Ahmadinejad yesterday.
“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. The president said the public budget for 2012-13 was worth around $90 billion, with an increase of 127 percent in the defense budget. Ahmadinejad set out a $416 billion state budget for Iran’s calendar and fiscal year, which runs this year from mid-March. That was 14 percent less than the 2011-2012 budget, which was set at $484 billion. The president did not elaborate on the defense spending, while telling that it would increase by around 127 percent. Iran’s economy has been grappling with ratcheted-up sanctions imposed by the U.S. and the E.U.in an effort to pressure Tehran to drop nuclear activities suspected to include research for an atomic bomb. “Considering increasing pressure and threats against Iran, it was necessary to increase the defense budget,” MP Jahanbakhsh Amini told Reuters. Iran has warned it would take drastic measures, including possibly closing the Strait of Hormuz at the entrance of the Gulf to tanker traffic, if its economy is brought to its knees, or the country is attacked.
Parliamentary speaker Ali Larijani again underlined that threat yesterday, saying that while Iran considers “the Strait of Hormuz as the strait of peace, it will cut the hands of anyone who seeks [military] adventurism in the Persian Gulf and the Sea of Oman,” the Islamic Republic News Agency reported. 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 per barrel yesterday, gaining for a second straight session on fears that tensions between Iran and the West may escalate further. The president has been accused by his hardline rivals, including lawmakers, of stoking price rises with profligate spending of petrodollars.
“The submitted budget is too optimistic. It is not compatible with the realities of our economy,” said lawmaker Ali Akbar Olia.
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