Rouhani submits budget bill for next year to Parliament
Iran’s President Hassan Rouhani submitted the budget bill for the next Iranian calendar year which begins on March 21, 2018 to the Parliament. The total draft budget amounts to IRR 11,949 trn (USD 331 bn at the current CBI official exchange rate) and is around 6% higher than the budget for the current year. The budget earmarks around USD 100 bn for a series of economic programs that include – most importantly – creating jobs, addressing a banking crisis and introducing a new social security program. The budget has been based on oil prices forecast at $55 a barrel. It introduces significant increases to various fees and duties such as car registration and the departure tax. It also envisages massive cuts to a popular program that involves delivering cash-handouts to the public in return for certain subsidies. The MPs will have debate over the bill for the next few weeks and will then send it to the supervisory Guardians Council for ratification before becoming law.
New survey shows Iran’s H1 growth reached 5.6%
A new survey shows Iran’s economic growth in the first half of the current Iranian fiscal year (March 21-August 21) reached as high as 5.6%. The survey was carried out by the Statistical Centre of Iran (SCI) which said the H1 growth figure was 6% without taking into account oil production. It added that Iran’s gross domestic product (GDP) stood at IRR 3,820 trn (USD 1.05 trn at the current CBI official exchange rate) over the same period. The figure included the oil sector and was nonetheless IRR 3,050 trn (USD 84.5 bn) excluding it. According to SCI, agricultural production expanded by 0.9% as the industry sector (comprised of crude oil, natural gas and other mineral extractions, industrial production, energy and construction) grew by 4.4%, based on a new report by Iran’s Financial Tribune newspaper. The services sector saw the highest growth of 7.2% during the first half of the current year.
House sales in Iran’s key market picking up
The latest figures released by the Central Bank of Iran (CBI) show house sales in capital Tehran increased by a whopping 50.2% over the past Iranian calendar month of Azar (21 Oct. – 21 Dec., 2017) compared to the same period last year. This was largely seen by analysts as reported in Iran’s media that the country’s key housing market is already starting to pick up after a protracted recession. The average price of houses stood at IRR 50.9 (USD 1,218 at current exchange rates) for each square meters which was higher by 14.9% compared to last year. The most expensive neighbourhood was District 1 in the north of the capital where houses were sold at prices above IRR 100 million (USD 2,387) per square meter. The least expensive neighbourhood was District 18 in south where the per square meter price of houses stood at a little above IRR 20 million (USD 477). A majority of sales took place in District 5 in western Tehran with 14.9%. The next most popular neighbourhoods were District 4 (East) and District 2 (North) where sales were up 11.4% and 9.9%, respectively. The average prices of houses in the three neighbourhoods stood at IRR 60 million (USD 1,432), IRR 75 million (USD 1,790) and IRR 80 million (USD 1,910), respectively.
Iran’s trade deficit up by $6bn
The latest official figures show Iran’s trade deficit increased by around USD 6 bn over a period of 10 months starting March 21, 2017 which marks the start of the country’s calendar year. Figures released by the Customs Department show non-oil exports over the period amounted to USD 31.6 bn, showing a minor decrease of 2.3% compared to the same period last year. Major exported items during the period included condensates, liquefied propane, methanol, light oils and their products except gasoline and hematite iron ore. Imports stood at USD 37.6 bn, indicating a rise of 18.3% compared to last year. The largest increase in imports belonged to basic goods, disposable automobile parts, and capital goods.
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Deal near for Iran’s membership to EEU
A top official in Iran’s Trade Promotion Organization (TPO) was quoted by media as saying in mid-December that the country was close to an ambitious agreement to become a member of the Russia-led Eurasian Economic Union (EEU). Behrouz Hassanolfat, the director of TPO’s Europe and Americas Department, said discussions over the final legal issues over Iran’s membership to the EEU were already being worked out, adding that the agreement would soon be signed by the presidents of all member states. The EEU is an economic union of former Soviet states including Kazakhstan, Belarus, Kyrgyzstan and Armenia and Russia which leads it. The Union is meant to guarantee free transit of goods, services, capital and workers among member states.
US House passes bill to scrutinize Iran plane deals
On 15 December, the House of Representatives approved a bill that would provide a strict monitoring and reporting mechanism over plane sales deals between US businesses and Iran. The bill would require the Treasury Department to report to Congress on Iranian purchases of US aircraft and how those sales would be financed. This provoked an immediate reaction from Tehran. Asghar Fakhrieh Kashan, Iran's Deputy Minister of Roads and Urban Development, said the bill was meant to deter financers but could eventually be used by the US to track and eventually confiscate the related payments made by the Islamic Republic. Fakhrieh Kashan said the bill would not ban sales of planes to Iran, but would nonetheless create serious obstacles on the way of selling planes to Iran. This, he warned, would be in clear violation of a 2015 agreement – the JCPOA – which world powers sealed with Iran to resolve disputes over the Iranian nuclear energy program.
Airbus to fund Iran’s plane purchases
Iran Air announced in mid-December that Airbus had agreed to provide a certain portion of the funding required to support the country’s plane purchases from it. Iran Air chief Farzaneh Sharafbafi said representatives from the European aviation giant were in Tehran to discuss the matter. She emphasized that talks with potential financers to support plane purchases would continue nonetheless. Sharafbafi said a total sum of USD 330 million had already been allocated from the National Development Fund to fund Iran Air plane purchases. The official emphasized that certain payments to the same effect had already been made to Airbus as a result of which three jets from the European plane-maker and six from its Italian-Franco offshoot ATR had been purchased.
Iranian banks, Russia’s Eximbank seal ‘unlimited funds’ deal
The CBI announced in late December that four Iranian banks had signed an agreement with the Eximbank of Russia based on which they would be able to get “unlimited funds” for development and industrial projects. The Iranian banks were Bank Sepah, the Export Development Bank of Iran, Bank Parsian and Bank Pasargad.Based on the agreement, Iranian development projects that have been approved by the government would be eligible to receive loans from Russia through the four Iranian banks. This would be in line with Iran’s budget laws as well as the country’s Sixth National Development Plan (2015-2020). Several similar agreements have so far been signed with banks from India, China, South Korea, Denmark and Austria over the past six months, according to a CBI statement.
Iran, Russia inching closer to integrating banking systems
A top CBI official said in late December that Iran and Russia were already conducting technical tests to link their bank card systems. The announcement was made by Davood Mohammad Beigi, CBI’s director of the payment system department, who said this would be part of a larger plan to create an integrated platform between the banking systems of the two countries. Beigi further emphasized that a deal to the same effect was near and that Tehran and Moscow were working over the related legal issues. The official also emphasized that Iran still lacked the standard security requirements for banking activities, adding that providing such requirements were essential for moving ahead with integrating its banking system with Russia.