Domestic Economy

Curbing Gov’t Role, Oil Reliance Key to Economic Recovery

Curbing Gov’t Role, Oil Reliance  Key to Economic RecoveryCurbing Gov’t Role, Oil Reliance  Key to Economic Recovery

President Hassan Rouhani, addressing the fifth joint meeting between the government and Parliament on Sunday afternoon, said his administration assumed office during "critical conditions" but was able to successfully overcome difficulties over the past 20 months with help from the parliament and people and guidance from the Leader, IRNA reported on Sunday.

He recalled that when his government assumed office [in August 2013], a barrel of crude oil was selling at $100, whereas prices declined to as low as $50 a barrel during the past Iranian calendar year (ended March 20), leaving the oil market unstable.

> $11.4b for Infrastructure Projects

He noted that of the 1,800 trillion rials ($64.2 billion at official exchange rate) in government revenues and spending in the Iranian calendar year 1393 (March 21, 2014-March 20, 2015), 320 trillion rials ($11.4 billion) was allocated for development of infrastructure, describing the amount as substantial.

Reiterating that "even if the nuclear negotiations [between Iran and the so-called P5+1 group] progress within the desired framework, the economic benefits will not appear in the short term," he called on both the government and parliament to avoid creating unnecessary burden for the executive bodies, and help in the running of administrative affairs.

> Almost Out of Recession

"We have almost stepped out of economic recession, but to achieve economic growth we need to attract foreign and domestic investment while at the same time focusing on transfer of technology and boosting the level of non-oil exports," said the president, while acknowledging that the unjust sanctions [imposed against Iran by the West over its nuclear program] are partly responsible for the country's economic problems.

The president further observed that apart from the sanctions, the economy is saddled with other problems and shortcomings, among them over-dependence on oil and fundamental flaws in the administrative system

, which are not resolvable in the short run.

"Iran's economy is dominated by the government and the oil sector; unless we are able to change that, we shall not be able to overcome the economic hurdles," said the president, adding that his administration successfully managed to significantly bring down inflation over the past 20 months.

> Inflation Down

Adding that his government has set as its main goal to bring down the inflation rate to a single-digit figure before the end of his term as president, he noted that the rate of inflation reduction will be moderate in the current Iranian year compared to the previous year, "as we have reached the core of the problems."

As per the report by the Central Bank of Iran (CBI), inflation rate dropped to 15.6% in the 12th month of the past Iranian year (February 20- March 20, 2015) from 34.7% at the end of the previous year.

> Positive Growth

He also pointed out that while the country had experienced recession and negative economic growth over the past few years, his government's measures resulted in positive growth in the past year, adding that the growth rate will also be moderate in the current year compared to the previous year.

Iran's economy grew by 3.6% in the first nine months of the past Iranian year (March 21-December 20, 2014) compared with the similar period in the previous year, according to the latest statistics released by the CBI in December, ending two consecutive years of negative growth.   

> Difficult Year Ahead

Also speaking at the meeting, Parliament Speaker Ali Larijani predicted the new Iranian year to be a "difficult year for the national economy," calling for cooperation and harmony among various sectors to find effective solutions to problems.

He mentioned "development of rail transport system, completion of semi-finished construction projects, water conservation, reducing government's role in the economy, investment in oil, gas, health and food security, and forging close interaction between universities and industries" as possible avenues for cooperation between the government and parliament.