Macroeconomic Forecast Iran

February 2007 | Macroeconomic Forecasts

We see the Iranian budget remaining in negative territory over the forecast period, with the deficit coming in at above 5% of GDP in 2007. Under pressure from the majlis, the president has submitted a budget with a lower oil price assumption of US$33.7/bbl - rather than the previously expected figure of over US$45/bbl - compared to a current price of US$44.10/bbl set for the current fiscal year which ends in March. However, the announcement at the same time of a 'parallel budget' based on a US$30/bbl assumption to be used in case an 'extraordinary incident happens on the international arena' represents a worrying development, whereby official data and planning are becoming further removed from the reality of an economy spending well beyond its means, with little consideration of future growth or efficiency. Indeed, as one MP has put it to a local paper, the president's move is 'an accounting trick' - real spending will certainly outstrip budget assumptions, and as such require a much higher oil price.

If you would like to subscribe to Middle East Monitor, The Gulf and gain instant access to this article, please click here to subscribe.

If you would like to take a trial to Middle East Monitor, The Gulf please click on the trial link below.