The government should allocate the bulk of its revenues in the next fiscal year (starting March 20, 2016) to improve the business environment and investment climate, says the head of Iran Chamber of Commerce, Industries, Mines and Agriculture.
“The government should give priority to improvement of the business environment and, accordingly, the investment climate over repayment of its debts to contractors or completion of unfinished construction projects, even though it will have to withstand pressure by those sectors,” Mehr News Agency quoted Mohsen Jalalpour as saying.
The Cabinet is currently drafting the new budget bill amid a huge drop in the government’s revenues blamed largely on falling oil prices.
Global crude prices have fallen by almost 60% since June 2015, with production from the Middle East, Russia and North America consistently above global demand.
The squeezed government income in recent years has increased its debts to different sectors, including banks and contractors. Although many experts believe there is no exact estimate of the government’s obligations to private sector contractors, President Hassan Rouhani says the figure tops $15 billion.
Jalalpour, however, believes improvement of the investment climate will lead to massive investment inflow that will, in the long run, benefit the contractors. He says having the budget sliced up would decrease its efficiency in all sectors.
“If the government divides the budget between the different sectors, it will not deliver the desired performance,” he said.
