MP: Oil income cut leaves negative impact on economy

Tehran, Nov 22, IRNA – Hadi Qavami, a member of the Plan and Budget Commission of the Majlis said on Friday that with the oil price reduction parts of this year’s budget will not be realized. He added that global oil price fall will have negative impact on Iran's economy and on oil producers. He told IRNA that oil price decrease will result in budget deficit and will influence the economy of oil exporting countries. Considering that a major part of Iran’s budget depends on oil, any fall in oil price will entail consequences for the economy. He pointed to devaluation of the national currency, inflation rise, drop in hard currency reserves and lack of control over hard currency rate as other consequences of oil price fall on the economy. Qavami said drop in oil price is a game staged by Saudi Arabia and directed by the US. For the same reason, he noted, the US has increased its oil supply at an outstanding level. The parliamentarian further remarked that oil price drop in international markets will affect economic plans of the government, adding that with the oil price fall government revenues will drop and as a result completion of development projects will be faced with difficulty. Stressing that if the price of one barrel of oil in this year’s budget drops from $100 in the first six months to $80 in the second half he said oil revenues will go down and to remove the negative fluctuation of the oil price on the economy real price for oil should be stipulated and substitute revenue resources should be introduced. It should be noted that the oil price was $115 p/b in June but dropped to $82 in October. According to oil market analysts the drop was not normal nor due to economic factors but rather a rise in oil supply. Observers maintain that a scheme designed by the US and its regional allies has been the main factor for realization of this objective. Accordingly, the 11th government intends to regulate the budget of the next year on the basis of $70 for each barrel and thus government policies will become contractile./end