Iran plans to wean budget off oil income by next year
Iranian officials say the country will kick its dependence on oil revenues by next year, using them only for development projects and to acquire capital assets.
The Iranian government has decided to eliminate its budgetary reliance on oil sales for the fiscal year beginning in March 2020. The administration kickstarted the policy by reducing gasoline subsidies on Nov. 16. This measure is meant to ease budgetary pressures caused by the US maximum pressure campaign on the country's economy, in addition to helping lower-income groups by increasing their cash subsidies.
However, the recent protests across the country proved implementing the policy won't be easy.
Oil funds, especially during the past half-century, have always been a major contributor to Iran’s public budget and expenditures financing. In fact, they paid for 46% of total state costs between 1971 and 2018.
Managing sustainable resources and spending efficiently are the key factors Iran's Planning and Budget Organization (BPO) is pursuing under its budget reform framework to gradually end overdependence on petrodollars. Mohammad Bagher Nobakht, head of that department, noted in an Oct. 9 interview on state TV that the government is bent on compensating for oil revenues being severely hit by US sanctions. Applying new tax laws, reforming hidden energy subsidies and selling off extra government assets are among the steps planned to increase the government’s financial resources, he said.
