TEHRAN, Feb 6: Iran said on Tuesday it was drafting a parallel budget for next year, which would come into force in the event of an `extraordinary incident’ affecting its heavily oil-dependent economy.

The so-called `shadow budget’ assumes an oil price of less than $30 a barrel, compared with 33.7 dollars in the actual budget proposed by President Mahmoud Ahmadinejad last month for the new year starting on March 21.

“We are preparing a shadow budget based on the oil price of under 30 dollars per barrel in case an extraordinary incident happens on the international arena,” the deputy head of state-run Management and Planning Organisation, Ali Askari, told reporters.

He did not specify what such an incident might involve.

Falling global crude prices are a major concern for Iran at a time when the UN Security Council has imposed sanctions on Tehran for its refusal to suspend sensitive nuclear activities.

The sanctions are targeted not to affect the wider economy, but the United States has threatened to tighten up the penalties if Iran does not comply. It is also pressuring European banks to limit their dealings with Tehran.

Although Washington emphasises the standoff should preferably be solved through diplomacy, it has also never ruled out military action to thwart Iran’s nuclear programme.

Mr Askari said that the budget was based on economic growth reaching about seven per cent in the coming year compared with the current year's predicted rate of 5.7 per cent.

Unemployment is predicted to be 10.6 per cent next year, compared with 11.3 per cent this year while the (official) inflation rate is predicted to fall from 12 per cent to about 11 percent, the official added.

Mr Ahmadinejad has promised to use only oil export income from a $33.7 per barrel oil price for the annual budget, with any surplus revenue saved in a stabilisation fund to back the economy in case of oil price fluctuations.

Even with that low base price, MPs and analysts believe such accounting only works on paper and fear that the government will inevitably use more oil revenues for current expenditure by dipping into the stabilisation fund.

Mr Askari put the withdrawal from the Oil Stabilisation Fund (OSF) in the current Iranian year so far at 21.2 billion dollars, covering three supplementary bills beyond the original budget.

He added that there was a fourth bill still awaiting parliamentary approval.

“In Dec 2006, the fund held $1.3 billion. In the next year, the budget has only foreseen (withdrawals of) 10.6 billion dollars from the OSF (for current expenditure),” Askari added.

Mr Ahmadinejad's second annual budget has come under heavy criticism for being unrealistic.

But Mr Askari defended the government’s economic policies.

“The budget bill is only a prediction and not definitive. We do not predict any additional budget for now and the government is expecting not to make any new decision ... but if necessary, we will have to do something.”

Experts argue that revenues from taxes, bonds and privatisation are less than half the budget predictions in the current year, explaining why the government has had to look for money beyond the original budget.

Iran’s economy is heavily dependent on oil revenues, which account for 80 per cent of total export earnings and cover more than 50 per cent of the state budget.—AFP