Domestic Economy

Economy Gradually Moving Away From Oil Revenues

Economy Gradually Moving  Away From Oil RevenuesEconomy Gradually Moving  Away From Oil Revenues

"The budget bill submitted to the parliament by the administration for the next fiscal year is the least reliant upon oil revenues (in the history of the Islamic Republic of Iran)," President Hassan Rouhani said in a public address in the southern city of Bushehr on Tuesday.

“Only a third of the next year's budget is based on oil revenues. Moreover, we know how to compensate the lost revenues,” IRNA quoted the president as saying.

“Oil revenues in next year's budget have been designed to account for only 60% of the country’s total export earnings, while the remaining is to be generated through non-oil exports. We are planning to boost non-oil exports in the coming year,” President Rouhani remarked; describing the falling oil prices in the international market as a "conspiracy orchestrated by a few countries in the region."   

"Those who have plotted the oil price slump, to harm other countries, are going to regret their actions,” the president said, giving assurance that Iran will "not bow to the pressure of falling oil prices.”

Oil prices have fallen nearly 56% percent from their June 2014 peak, mostly due to high production rates and less-than-expected demand in Europe and Asia, intensified with the decision by the Organization of the Petroleum Exporting Countries (OPEC) to hold off on cutting its oil production quota.

Instead of cutting production rates to balance the market, some OPEC countries are offering discounts to customers in an attempt to maintain their market share – a move that has been interpreted by some Iranians as a "conspiracy to persuade Iran to compromise on its nuclear program."

Iran and the so-called P5+1 group of countries namely the US, the UK, France, Russia, China  and Germany have been holding frequent talks to reach an agreement to end a decade-long dispute over Iran’s nuclear program. The parties decided to extend an interim accord, reached in Geneva on November 2013, until June 30, after they failed last November, for a second time, to meet a self-imposed deadline for reaching a final nuclear deal.

“Iran will overcome the conspiracy and the drop in oil prices cannot continue for long,” underlined President Rouhani in his speech.

>  Tackling Recession

During his Busheur speech, Rouhani also said Iran’s economy "has stepped out of recession and is moving towards prosperity."

“The time has come to move past the sanctions as the Iranian people unanimously are calling for an end to the unjust sanctions,” he said.

Since 2010, the United States, the European Union, and the United Nations have imposed several rounds of sanctions against Iran's economy in a bid to intensify pressure on Tehran to force it to abandon its nuclear energy program.

The western sanctions, targeting mainly the oil and banking sector, have left severe impacts on the economy. Iran’s crude oil and condensates export averaged 1.1 million barrels per day in 2013, which was 1.4 million barrels less than in 2011. The exports of oil has not yet reached the 2011 level, despite President Rouhani’s attempt in the past year to settle the nuclear dispute with the West and open the economy to the world markets.

“According to statistics, Iran's economy experienced 4% growth in the first six months of the current Iranian year compared with the similar period last year,” Rouhani announced, defending his performance in "ending eight consecutive negative growth seasons."

According to a summary report recently published by the Central Bank of Iran (CBI), the economy grew in the first and second quarters of the current year by 4.6 percent and 3.7 percent respectively. The GDP growth in the first half of the current Iranian year reached 4 percent following two consecutive years of negative growth.

“The industrial section has grown by 4%, indicating that positive economic growth is within sight,” President Rouhani said.

> Bushehr Free Trade Zone

Announcing a plan to turn Bushehr into a free trade zone, President Rouhani said the government bill will soon be handed over to the parliament for ratification. If ratified, the decision is expected to bring huge economic opportunities into the region.

Construction of a new road and completion of the city's wastewater treatment plant were among infrastructure projects the president promised the government would allocate budget for in the near future.

The President began his two-day visit to Bushehr on Tuesday. This is his second visit to Bushehr and marks his 12th provincial visit since he assumed office in the August of 2103.