Growth Target at 8% in 6th Development Plan

Growth Target at 8% in 6th Development Plan
Growth Target at 8% in 6th Development Plan

The sixth five-year development plan (2016-21) is targeting an 8% annual growth, says government spokesman, Mohammad Baqer Nobakht.

The plan outlines government strategies in its budget planning for the next five years.

According to President Hassan Rouhani, foreign investment is vital to meet the ambitious target.

“Iran needs $30-50 billion in foreign investments to achieve the 8% growth,” he said upon submitting the plan's draft to the parliament in mid-January.

Ayatollah Seyyed Ali Khamenei, Leader of the Islamic Revolution, laid out the initial guidelines for drafting the plan back in July.

"Bringing unemployment and inflation rates to a single digit are among other objectives of the sixth plan," Nobakht, who is also the head of Management and Planning Organization and an adviser to the president, added.

"Inflation and unemployment are to drop from their current rate of 12.8% and 10.7% to 8.9% and 7% respectively by the end of the plan's period," he was quoted by IRNA as saying.

He stressed that the oil industry will be the driving force behind the 8% growth target, followed by gas, water and electricity sectors.

Nobakht said energy productivity is projected to reach 54% in the oil industry and 29% in water, electricity and natural gas sectors.

The sixth plan is Iran's first major national development program based on the "Resistance Economy"–a set of policies proposed by the Leader to counter sanctions, boost production and reduce consumption.

> Oil Revenues

Oil revenues have a 31.5% share in Iran's 2015-16 budget, but will taper off to 22% by the end of the sixth plan, Nobakht said.

"Under the sixth five-year plan, investment in oil and gas sector is expected to rise to 31.9%," he said.

The government has proposed $40 oil for next year's budget, which would leave a big hole in its coffers.

Oil has lost value by more than 70% over the past 18 months, having crashed to the $30-per-barrel range from a $115-per-barrel high in mid-2014.

The global market has shown signs of recovery over the past few days after non-OPEC Russia hinted at the possibility of sitting at the negotiating table with members of the Organization of Petroleum Countries to find a way to boost sluggish prices.

But there is little room to celebrate the adjustment to lower oil prices –an irrevocable turn of events that the Iranian government, along with major oil producing countries such as Saudi Arabia, had seen coming.

Riyadh, OPEC's biggest top exporter, reported a nearly $100 billion budget deficit and Iraq, the group's second-biggest producer, posted a massive $25 billion deficit.

The grave figures clearly indicate how much oil producing nations depend on oil revenues and Iran is no exception.

Earlier this month, vice speaker of the parliament, Mohammad-Hassan Abutorabi-Fard, said Iran is facing a deficit of around $12.5 billion in this years' budget "in the best-case scenario".

However, the oil slump seems to have caught senior government officials off guard, despite a losing streak in oil prices that started 18 months ago.

In December, Iran's First Vice President Es'haq Jahangiri said Tehran "never expected oil prices to fall below $60" and plunge to as low as $30 a barrel, a major dent in national revenues that will irrevocably hurt the domestic economy.