Economy, Domestic Economy

Gov’t Can Function With Low Oil, Sanctions

Gov’t Can Function With Low Oil, Sanctions
Gov’t Can Function With Low Oil, Sanctions

The  government is able to run the economy despite the sharp drop in oil prices and the West’s economic sanctions.

“Despite the oil price fall in the international markets, 220,000 billion rials are allocated by the government to investment projects,” for the next year, ending March 2015, Government Spokesman, Mohammad Bagher Nobakht, said on Monday.

His remarks came following speculations that the falling oil price might hit the Iranian economy, which is traditionally dependent on oil sales.

In the current fiscal year, the budget’s reliance on oil revenues was at least 38%. Crude has fallen by nearly 46% since June, when it was $115 a barrel. It is now traded below $60 a barrel. The downward trend has been accelerated after OPEC’s member states, which control nearly 40% of the world oil market, failed to reach agreement last month on curbing production.

Despite Iran’s opposition, the oil organization decided in a Vienna meeting late in November to maintain its current output.

For the next fiscal year, oil revenue will account for less than one third of the government’s budget. Nobakht said Iran will be able to exploit other domestic resources to offset the oil revenue losses.

The official also said that the recent decline in oil price is “politically motivated,” warning the Arab states “trying to keep the prices at unreasonable low levels” against the repercussions of their attempts.

However, he predicted that oil will bounce back to $82 per barrel in the coming months.

On December 10, President Hassan Rouhani said that the fall in oil prices is “politically motivated, at least in part,” attributing it to a “conspiracy against the interests of the region, the Muslim people and the Muslim World,” without pointing to certain countries as perpetrators.

“Iran and the regional people will not forget such conspiracies, or in other words, treachery against the interests of the Muslim World,” he said.

Some analysts in Tehran believe that Saudi Arabia has been in some way involved in a plot in recent months to manipulate the oil prices.