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Iran Parliament May Accede To President On Subsidies

President Mahmud Ahmadinejad (right) handed over his draft annual budget to lawmakers on January 24.
TEHRAN (Reuters) -- Iran's parliament could finally accede to President Mahmud Ahmadinejad's demands for radical subsidy cuts after blocking the plan for months, a senior lawmaker has said.

Parliament this month passed a state budget for the next Iranian year starting March 21 that did not contain radical cuts in subsidies sought by Ahmadinejad.

Ahmadinejad on March 19 suggested holding a referendum on a reform to the Islamic Republic's costly subsidy system that would save $40 billion. Parliament approved only half of that amount.

"We believe it is not possible to implement the subsidy reform plan at 20,000 billion tomans ($20 billion)," Arsalan Fathipour, head of parliament's economic commission, was quoted on state news agency IRNA as saying.

"So delegates intend to raise the figure to 35,000-38,000 billion tomans ($35 billion-38 billion)."

It was not clear how such a last-minute change would be effected, since last week the Guardians Council constitutional watchdog signed off the budget approved by parliament.

Parliamentarians had said the cuts could stoke inflation, while analysts say they could also provoke unrest in a country already plagued by tension after street protests by opponents of Ahmadinejad over the past year. A referendum could risk more unrest.