Omid Memarian ‎

omid@memarian.info

Dr. Saeed Shirakvand, deputy finance minister in seyyed Mohammad Khatami’s administration, ‎discussed the impact of falling oil revenues on the Iranian economy in an interview with Rooz. ‎According to Shirakvand Mahmoud Ahmadinejad’s administration must learn the lesson of ‎previous years. Otherwise, the country would end up in a dire situation. Here is the text of the ‎interview. ‎

Rooz (R): The deputy governor of the central bank announced this week that if the price of oil ‎falls below sixty Dollars and 60 cents, Iran’s economy would face serious problems. How do ‎falling oil revenues impact next year's budget?‎

Saeed Shirakvand (SS): The Iranian government's budget is based on oil price estimates. For ‎this reason, the current budget was prepared on the assumption that oil prices would remain ‎above 80 Dollars. In other words, if a barrel of oil trades for more than 80 Dollars then the ‎government would be able to implement its plans and govern the nation according to the ‎expectation that it had of oil price levels. Now, however, oil has fallen to around 60 Dollars per ‎barrel, and if this price remains the government would face a massive budget deficit. ‎

R: How can this deficit be remedied?‎

SS: Some of this deficit can be financed from the remaining balance in the foreign currency ‎reserves account, which is estimated at around 25 billion Dollars, and another part of it will be ‎financed by diverting funds from development projects toward government's daily operational ‎expenses. ‎

R: Mr. Ahmadinejad has invited economists to join a discussion on issues related to this topic. ‎However, in the past few years prominent economists informed the president of their view in two ‎junctures to no avail. In your opinion, what has happened to prompt the president to make such a ‎call and what would result from these discussions? ‎

SS: The letter that Mr. Ahmadinejad wrote for economists was not an invitation to think ‎together and find solutions for the Iranian economy and the nation's domestic problems. It ‎appears that Mr. Ahmadinejad does not believe that the Iranian economy is or will be facing any ‎problems. For that reason, in the so-called invitation that he has sent to economists, he has asked ‎them to discuss ways to rescue the global economy from crisis! Therefore, from Mr. ‎Ahmadinejad's point of view, we must act to solve global economic problems, perhaps because ‎he believes that we do not have economic problems inside the country. ‎

R: Given that next year is an election year, how will the nation's economy be impacted by ‎politics?‎

SS: The determining factors in previous elections also were economic issues. Even the election ‎of Mr. Ahmadinejad who ran on the slogan of bringing oil wealth to people's tables was based on ‎economic factors. Given the impact of the ninth administration's policies on people's livelihoods, ‎the economy will naturally play a very significant role in next year's presidential election. ‎People participate in elections when they hope to solve their basic livelihood problems. ‎

R: What are the best and worst case scenarios for the nation's economy throughout the next ‎year?‎

SS: The best case scenario could be one in which the ninth administration learns the lessons of ‎past years and impose a kind of order on its expenditure by institutions a disciplined monetary ‎policy. The worst case scenario would be for the ninth administration to ignore such lessons and ‎continue to spend the budget with no clear plan only to satisfy political goals. ‎