Iran Economy NewsEconomic Ways Ahead Iran’s Government

Economic Ways Ahead Iran’s Government

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Iran’s economy is worrying. The government’s severe budget deficit, heavy current government spending, rising unemployment, impending droughts, sanctions, and dozens of other problems have made Iran’s economic situation difficult and overwhelming for a large population.

The regime’s new president needs financial resources for productive and employment-generating investments to save the country’s economy from these crises.

Iran needs hundreds of billions of dollars to invest in key areas such as rail, air and road transport, power plants, oil, gas, and petrochemical industries, and other important economic infrastructure.

Iran’s private sector has not been strengthened enough to take on an important part of the economic development burden.

Therefore, considering all the conditions prevailing in Iran, the main burden of the country’s economic development will be on the government. The most important sources of income for the country are:

  1. Taxes
  2. Oil and gas revenues
  3. Proceeds from the sale and transfer of property
  4. Revenue from government ownership

The total revenue sources of the government in 2021 are estimated at 420 trillion tomans. And such revenue will not cover government spending, and the government will face a significant budget deficit in 2021.

Which of the above sources of income will the new government be able to increase in the short term?

Due to the problems of various occupations caused by the coronavirus pandemic, a significant increase in tax revenues is not possible.

A significant increase in revenues from the sale and transfer of property is also not conceivable due to the problems in the stock market during 2020 and the prevailing atmosphere in the country’s economy.

Revenues from government ownership in 2020 were about 30 trillion tomans and include a small percentage of government revenues for which there is no significant increase.

Revenues from the sale of oil and gas in the budget of 2020 were about 50 trillion tomans. Iran can produce and export 3 million barrels of crude oil per day, which in terms of $ 70 value will be worth more than 75 billion dollars. This amount is about 4 times the total government revenues in 2020.

For the reasons stated here and here and other analyzes, the price of oil will gradually decrease in the coming years to about $ 30 a barrel, and in the next two decades there will be no idea of ​​$ 70 oil, so if the Iranian government cannot produce and export oil with all its might and capacity, in concept it will waste billions of dollars of income for the country and the future generations.

Therefore, the most logical, fastest, and most practical solution for the government to save the country from various economic crises and negative growth of the national economy and attract resources to develop important economic infrastructure, is focusing on increasing oil exports to more than 3 million barrels in the day and restoring Iran’s lost share in the OPEC oil export basket over the past years.

But this has become an unobtainable issue for the Iranian government because of the sanctions, which are the results of its behavior such as its nuclear program and global terrorism support threatening the global community. Therefore, best said with this behavior the country’s economy has no solution and will face a harder situation in the coming months and years.

Bahman Eshghi, Secretary-General of Tehran Chamber of Commerce in an interview with the state-run website Gostaresh on July 11, 2021, about the regime government’s situation said:

“The Iranian government cannot provide the means for development with this current mechanism. Let us be. Therefore, who is the president does not affect the general situation in the country, because, with this mechanism, the current vision, and the model of interaction with the world, we should not expect an efficient and advanced government. The situation will be the same as long as we form a base to manage the chicken price.”

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