Economy, Domestic Economy

Curbing Dependency on Oil Revenues

 Curbing Dependency on Oil Revenues
 Curbing Dependency on Oil Revenues

In the budget bill submitted on Sunday to the parliament for the next fiscal year, the share of oil revenue has dropped to 32 percent from 38-39 percent in the current year’s budget, Mohammad Bagher Nobakht, vice president of strategic planning and supervision, said on Monday during a news conference held in Tehran to explain the specifics of the budget bill.

Following the nationalization of the oil industry in Iran in 1949, the central government’s revenue dramatically increased, with Iranian officials exporting millions of barrels of oil each year. The extra revenue accelerated the country’s development process in first decades but the national economy came to be too reliant on the black gold.

The Rouhani administration has vowed to save the national economy by reducing the reliance on oil revenue.

And now for the second consecutive year, the administration has managed to lower the share of oil revenue in the budget bill.

The proposed budget for next year seems to be part of a pragmatic plan to reach a target growth rate of 2.5 percent, as it was noted by Nobakht on Monday.

The budget also aims to help lower the inflation rate to 15 percent by the end of next year, ending March 2016. Inflation is now around 18 percent, according to the central bank’s data. Iran has been known as a rentier state for years and experts believe that the new policies of President Hassan Rouhani have so far proved that his administration is determined to decrease reliance on oil sales.

A key success factor for the government is to create alternative revenue sources in the budget such as a more advanced taxation system. Experts believe the Rouhani administration is following globally experienced economic models and solutions to overcome the economic woes created by years of macroeconomic mismanagement and western sanctions.