TEHRAN, Jan. 18 (PNA/IRNA) — An English-language paper on Sunday reflecting on the declining oil prices, wrote that if oil rates are set at US$ 40, no economic upheaval will threaten our country.
“Iran Daily” was commenting on the collapse of oil prices which has prompted the government to announce plans for adjusting the oil price on which the draft budget bill of the next fiscal year (starting March 2015) is based.
Economic Affairs and Finance Minister Ali Tayyebnia said the government will lower oil prices to US$ 40, which had been set at US$ 72 in the budget bill submitted to the legislature.
Such an approach is rational and will forestall an economic crisis. Besides, it will help stabilize prices, particularly those in the forex market, praised the paper adding that the government should incorporate the change before the Majlis Joint Commission finalizes the budget bill’s provisions.
When the oil prices are reconsidered, the administration will have to curtail spending, particularly the development budget, it suggested, adding that unless expenditures are balanced by revenues, the government will face numerous problems.
As a result, the administration should adopt approaches to forestall these problems, recommended the paper.
Firstly, the government should explore ways to boost exports. If the revenues projected in the budget bill remain elusive, the inflation rate will rise.
Likewise, efforts made by President Hassan Rouhani’s government to curb inflation will be wasted, it said.
Second, the administration should slash the development budget instead of current expenditures to make up its budget deficit. This is because the monthly payments of civil servants are secured by current expenditures, it added.
Last but not the least, the government could double oil sales. Although a higher supply will boost state revenues, it will exacerbate the situation because oil prices will plunge further. Hence, such an approach seems illogical, it pointed out.
Majlis Joint Commission recommends oil prices be set at US$ 45 to US$ 50, while urging the government to reduce its development budget and other spendings to avoid the budget deficit, suggested the daily.
Nonetheless, the reduction of current expenditures could be useful, provided the payments of civil servants are not slashed.
Because of the drastic decline in oil prices, the ground realities should be incorporated into the budget bill, concluded the paper. (PNA/IRNA)