December 23, 2014

AS THE SA'UDS FORCE THEM RIGHT INTO OUR EMBRACE:

Oil Price Drop, Nuclear Deal Delay Unsettle Iran's Economy (BENO√éT FAUCON and  BILL SPINDLE, Dec. 22, 2014, WSJ)

The renewed economic travails are eroding gains that accompanied President Hasan Rouhani 's surprise election 18 months ago. Mr. Rouhani, whose political fortunes rest largely on an economic recovery, has been scrambling to contain the damage. In a recent address to parliament, he touted a radical but difficult plan to address what he called an unprecedented oil slump: cutting dependence on oil income by boosting industrial exports and hiking taxes.

He has also proposed dramatic fiscal tightening in the new Iranian year that begins in March.

"Iran is moving to a very austere budget," said Fereydoun Khavand, an Iran expert and senior lecturer at Paris Descartes University.

Iran's economic progress came after significant reforms, bolstered by a leap in optimism that the president would be able to get international sanctions over Iran's nuclear program lifted through an agreement with the West.

Inflation had stopped accelerating over the past year, falling to about 20% on an annual basis currently compared with 35% in recent months, according to the government.

The rial lost two thirds of its value against the dollar in 2012 as banking sanctions tightened. It has regained some ground since then, but lost 5% in a week against the dollar when the deadline for reaching a nuclear deal was extended beyond November.

President Rouhani continues to focus on nuclear talks. He advocated for a deal again in remarks carried by Iranian state media in recent days, directly challenging hard-liners who oppose any agreement with the West. Such an agreement would bring access to oil funds blocked abroad and foreign investment that "would largely make up for the oil slump," Mr. Khavand said.

Posted by at December 23, 2014 4:43 PM
  

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