Spending will rise by 27 per cent to IR 1,957 million million ($215,054 million) in the Iranian year 1385, starting on 21 March. The president said the biggest increase would be in provincial spending. ‘There will be a 180 per cent increase in the budget for the provinces,’ said Ahmadinejad. ‘We are trying to activate the provinces and move jobs from Tehran.’ Iran’s poorest areas are in the western and southern provinces.

The new budget is based on a forecast oil price of $39 a barrel – a significant rise on the $28 a barrel used for the last budget. The higher figure means far less money will go to the OSF, which funds low-interest industrial loans, as well as providing a cushion against energy market instability. The expected cash injection has drawn criticism from economists and the Majlis, which must ratify the budget before it will be adopted. Mohammed Khoshchehreh, head of the Majlis economy commission, said it could further increase inflation, which this year is running at about 14 per cent.

The Management & Planning Organisation, the government department responsible for drawing up the budget, says the economy will grow by 6.5 per cent in 1385. However, some economists remain sceptical about the figures, pointing to the original strong forecasts for growth in 1383, which were later revised significantly downwards. The budget figures do not allow for possible sanctions on Iran because of its nuclear programme.