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Rouhani’s budget proposal reverses declining reliance on oil

The Rouhani administration’s proposed budget bill is realistic, but its dependence on oil revenue is stirring criticism.
A gas flare on an oil production platform in the Soroush oil fields is seen alongside an Iranian flag in the Persian Gulf, Iran, July 25, 2005.    REUTERS/Raheb Homavandi/File Photo - RTX2QOOL

Iranian President Hassan Rouhani presented the last budget bill of his current term to the parliament Dec. 4. The state budget for the next Iranian year, beginning March 21, 2017, will exceed 10 quadrillion rials ($328 billion at an exchange rate of 33,000 rials to the dollar) for the first time in Iran’s history. It is 10.9% larger than the current year's budget, but it looks to be more realistic as government revenue is projected to increase only by 1.5% while reliance on tax revenues will grow steadily.

Thanks to the lifting of nuclear-related sanctions Jan. 16 as part of the Joint Comprehensive Plan of Action, the Rouhani administration seems to have felt less pressure preparing the budget bill. Indeed, the figures released by the administration indicate that it has adopted neither a contractionary nor an expansionary fiscal policy for the coming year. The proposed budget forecasts 7.7% growth in gross domestic product (GDP) and expansion of the money supply by 19%, with an expected inflation rate of 7.6%, which is slightly less than the current level.

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