Tehran, Iran, December 13
By Mehdi Sepahvand –- Trend:
Although the Iranian rial started to drop more sharply early in the current fiscal year (since March 21), it grew more controversial when in September the USD first hit 40,000 rials in the free market.
Some theory has been going around that this unprecedented rise in currency rates, coupled with that of gold, in the Iranian market has been a government mechanism to skim over its deficiency problem.
However, looking at the next year’s budget bill which was just proposed this week, it seems more deficit would be likely as the government seems to have deliberately put the numbers so that meeting a revenue-expenditure level situation would be hard.
While the USD just surpassed 42,000 in the free market and 35,200 in its official rate, the bill puts it at 35,000 for the fiscal year to come.
Nonetheless, the bill has put the oil prices at $55 per barrel, despite the fact that both Petroleum Minister Bijan Zanganeh and world analysts say prices will likely hover around $50 in 2018.
This risk by President Hassan Rouhani to run lean has now become the source of speculation by experts as what are the reasons.
But putting currency and oil prices aside, the bill also devised new sources of income for the government. One of these sources is increase in tariff on outgoing tourism, which has witnessed a rise of 200 percent. From this, the government hopes to reap 1.6 trillion rials.
Also, the government has put developmental budget at about 10.4 percent of last year’s. It has put in mechanisms to replace this reduction, such as ministerial revenues, banking facilities, and foreign investment.
On the other hand, many other fields have been set to receive lower budgets, such as some cultural programs as well as defense.
A major policy for taking oil at higher price while putting the USD at lower rate in the budget has been to lessen dependency on oil revenues, an official with the Management and Planning Organization told Trend recently.
But the downside is that if deficiency becomes the case, inflation will hit the already volatile market since the major source of dollars in Iran is oil and its products, which are the exclusive province of the government.