Iran's Rouhani submits conservative 2018 budget as US tensions overshadow economy

Iranian President Hassan Rouhani proposed to parliament on Sunday a conservative state budget of about $104 billion for next year, with the outlook for the economy and state revenues clouded by tensions with the United States.

Rouhani announced a draft budget for the Iranian year starting next March 21 of 3,681 trillion rials ($103.9 billion at the official exchange rate), excluding the spending of state enterprises.

That is up about 6 percent from the budget plan for the current year, but since inflation is running at nearly 10 percent, the budget extends the conservative fiscal policy which Rouhani introduced after taking office in 2013.

In a speech broadcast live by state television, Rouhani described the budget as one that would work towards full employment, eliminating poverty and creating social justice.

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After struggling for years under sanctions, Iran’s economy picked up in 2016 after most restrictions were removed under a deal with world powers on its nuclear programme. Gross domestic product grew 12.5 percent last year, according to the International Monetary Fund.

But that leap in growth was almost entirely due to a surge in the oil sector as Iran became able to increase its oil exports; the rest of the economy, which is more important to the welfare of most Iranians, improved much less. The IMF projects growth of just 3.5 percent this year.

Unemployment, officially put at around 12.5 percent, is a major cause of public concern and Rouhani said in his speech that 840,000 people would enter the job market next year.

Rouhani is under pressure to boost economic growth and create jobs as his hardline opponents, who were against the nuclear agreement, say he has failed to improve living standards as much as hoped after the lifting of sanctions.