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Saturday, November 15, 2014

Iran to Draw on Sovereign Wealth Fund to Cope with Plunging Oil Prices

Iranian Oil Minister Bijan Zanganeh told oil ministry’s news site SHANA that Iran will draw on its National Development Fund, its sovereign wealth fund, to cope with damage to its oil industry from plunging global oil prices.

“By drawing upon its National Development Fund to reimburse contractors active in upstream projects, Iran will make up for the impact of the oil revenue decline on these projects,” Zanganeh said. (SHANA, 14 November/Reuters, 15 November)

Iran needs to invest heavily in its aging oil production facilities and infrastructure, and the oil price plunge has slashed the funds it has available to do that.

Sovereign Wealth Fund Institute, which tracks such funds worldwide, estimates that Iran’s Fund is worth about $62 billion, but some of its assets are frozen by the sanctions imposed over the country’s nuclear program. By contrast, Saudi Arabia’s sovereign wealth fund exceeds $700 billion.

The International Monetary Fund estimates that with oil prices at $80 a barrel, Iran will run a budget deficit of $8.6 billion this year at the official exchange rate. (Reuters, 15 November)

Iran will adopt “contradictory” monetary policy for the next year, Zanganeh said. He pointed out that the government will raise tax revenues due to plunging oil prices, but such move would slow down an economy that is recovering only slowly from a deep recession triggered by the sanctions. (SHANA, 15 November)

File photo: Iran's oil export terminal at Kharq island (Getty Images)

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6 comments:

  1. AnonymousNovember 16, 2014 at 3:25 AM

    So the previous government was not that bad...the sanctions were tougher but oil was at 125USD at that time... I think time has come for Rohani to perform or people will get tired of him soon.

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    Replies
    1. AnonymousNovember 16, 2014 at 7:00 PM

      Ahmadinejad will come back.....

      A-F

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    2. AnonymousNovember 16, 2014 at 7:44 PM

      That's what you fantasize about A-F... in reality Antarnejad's work is finished... he'll never be back.

      Delete
    3. AnonymousNovember 17, 2014 at 7:24 AM

      Forget AN and Mr. Fereydoon (Rouhani's real name before changing it, because Fereydoon was too Iranian for an akhoond). What about their boss, the Supreme Leader-for-Life? Can the people of Iran touch the Twelfth Emam's Earthly Representative (pending Emam Zaman's "return"?

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    4. AnonymousNovember 18, 2014 at 8:22 AM

      Well said anon 7:24 AM. The fact remains that it doesn't matter which type of "Abdarchee" is "president" because the head mullah will still decide the fate of the nation at his whim.

      Delete
  2. AnonymousNovember 18, 2014 at 5:37 PM

    Maybe akhoond khameini should dip into the stolen sovereign wealth of Iran laying in one of his many bank accounts and save the country from his own handiwork? Somehow I doubt that will ever happen.

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