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Iran MPs approve extra spending after oil windfall

TEHRAN, Oct 10 (Reuters) - Iran 's parliament on Tuesday approved a government plan to use about $4 billion in extra oil income to help revive the stagnant economy.

State radio said deputies passed a budget amendment allowing the government to spend half of Iran 's extra income from robust oil prices to fund development projects and create jobs.

The measure, which still has to be approved by the overseeing Guardian Council, allows the extra spending to start at once and continue in the Iranian year to March 2001.

Without the amendment the government would not have access to the extra oil income - estimated at about $8 billion in the current year - until the next year which begins in March 2001.

State radio said the measure allowed the government to use up to eight trillion rials ($980 million) of the new funds to complete unfinished development projects.

One trillion rials would be used to compensate losses from a severe drought that has hit the country and another one trillion rials would be paid as bonus to state employees.

Deputy Majid Ansari, who heads parliament's budget committee, told the radio that much of the funds would be used to provide hard currency loans to private companies for job-creating projects.

The extra funds are to be used to boost output and employment in industry, mines, agriculture and transport and in projects to offer technical services to the private sector.

Boosting growth and reducing unemployment, which official figures put at 16 percent, are the main economic priorities of the government of President Mohammad Khatami.

As international oil prices hover at 10-year highs of more than $30 per barrel, Iran 's crude oil exports of some 2.4 million barrels per day have been fetching around $26 a barrel - well above the forecast $15.80 per barrel.

Some Iranian economists have cautioned that a big cash infusion could feed inflation and have said structural reforms were needed for a sustainable economic recovery. ($1=8,165 rials).


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