Iranian MP says falling oil price not to cause significant budget deficit next year
Tehran, Iran, Dec. 17
By Milad Fashtami - Trend:
An Iranian MP said the decline in oil price will not result in significant budget deficit in the next Iranian calendar year (to start March 21, 2015).
Mohammad-Ali Abdolahzadeh, a member of the Planning and Budget Commission of Iranian Parliament (Majlis) told Trend Agency Dec. 17 that the oil price fall is temporary and cannot last for a long time.
"Just 710 trillion rials (some $24.9 billion based on the proposed official exchange rate of US dollar for next year) or about one third of the next year's budget plan is based on oil revenues. So even if we lose some 200 million rials of the mentioned figure due the falling trend of oil prices, it won't have a great negative impact on the next year's total budget," he explained.
"According to the law, some 32 percent of the country's oil revenues should go to the National Development Fund in the next calendar year, since we have to increase the fund's share by 3 percent each year and the figure was 29 percent in the current year," the MP said.
"But based on the government's proposal just some 20 percent of the oil revenues will go to the NDF next year, so the government will have some 12 percent more to spend and compensate any price fall, "he explained.
Abdolahzade went on to note that OPEC's decision for not cutting the organization's total output was nothing but a plot.
"The decision was absolutely political. Some countries are willing to bear losses just to carry out their plots," he said.
Iranian government submitted next year's budget bill to Parliament on Dec.7.
Next year's national budget bill is based on an oil price of $72 per barrel and a projected average exchange rate of 28,500 rials to the U.S. dollar for the fiscal year.
According to President Hassan Rouhani, the administration has taken the necessary steps to minimize any negative effects of the oil price decline.
The government expects to export 1.3 mbpd of crude oil and condensate at $72/barrel during next fiscal year, unchanged in volume, but decreased by 28 percent in value compared to the current budget law.
Rouhani said that about $24 billion of oil revenues are forecasted for the next fiscal year, adding that share of oil revenues in next year's budget bill has decreased to 31.5 percent compared to 45 percent of oil revenues in current year's budget.
Edited by CN