Iran won’t be oil-dependent economy even if all sanctions are lifted: economy minister:

Date of publish: 7/14/2014


    TEHRAN – Finance and Economic Affairs Minister Ali Tayyebnia says Iran will no longer promote an oil-based economy even if the economic sanctions which have been imposed against the country are totally lifted.

Too much reliance on oil revenues has been the source of low economic growth over the past years, the IRNA news agency quoted Tayyebnia as saying on Saturday.

“Although the unfair sanctions have fettered the country’s economic activities, but it also had a benefit for the national economy. The sanctions showed how much the country was dependent on oil incomes.”

Certainly, even if the sanctions are totally lifted, oil incomes will not be cornerstone for the national economy in the future, he added.

Historically, Iran’s economy has been heavily dependent on oil, and the fluctuations of oil prices and exports over the years have directly influenced the government’s budgets and actions.

In the national budget bill for the calendar year 1393 (March 2014-March 2015), 39.9 percent of revenues is dependent on the export of oil and other hydrocarbons, such as gas condensates.

In recent years, sanctions have caused a fifty-percent decline in Iran’s oil exports. But the oil-addicted economy, instead of improving its non-oil revenue systems like taxation, restructuring its bloated human resource organizations, and cutting unnecessary additional expenditures, has compensated for the loss in oil exports by devaluation of the national currency in order to double the value of its suppressed oil revenues. The government did this by selling its petrodollars at a higher dollar-rial conversion rate. 

In a decree issued on February 19, Supreme Leader of the Islamic Revolution Ayatollah Seyyed Ali Khamenei outlined the general policies of the country’s resistance economy, according to which the government must take action to expand the production and exportation of knowledge-based products, increase domestic production of strategic goods, and develop markets in neighboring countries. 

Iran’s Oil Minister Bijan Namdar Zanganeh has set an output target of 5.7 million barrels per day of crude by 2018, according to official statements. The latest figures produced by OPEC show that Iran is currently pumping about 3 million bpd of crude.

An interim accord easing restrictions on insurance for Iran’s oil shipments and freeing up cash held outside the country in return for a suspension of nuclear work went into effect in January. Under the agreement, six buyers permitted under U.S. sanctions to take Iranian crude don’t have to cut imports to avoid penalties.