Iran unveils budget of 'resistance' against US sanctions

President Rouhani says budget will benefit from a $5b investment from Russia

TEHRAN: Iran's President Hassan Rouhani announced Sunday a "budget of resistance" against US sanctions targeting the country's vital oil sector, backed by a $5 billion Russian investment.

Rouhani said the aim was to reduce "hardships" in the Islamic republic where a sharp fuel price hike last month triggered nationwide demonstrations that turned deadly.

The US sanctions imposed last year in a bitter dispute centred on Iran's nuclear programme include an embargo on the oil sector whose sales Washington aims to reduce to zero in a campaign of "maximum pressure".

Iran has suffered a sharp economic downturn, with a plummeting currency sending inflation skyrocketing and driving up import prices.
Rouhani told parliament that the budget of 4,845 trillion rial, or $36 billion at the current street rate, was devised to help Iran's people overcome difficulty.

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"We know that under the situation of sanctions and pressure, people are in hardship. We know people's purchasing power has declined," he said.

The budget would benefit from a $5 billion "investment" from Russia which was still being finalised, said Rouhani.

"We hope that $5 billion in capital will enter the country, either through plans that have already been finalised or which will be finalised next year," he said.

Iran and Russia have strengthened ties in recent years, with both backing President Bashar al-Assad in Syria's civil war.

Rouhani told lawmakers the budget, which includes a 15-percent public sector wage hike, "is a budget of resistance and perseverance against sanctions".

He said the fiscal plan came in response to the "maximum pressure and continuation of America's sanctions" and vowed it would signal "to the world that, despite sanctions, we will manage the country, especially in terms of oil".

Iran, a founding member of the Organization of the Petroleum Exporting Countries (OPEC), sits on the world's fourth-biggest oil reserves and second-largest gas reserves.

Rouhani said that despite the US sanctions, his government expected to earn almost 455 trillion rials ($3.4 billion) from oil exports.

But he also said Iran's non-oil economy would "be positive" in the next year.

"Our exports, our imports, the transfer of money, our foreign exchange encounter a lot of problems," he said.

"We all know that we encounter problems in exporting oil. Yet at the same time, we endeavour to reduce the difficulty of people's livelihood.

"Contrary to what the Americans thought, that with the pressure of sanctions our country's economy would encounter problems, thank God we have chosen the correct path... and we are moving forward."

The budget announcement comes after fuel price hikes Iran announced in mid-November triggered demonstrations across the country before security forces cracked down on protesters amid an internet blackout.

Officials in Iran have yet to give an overall death toll for the unrest in which petrol pumps and police stations were torched and shops looted.

London-based human rights group Amnesty International said at least 208 people were killed in the crackdown. Iran has dismissed such figures as "utter lies".

US President Donald Trump began imposing punitive measures in May 2018, after unilaterally withdrawing from an accord that gave Iran relief from sanctions in return for limits on its nuclear programme.

The United States has continued to ramp up its sanctions this year as part of a stated campaign of "maximum pressure" against the Islamic republic.

Iran's economy has been battered, with the International Monetary Fund forecasting it will contract by 9.5 percent this year. The sharp downturn has seen the rial plummet and inflation running at more than 40 percent.

In his speech, Rouhani only touched on a few areas of the budget for the financial year starting late March 2020, which must be scrutinised and voted on by parliament.

"All our efforts are geared towards reducing these hardships to some extent so it can be more tolerable," he said.