Tehran - Iranian President Mahmoud Ahmadinejad has delayed by at least one year the implementation of a controversial 3-per-cent value-added tax (VAT) following protests and strikes in bazaars in several cities, Fars news agency reported Monday.

The VAT on all goods officially came into force last month but protests brought market trade to a virtual standstill in the bazaars of several big cities, including the capital Tehran, Isfahan, Mashad and Tabriz.

Due to the protests, Ahmadinejad last week ordered a two-month freeze on the implementation of the VAT.

Observers believe that the presidential decision is an effort to not anger the powerful bazaar merchants ahead of the presidential elections on June 12.

The votes of the merchants are said to have been a major reason for Ahmadinejad's election victory in 2005.

The president has failed to implement many promised economic reforms for the lower and middle classes despite the skyrocketing price of oil, the country's main income generator, since he took office in August 2005.

The minister of economy, two governors of the central bank and the vice-president in charge of planning and budget have already resigned due to grave differences with the president over his economic policies.

Official inflation rose 30 per cent last month although it is believed to be even higher. The opposition blames Ahmadinejad for presenting unrealistic figures on the economy and leading the country into crisis.

While blaming the global economic crisis for some of Iran's difficulties, Ahmadinejad has promised a new economic package that he says will alleviate major problems facing the country. (dpa)