TEHRAN, Iran - Iran's hard-line president has acknowledged publicly for the first time that the economy is taking a beating from tumbling oil prices, a damaging admission as his popularity erodes ahead of a tough reelection battle next year.
Oil prices have plunged 60 percent since July as a faltering global economy has dampened demand. Mahmoud Ahmadinejad said that would force the government of the world's fourth-largest oil exporter to trim spending and generous subsidies and raise taxes, the official IRNA news agency reported yesterday.
Ahmadinejad said his government would have to lower its expectations of oil revenue when planning next year's budget, which is largely funded by oil exports.
International financial institutions estimate that Iran needs oil at $90 a barrel to keep this year's budget balanced. It is below $50 now.
"We have to leave a major part of our projects behind," Ahmadinejad said.
Only a month ago, officials in the president's office said they planned to base next year's budget on an oil price of $50 to $60 a barrel. "But we are obliged to set it at $30 to $35 because we do not decide the price of oil on the global market," Ahmadinejad said.