Iran’s parliament has increased its budget for the year from March 2011 to March 2012 by 31 per cent to $484bn, due to higher oil prices and its successful implementation of subsidy cuts.

The new budget, which has been delayed in parliament for nearly two months, is based on average oil prices of $81.5 a barrel for the year, AFP news agency reports.

This could earn the Opec member revenues of $65bn, 20 per cent higher than expected. The government will receives $162bn from the budget, while $338bn is reserved for the public sector.

Reforms to the Islamic Republic’s energy subsidies system implemented at the end of 2010 are expected to save the country $50-60bn. However, some $38bn will be spent in direct cash-payments, which will compensate many poorer Iranians for the new subsidies(MEED 24:12:10).

The budget in 2010 was $347bn. The government began slashing $20 billion of subsidies from December 19 despite fears that it could lead to huge rises in prices of goods, which were heavily subsidised, including gasoline, electricity and natural gas.

The Central Bank of Iran will maintain its exchange rate of IR10,500 to the dollar, despite rising inflation, which hit 13.5 per cent in April, according to Bank Governor Mahmoud Bahmani.