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Iran MPS Move to Boost Spending after Oil Windfall

TEHRAN, Oct 4 (Reuters) - Iran's parliament gave initial approval on Wednesday to a government plan to use up to $4 billion in extra oil income until March to help revive the stagnant economy.

State radio said deputies passed after a first reading 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 passed after a second reading and approved by a top state body, would allow 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 the extra oil income -- estimated by officials at up to $8 billion in the current year -- until the next year beginning in March 2001.

State radio said the measure allowed the government to use the extra funds to boost production and employment in industry, mines, agriculture and transport and in projects to offer technical and engineering services to the private sector.

Iran's Central Bank governor expressed hope last week that the extra oil income could help boost investment and growth and reduce unemployment, which official figures put at 16 percent.

As international oil prices hover at 10-year highs of over $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 said structural reforms were needed for a sustainable economic recovery.


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