Iran – planning & budget organization building. (Tasnim)

December 6, 2018

The Iranian government has lost two thirds of its funding, according to statements from the head of the Islamic Republic’s Planning and Budget Organization (PBO) that were quickly removed from official websites.

Mohammad Bagher Nobakht painted the dire fiscal picture December 4 while speaking at a gathering of representatives of disabled people assembled at the PBO to protest cuts to government funds allocated to support them.

The budget shortfalls are largely due to losses in oil revenue as a result of re-imposed sanctions slapped on Iran after the U.S. withdrew from the nuclear deal in May. The Research Center of Iran’s parliament has predicted that Washington’s decision to reimpose sanctions will lower Iran’s oil exports by 500,000 to one million BPD.

Meanwhile, Rouhani’s first deputy, Eshaq Jahangiri, reports that revenues from petroleum sales in the next fiscal year, which begins March 21 in Iran, will be 25 percent lower than this year. That can be an optimistic forecast, especially with lower oil prices.

Mohammad Bagher Nobakht, Iranian government spokesman, the president's advisor and Head of the Plan and Budget Organization speaks to AFP during an interview at his office in Tehran, February 15, 2018
Mohammad Bagher Nobakht, Iranian government spokesman, the president’s advisor and Head of the Plan and Budget Organization speaks to AFP during an interview at his office in Tehran, February 15, 2018

Behrooz Nemati, the spokesman for the presiding board of the parliament, announced in a telephone interview with state-run IRIB December 2 that the government estimates sales of 1.5 million BPD of oil at the price of $54 per barrel in the budget bill. But critics say Iran’s oil exports can go as low as 500 BPD in the coming months.

“Each dollar is predicted to be worth 57,000 rials in the budget bill,” he added.

Jahangiri accused the U.S. of attempting to totally block all of Iran’s oil exports, and said the government has decided to only rely on oil revenues for 25 percent of the budget.

In the meantime, Tehran still hopes that its EU partners will soon find a way to salvage some of the nuclear deal despite the withdraw of the U.S., and allow Iran export its oil and benefit from international investment.

Speaking to the state-run Islamic Consultative Assembly News Agency (ICANA) on Tuesday, Iranian Foreign Minister Mohammad Javad Zarif rejected the recent claim by Reuters that the Iran-EU trade mechanism created to replace the nuclear deal, officially known as the Special Purpose Vehicle (SPV), will not cover oil sales and only includes humanitarian and food products.

Zarif says Iran’s oil sales are actually the focal point of the EU’s promised trade mechanism, adding “based on the information we have, [Reuters’ claim] is not true. If the revenues of Iran’s oil sales are not put into an account, then it won’t be clear if there is any money to do transactions with. On the other hand, Iran’s major export is oil, so I suspect there is some media hype aimed at making people lose hope.”

President Hassan Rouhani has repeated threats to subvert oil exports from Gulf states if Iran is not allowed to export its oil. The Islamic Republic’s authorities have repeatedly vowed to disrupt the flow of oil through the Straits of Hormuz in the Persian Gulf if Tehran is prevented from exporting its oil.

Reacting to Rouhani’s earlier threats, the U.S. military’s Central Command said on July 5, “The U.S. Navy stands ready to ensure free navigation and the flow of commerce…through the Strait of Hormuz if necessary.”

Furthermore, retired Admiral James Stavridis had previously told CNBC that in the event Iran chooses to close the Strait of Hormuz with military force, the United States and its Arab allies would be able to open it in a matter of days.


About Track Persia

Track PersiaTrack Persia is a Platform run by dedicated analysts who spend much of their time researching the Middle East, in due process we fall upon many indications of growing expansionary ambitions on the part of Iran in the MENA region and the wider Islamic world. These ambitions commonly increase tensions and undermine stability.