Interview: Oil price slump daunting for Irans economy: expert by Majid Danesh TEHRAN, Dec. 14 (Xinhua) -- Recent global oil price drop gives tough days for Irans economy that has already been hammered by a host of domestic and international factors, an Iranian economic expert told Xinhua on Sunday. The fall in oil price that we face is a very big problem, Dr. Saeed Leylaz said, adding that 40 percent decease in oil price means that hard currency income of the country (in the following year) will be less than one fourth in the year 2011. In 2011, Irans income from oil exports hit some 120 billion U. S. dollars, the biggest in the history of the country, but it will be less than 30 billion dollars in 2015, Leylaz said. Over the past months, crude prices gradually declined to slightly over 60 dollars a barrel, from some 100 dollars in June, amid worries that global supplies surpassed demand as the Organization of Petroleum Exporting Countries (OPEC) did not agree to cut its output recently. Iran, once the second biggest oil exporter of the block, failed to persuade the November meeting of the OPEC to cut its output in an attempt to rebound the market prices. We will not have enough purchase power for more than 50 percent of Iranian people ... and then the demand will be freezed, which is very important to the economy, Leylaz said. Besides, the drop in oil revenues will have its dire impact on the budget of government for projects, which is crucial for creating jobs and economic growth, he said. He said the government may have to adopt very tough monetary policy, abide by rigid financial discipline, cut expenses, and increase tax as well as prices. We will have more pressure on poor people, he explained. On Wednesday, Irans President Hassan Rouhani said the current drop in global crude prices is a political plot by some countries. The fall in crude price is not merely an economic issue. Rather, it is caused by a plot and political planning by certain countries, Rouhani said. He was referring to Irans political and economic rival Saudi Arabia, which is at odds with Iran over the countrys support for Syria and Iraq. Saudi Arabia, number one exporter and the most influential OPEC member, blocked Irans push for a one-million-barrel cut of OPECs oil output in its recent meeting. However, Rouhani said his administration is capable of running the country based on the current level of crude price, , adding that the present circumstances is an opportunity to reduce the dependency of the countrys budget on oil revenues. Rouhani unveiled the draft of new budget to the parliament last week, stating that the budget has less reliance on oil revenues than those of the previous years. Speaking of foreign impediments, Irans financial system as well as its oil exports are further under sanction pressures imposed by the United States and the European Union over the countrys disputed nuclear program. Iran and the world powers agreed, on Nov. 24, to extend the nuclear talks for another seven months until June 30, 2015, after they failed to reach a comprehensive nuclear agreement last month before a previous deadline. As for Irans economy, everything is dependent on the supply of U.S. dollars to the economy of Iran. If we have a good nuclear deal, or the price of oil regains (its previous status), the situation will be different, Leylaz said.
Posted on: Sun, 14 Dec 2014 15:34:24 +0000
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