Iran Prepares To Slash Spending

Iran’s budget for the year starting 20 March 2016, together with details of the sixth five-year plan will be presented to parliament next week, Mohammad Baqer Nobakht, the head of the Management and Planning Organization (MPO) announced on 12 January. Despite Iran anticipating reaping the benefits of the upcoming lifting of nuclear-related sanctions (see column), the budget is set to slash spending in real as well as nominal terms.

Though the budget was supposedly finalized on 20 December, the subsequent further collapse in oil prices – Brent this week fell to $30/B – has delayed its unveiling.

Following the 20 December cabinet meeting, the government said that it had approved the “general” budget for current and development expenditure of IR2,670 trillion ($89bn at the budget exchange rate of $1=IR29,997), down 2.7% in nominal terms from IR2,744bn ($92bn at $1=IR28,850) in 2015-16. But with inflation running at around 14% at the end of 2015-16, according to the IMF projections, coupled with the depreciation of the currency, the real-terms cut could be as much as 20%. (CONTINUED - 765 WORDS)