Baku, Azerbaijan, Jan. 13
By Umid Niayesh - Trend:
Iran's Supreme Leader, Ayatollah Ali Khamenei has asked parliament to approve government's offer to decrease share of Iran's National Development Fund (NDF) from the country's oil revenues to 20 percent in the next fiscal year (to start on March 21, 2015), the parliament's speaker, Ali Larijani said, the official IRIB news agency reported Jan. 13.
According to the laws, the government should annually increase the share of the NDF from oil and gas revenues by 3 percent, Larijani said, adding the share should be increased by 12 percent by the next fiscal year.
However the government has wrote a letter to Khamenei and asked him to not implement the increase considering the current situation in the oil markets, Larijani said.
The speaker emphasized that the parliament should cooperate with government approving the only 20 percent share of the NDF from oil incomes in next Iranian year.
The NDF is Iran's sovereign wealth fund. It was founded in 2011 to replace the Oil Stabilization Fund.
Based on Article 84 of the Fifth Five-year Socio Economic Development Plan (2011-2015), the National Development Fund was established to transform oil and gas revenues to productive investment for future generation. The money will increasingly be deposited in domestic banks.
Accordingly, 20 percent of the oil income is to be transferred to the National Development Fund and this percentage increase 3 percent annually until the end of the fifth development plan.
The Islamic Republic allocated 31 percent of oil and gas incomes to the fund in the current fiscal year (started on March 21, 2014).
In next year's (to start on March 21, 2015) budget bill, which was submitted to parliament on Dec. 7, 2014 the government has offered to not implement the annual 3 percent share increase of the NDF from oil incomes.
The NDF's reserves were around $54 billion when President Hassan Rouhani took the office in August of 2013.
Last August Safdar Hosseini, the chairman of the board of directors of the NDF said that the fund's assets reaches $64.8 billion.
The fall in the global crude oil price from almost $110/barrel to below $50/barrel in recent months has imposed serious pressure on the Islamic Republic's economy.
The OPEC oil basket price was $107.89 in mid-June, but has been in dramatic decline, especially after October. The price stood at $45.19 a barrel on Jan. 12.
The falling oil prices forced Iran's government to decrease the oil price figure in the proposed budget bill for the next Iranian fiscal year to $72 per barrel from the current figure of $100.
Oil revenues share about 50 percent of Iran's current fiscal year budget, meanwhile the figure has been decreased to 33 percent in next year's budget bill.
President Hassan Rouhani already confirmed that the Islamic Republic's oil revenues have decreased by 30 percent as a result of the price fall.
Experts believe that due to the continuing fall of oil prices in global markets, a budget deficit in the current and next fiscal year is inevitable.
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