President Hassan Rouhani on Sunday submitted Iran’s "budget of resistance" to the Parliament, a national budget plan to withstand US sanctions targeting the country's vital oil sector, backed by a $5 billion Russian investment.
Rouhani told Parliament that the budget of 19,880 trillion rials, or $153.5 billion at the current forex market rate, was devised to reduce "hardships" for Iran's people.
The new budget is 10% bigger than that of the current financial year in local currency terms, although its dollar value is lower due to annual inflation that is running at about 35%.
The US sanctions imposed last year in a bitter dispute center on Iran's nuclear program and include an embargo on the oil sector whose sales Washington aims to reduce to zero in its campaign of "maximum pressure" against the Islamic Republic.
"We know that under the situation of sanctions and pressure, people are in hardship. We know people's purchasing power has declined," he said.
The budget would also benefit from a $5 billion "investment" from Russia, which was still being finalized, said Rouhani.
"We hope that $5 billion in capital will enter the country, either through plans that have already been finalized or which will be finalized next year," he said.
Iran and Russia have strengthened ties in recent years.
Rouhani told lawmakers the budget, which includes a 15% public sector wage hike, "is a budget of resistance and perseverance against sanctions".
He said the fiscal plan came in response to the "maximum pressure and continuation of America's sanctions" and vowed it would signal "to the world that, despite sanctions, we will manage the country, especially in terms of oil".
The proposed budget will counter "maximum pressure and sanctions'' by the US, he said.
Iran, a founding member of the Organization of the Petroleum Exporting Countries (OPEC), sits atop the world's fourth-biggest oil reserves and second-largest gas reserves.
Rouhani said that despite the US sanctions, his government expected to earn almost 455 trillion rials ($3.5 billion) from oil, gas condensate and natural gas exports.
The budget forecasts revenues for oil, gas and condensates falling 40%, leaving a gap it plans to plug by raising taxes, using state bonds and selling state properties.
Officials have not given figures for the oil price and export volumes used in the calculations, although the International Monetary Fund has indicated Iran would need oil prices to be triple current levels to balance its budget as its crude exports have plunged. The IMF forecast a fiscal deficit of 4.5% of gross domestic product in 2019/2020 and 5.1% in 2020/2021.
Although US sanctions on Iran’s oil industry have slashed the OPEC member’s crude exports by more than 80%, oil product sales remain strong, generating nearly $500 million a month, shipping data showed in September.
But Rouhani also said Iran's non-oil economy would "be positive" in the next year.
"Our exports, our imports, the transfer of money, our foreign exchange encounter a lot of problems," he said.
"We all know that we encounter problems in exporting oil. Yet at the same time, we endeavor to reduce the difficulty of people's livelihood.
"Contrary to what the Americans thought, that with the pressure of sanctions our country's economy would encounter problems, thank God we have chosen the correct path... and we are moving forward."
He said the US and Israel will remain "hopeless" despite their goal of weakening Iran through sanctions.
US President Donald Trump began imposing sanctions in May 2018, after unilaterally withdrawing from an accord that gave Iran relief from sanctions in return for limits on its nuclear program.
The United States has continued to ramp up its sanctions this year as part of a stated campaign of "maximum pressure" against the Islamic Republic.
Iran's economy has been battered, with the IMF forecasting it will contract by 9.5% this year.
The downturn has seen the national currency plummet and inflation running high.
In his speech, Rouhani touched on a few areas of the budget for the financial year starting late March 2020, which must be scrutinized and voted on by Parliament.
"All our efforts are geared toward reducing these hardships to some extent so it can be more tolerable," he said.
Rouhani said Iran would continue to subsidize basic goods and medicine in the budget, based at an exchange rate of 42,000 rials to the dollar, compared to the free market current rate of 129,500 rials. Using the lower exchange rates makes them more affordable to ordinary Iranians who have complained of surging prices.
Iran’s move to reduce subsidies on gasoline by raising prices by as much as 200% in November led to nationwide protests.
Parliament has until early February to discuss the budget bill. The Guardian Council, a constitutional supervisory body, must approve the bill for it to become law.
AFP, AP and Reuters contributed to this story.