Domestic Economy

Resource Management Key to Countering Oil Price Fluctuations

Resource Management Key to Countering  Oil Price Fluctuations
Resource Management Key to Countering  Oil Price Fluctuations

Resource management is one way to tackle a possible budget deficit next year amid fluctuations in oil prices, Mohammad Bagher Nobakht, vice president for strategic planning and supervision, said on Monday.

“We can easily manage oil price fluctuations through resource management, even if prices fall to $30-$35 per barrel,” Nobakht said on the sidelines of a conference in Tehran. However, the official predicted that international oil prices will bounce back to $80 per barrel next year.

In next year’s budget, the Rouhani administration has assumed that oil prices will not go below $70, which is $30 less compared to the current budget. In recent weeks international oil prices fell below $60, stoking concerns in oil producing countries such as Iran about a possible budget deficit.

Iran is heavily reliant on oil revenues to run the country’s affairs. However, the administration has on several occasions vowed to reduce dependence on oil from an average 45 percent of total revenue over the past two decades to about 31.5 percent next year in an attempt to immune the country against oil price fluctuations.

The share of oil in next year’s state revenues is slightly higher than 30 percent, Nobakht said.

“Next year, the government will easily manage the capital and current expenditures,” he said, adding that it has carefully calculated its annual income and expenditure.

President Hassan Rouhani submitted the budget bill for the next fiscal year (starting March 21) to parliament early December.

Out of the 2,670 trillion rial ($90 billion at official exchange rate) state revenues, the government has proposed to allocate 480 trillion rials to capital projects.

The bill providing a detailed projection of the government’s income and expenditures has been prepared by the office of the vice president for planning and strategic supervision in line with the general policies set in the next Five-Year Economic Development Plan.