Iranian president Mahmoud Ahmadinejad has presented a draft budget of $539bn to the Iranian parliament (Majlis) for the Iranian year 1390, which starts on 21 March 2011.

The Majlis will make a decision on the budget within 15 days of it being submitted. If it is approved, the draft will be sent to the Guardian Council for final approval.

The new budget is based on an oil price of $80 a barrel and the budget for state-owned companies is $362bn.The budget for the year to 20 March 2011 was $368bn, meaning the 2011 budget is over 40 per cent up on the previous year.

The main reason behind the budget hike is the implementation of Iran’s subsidy plan introduced at the end of 2010. The plan will remove all subsidies over a five-year period. Subsidies will be removed on gasoline, natural gas, electricity and food. By eliminating subsidies, the government has promised to give 50 per cent of the money saved to Iran’s lower classes to offset the impact of higher prices. This is a politically motivated move, given that the majority of the uneducated poor were the main supporters of Ahmadinejad’s initial rise to power. Another 20 per cent will go towards infrastructure projects (MEED 22:12:10).

Ahmadinejad also says he plans to tackle unemployment, which is a huge problem in Iran. The president says he hopes to reduce unemployment by 2-3 per cent by 2013 and will aim to create up to 2.4 million new jobs each year until then.