Iranian Lawmakers Reject Framework of Rouhani's New Budget

(Bloomberg) -- Iranian lawmakers rejected the outline of a budget proposed by President Hassan Rouhani, which was to include another round of unpopular subsidy cuts for the next fiscal year.

The budget framework was defeated Sunday by a vote of 120 to 83, with nine abstentions, state-run Mehr news agency reported. Almost a third of the lawmakers were absent as heavy snow in the capital, Tehran, obstructed roads and slowed down traffic.

It was the first time in more than three decades that legislators voted against the outlines of a draft budget, local newspapers reported. They linked it in part to a heightened sensitivity to public sentiment following pocketbook protests that began in late December.

“The rejection of the framework of the budget, while in itself rare, can’t be analyzed without taking into account last month’s events,’’ the daily Shargh newspaper wrote on Monday. “Deputies were certainly compelled to display greater oversight.”

Rouhani, who submitted the draft budget to parliament in early December, had planned to reduce energy subsidies and strip cash handouts from millions who had received them after an earlier round of subsidy cuts. The protests against economic conditions now complicate the Rouhani administration’s course of action at a time when it is already struggling to attract the levels of foreign investment necessary to revive an economy battered by sanctions and mismanagement.

Legislators criticized the breakdown of funds to some provinces, a lack of attention to teachers’ living conditions and social security funds’ shortfalls, newspapers reported.

The budget was drafted “with the goal to create jobs,’’ and “not to solve all the country’s problems,” government spokesman Mohammad-Bagher Nobakh told parliament Sunday ahead of the vote.

Parliament’s budget committee had already revised the proposed rise in energy prices before the budget outline reached the plenum floor, deeming it “against society’s interest,” Shargh cited panel spokesman Ali-Asghar Yousefnejad as saying.

The committee will review lawmakers’ suggestions over the next three days, Parliamentary Speaker Ali Larijani said. Parliament will then reconsider the budget outline for the Iranian year starting March 21st again next week, he said.

To contact the reporter on this story: Ladane Nasseri in Dubai at lnasseri@bloomberg.net.

To contact the editors responsible for this story: Alaa Shahine at asalha@bloomberg.net, Amy Teibel, Stuart Biggs

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