PHOTO: President Rouhani presents the 2016-2017 budget to Speaker of Parliament Ali Larijani
President Rouhani has given an optimistic view of Iran’s economic prospects, as he presented the 2017-18 Government budget to Parliament on Sunday.
Rouhani declared a budget based on a price of about $50 per barrel of oil, compared to $40 in 2016-17. He pointed to Iran’s victory on Wednesday in OPEC talks that agreed a cut in output, but allowed Tehran to produce up to 3.96 million bpd. close to its level in 2012 before stringent US and European sanctions:
Iran has already been able to regain its share of the global oil market. Thanks to the recent victory in OPEC, we will literally face no limitations increasing the production and export of our crude oil over the next few months.
The OPEC agreement, after months of debate, sent oil prices above $50 per barrel. The price fell to as low as $27 this year, compared to a peak of about $114 in 2014.
However, Rouhani’s projection is based on an ambitious assumption, foreseeing exports of 2.42 million bpd. Iran’s current sales are just under 2 million bpd, and would be capped unless the Islamic Republic gets OPEC agreement to a further significant increase in Iranian production.
The Government’s budget in 2016-17 was troubled by a large deficit because of the low oil price, and it was also delayed for months by the implementation of the July 2015 nuclear deal and debate over the Government’s 5-Year Development Plan.
But Rouhani maintianed on Sunday, “The nuclear deal …helped prevent the Iranian economy from plunging into a crisis as a result of falling oil prices as did many other oil exporters.”
While struggling to confirm foreign investment — in part because of regime in-fighting — to boost Iran’s economy, the President can point to success in the reduction of inflation to 8.6%, compared to more than 40% when he took office in 2013.
