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Iran's "disinherited" still victims of economic woes 20 years on

TEHRAN, Jan 26 (AFP) - Millions of "disinherited" Iranians, in whose name the 1979 Islamic Revolution took place, are the hardest hit by the country's economic crisis on the eve of the 20th anniversary of the upheaval. Iran's have-nots, supposedly the regime's main support base, are today facing a growing decline in their purchasing power as the country's economic recession deepens, mainly due to plummeting oil prices.

The government seems to be looking on helplessly as the prices of essential consumer goods soar out of control, unable to do much except grant subsidies.

Parliament approved last week a 75-percent increase in the prices of domestic fuel, in a move which is likely to further push up the rate of inflation.

In view of the difficulties faced by the poor, the assembly turned down a proposal from the government for a 275 percent increase in petrol prices as part of its cost-cutting campaign to cope with dwindling revenues.

Most here agree that low-income earners, who makes up the bulk of the country's 60 million population, are bearing the brunt of the economic woes gripping the country.

Economic indicators are all in the red this year following a dramatic fall in crude prices, the country's main source of hard currency.

The reformist government of President Mohammad Khatami is hoping to collect more taxes to fill the gap left by falling oil revenues, which make up about half the government's total income.

According to Western experts, the Iranian economy is expected to grow by a negligible 0.5 percent next fiscal year, which begins on March 21, although the inflation rate, officially put at 18 percent, hovers around 40 percent.

Facing a budget deficit of 6.3 billion dollars this year, the government is hard pressed to pay back foreign creditors as its external debt is set to climb from 21 billion dollars presently to 22.3 billion dollars at the end of the year 2000.

Iran, the second largest oil producer in the Middle East, is counting on only 12 billion dollars from oil exports next year.

The forecast income is based on the crude price of 11.8 dollars a barrel, though Iranian crude is currently selling at around nine dollars a barrel.

The country produces an annual 3.6 million barrel per day, of which 2.5 million bpd are exported. To revive the economy, the government hopes to attract around 10.5 billion dollars in foreign investment, mainly in its oil and gas sector.

Such investment, if it arrives, will be on a buy-back basis, a mechanism which allows foreign investors to be paid back through a share of production.

The steady drop in the rate of rial against major foreign currencies is another ominous sign of the present state of the economy.

But despite the economic hardship, the country is gearing up to spend lavishly on February 1-11 celebrations of the 20th anniversary of the Islamic Revolution and the Iranian new year a month later.

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