December 21, 2018
The Rohani Administration submitted its budget proposal for the next Persian year to the Majlis with an assumption that Iran will export only 1.5 million barrels a day of oil next year and earn an average of only $54 a barrel.
The budget was handed over to the Majlis December 6 to meet the legal deadline for submission. President Rohani, however, will not make his formal presentation speech to the Majlis until later.
The government gave these details about the budget:
• The proposed budget is 12 percent larger than the current year’s budget. That actually means the budget is much smaller than this year’s in real terms, given that inflation is now running at 40 percent annually.
• The budget’s foreign exchange earnings are based on an assumed average exchange rate of 57,000 rials to the dollar. No one explained how that number was calculated. The official exchange rate, which is used only for a handful of imports such as food and medicine, is 42,000 rials. The two open market prices have been all over the place, ranging from 75,000 to 150,000 during the months of November and December.
• The budget includes no price hikes for fuel, with gasoline remaining at 10,000 rials per liter (29 cents per us gallon at an exchange rate of 130,000).
• The budget forecasts oil sales will average 1.5 million barrels a day, which is around what exports are currently, but well down from the 2.5 million that prevailed before the reimposition of sanctions, and thus assumes that sanctions will continue all next year.
• It projects a barrel will sell for an average of $54 over the coming Persian year. That is a very, very conservative number. The price has not been that low since 14 months ago in October 2017. That estimate goes directly against the predictions in endless Iranian officials’ speeches that the Trump sanctions will drive the price of oil through the roof.
• It proposes to raise civil service salaries by 20 percent, or half of the current rate of inflation.
All eighteen Majlis deputies from Esfahan province submitted their resignations to protest the zeroing of the budget for water projects in the province. Such protest resignations are common, and are normally withdrawn after several days.
