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Iran's budget tackles falling oil prices

Iranian President Hassan Rouhani's $294 billion budget for 2015 shows his government is willing to cut costs to compensate for falling oil prices, but makes no allowance for the absence of a nuclear deal with the West.
Iranian President Hassan Rouhani (C) arrives at parliament before presenting the proposed annual budget in Tehran on December 7, 2014. Iran's parliament has adopted a law on December 4, to tax religious foundations and military-linked companies, a first for the Islamic republic that could generate hundreds of millions of dollars in revenues, media reported. AFP PHOTO/ATTA KENARE        (Photo credit should read ATTA KENARE/AFP/Getty Images)

On Dec. 7, President Hassan Rouhani presented his budget bill for the Iranian year 1394 (which begins March 21, 2015) to the Iranian parliament. The budget bill was anticipated by various stakeholders, especially considering low and falling oil prices as well as the wait-and-see mode in the nuclear negotiations that have induced massive uncertainties into Iran’s economic outlook.

According to the figures released by the government, the overall state budget for the next Iranian year will be 8,379 trillion rials ($294 billion at the emerging official exchange rate of 28,500 rials to the US dollar), showing a mere 4% growth compared with the 1393 budget law. This figure alone indicates that the government has adopted a contractionary fiscal policy, though there are many nuances in the budget bill that will be debated in the parliament. The following table summarizes the key positions of the proposed budget framework, compared with the budget law of the current Iranian year:

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