Iran to face $18B deficit in budget

Baku, Azerbaijan, Jan. 26

By Umid Niayesh - Trend:

Iran's national budget for the current fiscal year (started on March 21, 2014) will face a deficit by $18 billion (based on official rate of 27,497 rials/USD), Iranian MP, Mousarreza Servati said, the country's Tasnim news agency reported Jan. 26.

Iran's budget relies on oil revenues and fall in global oil prices will lead to a deficit in the budget, Servati who is a member of the parliament's Budget and Planning Commission said.

The problem is repeated every year, the MP said, adding the deficit in budget stood at $10.9 billion last fiscal year (ended on March 21, 2014).

Iranian government's spokesman, Mohammad Bagher Nobakht earlier said that over 310 trillion rials (about $11.3 billion) of the government's predicted incomes for current fiscal year would not be materialized.

Nobakht, who is Iran's Vice President for Planning and Strategic Supervision, said the administration will be able handle the situation, however "it would face some difficulties".

Servati also said that the Iranian government faces $4.4 billion deficit due to paying cash subsidies to citizens.

The government acquire 300 trillion rials (about $10.9 billion) in revenues through the implementation of the subsidy reform plan, meanwhile pays 420 trillion rials (about $15.3 billion) in cash subsidies to families, he explained.

Iran's subsidy reform plan is aimed at easing the pressure on state finances by cutting tens of billions of dollars from government subsidies on food and fuel. The government pays cash to citizens as compensation for prices increased by cutting subsides.

Falling global 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 next fiscal year is also inevitable.

Edited by CN

Follow the author on Twitter: @UmidNiayesh

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