Iran’s parliament seeks to cut budget’s dependency on oil, forex
Tehran, Iran, Jan. 6
By Milad Fashtami - Trend:
Iran's parliament is working on a plan to cut the budget's dependency on oil and foreign currencies, MP Ahmadi Tavakoli said.
He said that the plan's goal is to base the country's budget completely on national currency (the rial), Iran's Mehr News Agency reported on Jan. 6.
Based on the plan the country's oil revenues (except of the share of the National Development Fund) will completely go to Iran's Forex Fund.
The government will be allowed to extract money from Iran's Forex Fund to compensate for any budget deficit just in case there is no other source available.
The Parliament will allow the government to extract 711 trillion rials (some $24.94 billion based on the proposed official exchange rate of US dollar for the next year) out of the fund in the next Iranian calendar year.
"If the plan is approved, then the Central bank of Iran's Money and Credit Council (MCC) will remain in charge of deciding about the official exchange rate of US dollar based on the country's national interests," he added.
Iranian government submitted next year's budget bill to Parliament on Dec.7, 2014. 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.
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.
Iranian president Hassan Rouhani said that about $24 billion of oil revenues is forecasted for next fiscal year, adding 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.
Iran is expected to face severe budget deficit in the current Iranian calendar year (to end March 20, 2015).
The country decided to sell its crude oil to Asia in November at the biggest discount in almost six years. The decision was made after Saudi Arabia cut prices for all grades and to all regions for November. Qatar and Iraq decreased their prices as well.
Reports suggest that if the current tendency continues, the total budget deficit may soar above $2.5 billion.
Experts believe that due to the continuing fall of oil prices in global markets, a budget deficit in the next calendar year is also inevitable.