Iran will withdraw up to $4.8 billion from its sovereign wealth fund to spend on developing its oil and gas fields next fiscal year under a proposal approved by parliament.

The decision to dip into the National Development Fund underlines the heavy financial pressure which Iran faces from low oil prices and international economic sanctions over its disputed nuclear programme.

The hard currency allocation, which will supplement other budgetary allocations for the sector, also shows the large sums which Iran needs to spend to modernise its ageing oil fields and crumbling energy infrastructure.

"Members of parliament gave permission to the National Development Fund to pay $4.8 billion into bank deposits for use in expansion projects at combined oil and gas fields," state news agency IRNA reported on Tuesday. The money would be spent as part of the state budget for next fiscal year, which starts on March 21.

The National Development Fund is estimated at about $62 billion, according to the Sovereign Wealth Fund Institute, which tracks the industry. Some of its assets may be frozen by the sanctions, which have blocked foreign investment in Iran's energy sector.

After the plunge in oil prices over the last several months cut its oil revenues, Iran slashed the oil price assumption in next fiscal year's budget to $40 a barrel from $72.

The government cut domestic fuel subsidies last April to save money, and government spokesman Mohammad Baqer Nobakht hinted on Tuesday that subsidies might be reduced further.

Additional revenues "will come from correcting the prices of energy products", IRNA quoted him as saying, without giving details of the plan.  - Reuters