Economy, Domestic Economy

Moody’s: Iranian Poll Results to Boost Economy

Moody’s: Iranian Poll Results to Boost EconomyMoody’s: Iranian Poll Results to Boost Economy

A strong performance by moderates in the Iranian elections should offer a boost to the country’s economy, and to foreign investment, ratings agency Moody’s said.

The election, which saw reformists and moderates take an overwhelming majority in the 290-seat parliament, will help the country pass credit positive as the country requires $50 billion of foreign capital inflows every year to meet its 8% growth target.

Iran’s Parliament has the power to draft legislation, ratify international treaties, approve loans and examine and approve the state budget. Because of this, international observers widely viewed the general elections as a referendum on President Hassan Rouhani’s economic agenda.

According to the agency's report, the election will give reformist President Rouhani a stronger political mandate to enact economic reforms that will attract this investment.

Previously, Iran's Parliament was overseen by a conservative majority, which was largely suspicious of Rouhani's efforts to promote closer ties to the West.

New measures needed to boost the sanctions-damaged economy will include ratifying international treaties and approving loans.

The stronger mandate will vitally aid the government to push for a restructure of the country's international petroleum contracts to revive its former oil infrastructure, the report read.

Though foreign ownership of oilfields is still banned, a restructure would allow foreign investors to be involved in the production process, giving them access to long-term revenue streams.

Moody's analyst Shirin Mohammadi said many of Rouhani’s economic reforms are outlined in the sixth five-year development plan (2016-21), which he introduced in January to parliament alongside the budget bill for the end of the fiscal year in 2017.

"Although details of the plan have not yet been released to the public, we expect policies to be more conducive to foreign investment," she said.