Domestic Economy

Boost Cooperatives Role, Reduce Oil Reliance

Boost Cooperatives Role,  Reduce Oil RelianceBoost Cooperatives Role,  Reduce Oil Reliance

President Hassan Rouhani invited cooperatives and the private sector to play a larger role in Iran's economic development and emphasized on moving away from oil-based, government-dominated economy at a Saturday meeting on the occasion of the National Cooperatives Week.

"Unfortunately our economy has been dominated by the government in the past years. But this must change and the state's share ought to be transferred to private and cooperative hands to increase efficiency," said the president, addressing a gathering of officials and representatives from cooperatives companies, unions and the Ministry of Cooperatives, Labor and Social Welfare.

He urged the ministry to complete and submit the “Cooperatives Development Document” for government approval, underscoring the significant role played by cooperatives in promoting social justice and preventing uneven wealth distribution, IRNA reported.

Noting that some cooperatives have been more successful than others in achieving their targets over the past years since the Islamic Revolution of 1979, President Rouhani referred to cooperatives active in areas of agriculture, transportation and border-region affairs as some prominent examples.

He also reiterated the cooperatives' role in job creation for women as well as expansion of small home-based businesses.

Iranian officials have repeatedly voiced a positive outlook toward the cooperatives sector, calling it “the cornerstone of Islamic economy,” and the “main source of job creation in Resistance Economy.” Furthermore, the cooperatives sector’s share in the national economy was envisioned to be 25% in the Fifth Five-Year Development Plan (2011-16).

However, in reality, the cooperatives sector currently has only a 6% share in the national economy, according to deputy minister of cooperatives, labor and social affairs, Hamid Kalantari.

> Shifting Away From Oil

Elsewhere during his speech, the president called for shifting away from an oil-based approach in planning government budget, noting that oil revenues provided a third of the budget revenues planned for the current Iranian year, which started on March 21.

"Lack of economic diversification and over-reliance on oil has been the main challenge for our economy over the past decades, which we have not yet fully overcome," he said. "This is while the share of oil revenues in the government's annual budget has been lowered from 70-80% in the past decades to 33% in this year's budget.”

He then referred to the sanctions, imposed by the West over Iran's nuclear energy program, as an example of how reliance on oil revenues could harm the economy, and expressed hope that implementation of the Joint Comprehensive Plan of Action will help reduce economic pressure on the public.

"Sanctions prevented us from selling more than one million barrels of crude oil per day, which put pressure on the Iranians and hurt their pride," the president noted.

"To make matters worse, some oil producing countries adopted policies that resulted in oil prices declining from $110 per barrel to nearly a third at $40 per barrel. And event then, financial restrictions imposed against the country did not allow us to access a large part of our oil revenues," he added.

The Joint Comprehensive Plan of Action, reached between Tehran and the P5+1 group (the permanent members of UN Security Council plus Germany) on July 14, is to relax some of the sanctions imposed against Iran in exchange for limitations on the country’s nuclear energy program.

Last week, President Rouhani issued a circular to the heads of executive departments and agencies, highlighting the priorities and main policies to be followed for drafting the budget for the next fiscal year, which begins on March 20, 2016. The president is scheduled to submit the budget bill to the parliament on December 6.

Government spokesperson and head of Management and Planning Organization, Mohammad Bagher Nobakht, said on Saturday next year's budget bill assumes three scenarios for oil prices during the year.

"The budget will be prepared based on three scenarios for crude oil prices of $42, $45 and $50 per barrel," said the official.