World Economy

WB: Sanctions Relief to Create Economic Windfall

WB: Sanctions Relief to Create Economic Windfall WB: Sanctions Relief to Create Economic Windfall

The lifting of economic sanctions on Tehran will create an economic windfall for Iran, World Bank’s chief economist for the Middle East and North Africa, Shantayanan Devarajan, told Sputnik this week.

"[We are] calling it an economic windfall, that’s a technical term in economics, which is a one-time increase in resources accruing to a country, and that’s what this is," Devarajan said of the impact of the sanctions relief under the Iran nuclear agreement.

The economist added there are some "political ramifications" for the process, "which is why we [World Bank] very carefully called it an economic windfall".

According to members of US President Barack Obama’s negotiating team, Iran is likely to gain $55 billion once the nuclear agreement is in place, much of it in the form of foreign reserves. But Iranian authorities say the figure hovers around $100 billion. Central Bank of Iran says only $29 billion are now accessible, of which $23 billion belong to the bank as international reserve and $6 billion, mainly the proceeds of oil sales, will go to the government.

In a speech at the Carnegie Endowment for International Peace on Thursday, Devarajan argued that the amount of money is less consequential than how Iran decides to use it.

"It really matters how you [Iran] manage this windfall, if it will create sustainable growth," he said.

In an August report on the impact of Iranian sanctions relief, the World Bank advises Tehran to invest its economic windfall in domestic infrastructure and upgrade telecommunications in support of high technological, non-oil industries.

Iran's economy suffered as a result of the tough western sanctions beginning in 2012.  Under the Joint Comprehensive Plan of Action reached in July, all nuclear-related sanctions against Iran will be lifted as a condition of Iran’s agreement to put curbs on its nuclear energy program.