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“Oil for development” budget, challenges and opportunities

“Oil for development” budget, challenges and opportunities thumbnail

Iran has recently announced that its next fiscal year’s budget is going to be set with less reliance on oil revenues.

Last week, Head of the Country’s Budget and Planning Organization (BPO) Mohammad Baqer Nobakht said “In the next year’s budget – it starts on March 19, 2020 – oil revenues will be only spent for development projects and acquisition of capital asset, and not even one rial is going to go to government expenditures and other areas.”

At first glance, the idea is very appealing and it seems if the government manages to pull it off, it will be a significant step for Iran in its movement toward an oil-independent economy. However, it seems that cutting oil revenues from the budget and allocating them only to a specific part of the country’s expenditures is not going to be an easy task.

Although, BPO has already suggested various substitute sources of revenue to replace those of oil, some experts believe that the offered alternatives are not practical in the short-term.

So, how successful will the government be in executing this plan? What are the challenges in the way of this program? What are the chances for it to become fully practical next year?

To answer such questions and to have a clearer idea of the notion, let’s take a more detailed look into this [so called] ambitious program.

The history of “oil for development”

It is not the first time that such a program is being offered in Iran. Removing oil revenues from the budget and allocating it to development projects goes way back in Iran’s modern history.

In 1927, the Iranian government at the time, decided to go through with a plan for removing oil revenues from the budget, so a bill was approved based on which oil incomes were merely allocated to the country’s development projects.

This law was executed until the year 1939 in which the plan was once again overruled due to what was claimed to be “financial difficulties”.

Since then up until recently, Iran has been heavily reliant on its oil revenues for managing the country’s expenses. However, in the past few years, and in the face of the U.S. sanctions, the issue of oil being used as a political weapon, made the Iranian authorities to, once again, think about reducing the country’s reliance on oil revenues.

In the past few years, Iran’s Supreme Leader Ayatollah Seyed Ali Khamenei has repeatedly emphasized the need for reducing reliance on oil and has tasked the government to find ways to move toward an oil-independent economy.

Now that Iran has once again decided to try the “oil for development” plan, the question is, what can be changed in a program that was aborted 80 years ago to make it more compatible with the country’s current economic needs and conditions.

The substitute sources of income

Shortly after BPO announced its decision for cutting the oil revenues from the next year’s budget, the Head of the organization Mohammad-Baqer Nobakht listed three alternative sources of income to offset oil revenues in the budget planning.

According to the official, elimination of hidden energy subsidies, using government assets to generate revenue and increasing tax incomes would be the main sources of revenues to compensate for the cut oil incomes.

In theory, the mentioned replacements for oil revenues, not only can generate a significant amount of income, but they could, in fact, be huge contributors to the stability of the country’s economy in the long run.

For instance, considering the energy subsidies, it is obvious that allocating huge amounts of energy and fuel subsidies is not a good strategy to follow.

In 2018, Iran ranked first among the world’s top countries in terms of the number of subsidies which is allocated to energy consumption with $69 billion of subsidies allocated for various types of energy consumption including oil, natural gas, and electricity.

Based on data from the International Energy Agency (IEA), the total amount of allocated subsidies in Iran equals 15 percent of the country’s total GDP.

The budget that is allocated for subsidies every year could be spent in a variety of more purposeful, more fruitful areas. The country’s industry should compete in order to grow, people must learn to use more wisely and to protect the environment.

However, practically speaking, all the above-mentioned alternatives are in fact long term programs that take time to become fully operational. A huge step like eliminating hidden subsidiaries cannot be taken over a one or event two-year period.

The development aspect

One big aspect of the government’s current decision is the “development” part of the equation.

A big chunk of the country’s revenues is going to be spent on this part and so the government is obliged to make sure to choose such “development” projects very wisely.

Deciding to allocate a huge part of the country’s income on a specific sector, makes it more prone to corruption, and therefore, a plan which is aimed to help the country’s economy could become a deteriorating factor in itself if not wisely executed.

The question here is, “Is the government going to spend oil money on all the projects which are labeled as ‘development’ even if they lack the technical, economic and environmental justification?”

So, the government needs to screen development projects meticulously and eliminate the less vital ones and then plan according to the remaining truly-important projects.

Final thoughts

Even if the “oil-free” budget is a notion that seems a little ambitious at the moment, and even if there are great challenges in the way of its realization, but the decision itself is a huge step toward a better future for Iran’s economy. Although realizing this plan seems fairly impossible in the short-term, it surely can be realized with proper planning and consideration in the long term.

Sooner or later Iran has to cut off the ties of reliance on oil incomes and start moving toward a vibrant, dynamic and oil-free economy; a journey of which the first step has been already taken.

Tehran Times



123 Comments on "“Oil for development” budget, challenges and opportunities"

  1. makati1 on Wed, 16th Oct 2019 6:29 pm 

    “…move to Asia rather than live under such tyranny.”

    “We are in the collapse of government and the socialistic promises since World War II are all coming due. Economically, this is a battle to the end. The left wants to confiscate all the wealth of the right. This is the end of the purpose of civilization and the beginning of pure tyranny.

    I for one have no desire to live in a socialistic world of tyranny. I will most certainly leave and move to Asia rather than live under such tyranny.” (Martin Armstrong)

    https://www.theburningplatform.com/2019/10/15/why-is-socialism-dying/#more-205701

    “This is the final rally of socialism before the crash…. the unfunded promises will reach $400 trillion by 2032. There is no possible way to fund that without a crash & burn.”

    I guess I am not alone in my thoughts about Amerika.

    BTW: Who gives a damn about oily bullshit as in the above article? Not me. Up. Down. Sideways. What will be, will be. Buckle up and enjoy the ride. It will be a bumpy one to the bottom.

  2. Cloggie on Thu, 17th Oct 2019 9:37 am 

    As always Solar Team Eindhoven is well placed to win tomorrow yet again the Bridgestone World Solar Challenge in Australia:

    https://youtu.be/Ou9ALkP8JRA

    Anglos love to congratulate each other with how wonderful Anglo universities are, Eindhoven always wins. That’s what counts.

  3. Cloggie on Thu, 17th Oct 2019 12:16 pm 

    In the Challenger class the university of Delft-Netherlands was in the overall lead, but at the last moment their car BURNED to the ground, see incredible pictures:

    https://www.worldsolarchallenge.org/blogs/2019/10/17/agoria_claims_their_first_bwsc_title

    Now a Belgium team from the University of Leuven won the race. The fact that they also speak Dutch (sort of.lol) is a small consolation.

  4. Cloggie on Thu, 17th Oct 2019 1:24 pm 

    How a burning solar car looks like… and devastated Dutch students:

    https://www.nu.nl/buitenland/6004646/zonneauto-van-tu-delft-brandt-volledig-uit-tijdens-race-in-australie.html

  5. supremacist muzzies jerk on Thu, 17th Oct 2019 2:28 pm 

    why (((supremetard))) SAW SAWS pbuh swt why, why?
    you (((supremetard))) SAW SAWS pbuh swt got the order all messed up? why elijah cummings SAW SAWS pbuh swt and not her majesty royalty DUM DUM Frederica Wilson SAW SAWS pbuh swt (i’m big into muzzie “insult” thing, they should be punished)

  6. Cloggie on Thu, 17th Oct 2019 4:32 pm 

    Mike Pence arranges a 5 day cease-fire in NE-Syria.
    What DJT “achieved” was that he drove the Kurds in the arms of Assad, who basically got most of his country back and already took Kobane and Raqqah, rolling back everything the 2011 CIA operation had initiated.

    Russia has taken over deserted US military camps, which is not good for US prestige. It also undermined Saudi trust in the solidarity of the US overlord.

    The US deep state hates it, but Trump’s electorate couldn’t care less about the US withdrawl.

  7. Davy on Thu, 17th Oct 2019 4:36 pm 

    Uh, Cloggo, US is remaining in the oil fields further south. Seems your crushing US defeat is another limp dick effort at your fantasy agenda.

  8. Cloggie on Thu, 17th Oct 2019 4:44 pm 

    BBC Newsnight: Tory defectors repent and will probably back BoJo. Admit they were wrong in suggesting BoJo wasn’t interested in a deal (was my thought too).

    No big difference between May en BoJo deal.

    BBC lightly skeptical BoJo has the numbers.

  9. Sissyfuss on Thu, 17th Oct 2019 4:47 pm 

    ” Eindhoven always wins.” That’s only if they don’t burn it to the ground, Clendhoofer. I believe it was Franklin who said, ” You have a right to express your opinion but that is not a guarantee that you are correct.”

  10. Cloggie on Thu, 17th Oct 2019 4:47 pm 

    “Uh, Cloggo, US is remaining in the oil fields further south.”

    You mean these 30,000 bpd?

    i’m impressed!

    Need to urgently review my world view.

  11. Cloggie on Thu, 17th Oct 2019 4:51 pm 

    “That’s only if they don’t burn it to the ground,”

    Over the years they never have. Instead they were the only participating university on earth that created a spin-off startup and sell solar cars commercially:

    https://deepresource.wordpress.com/?s=lightyear

  12. Cloggie on Thu, 17th Oct 2019 5:04 pm 

    The car that is the next logical step after Tesla:

    https://deepresource.wordpress.com/2019/06/25/worlds-first-solar-car-presented-in-the-netherlands/

    Fuel out of thin air, reducing the need for charging.

  13. Davy on Thu, 17th Oct 2019 5:15 pm 

    “Need to urgently review my world view.“

    You got that right!

  14. Davy on Thu, 17th Oct 2019 5:16 pm 

    “Fuel out of thin air, reducing the need for charging.”

    Total waste of time

  15. Cloggie on Thu, 17th Oct 2019 5:16 pm 

    Sarcasm is your fort, eh?

  16. Cloggie on Thu, 17th Oct 2019 5:17 pm 

    “Total waste of time”

    Why?

  17. Davy on Thu, 17th Oct 2019 5:18 pm 

    No, but irony is yours

  18. Davy on Thu, 17th Oct 2019 5:21 pm 

    “Total waste of time”Why?”

    Cloggo, anybody that utilizes solar will quickly realize the surface area of a vehicle is inadequate for useful solar supplies propulsion especially considering the cost benefit equation.

  19. Cloggie on Thu, 17th Oct 2019 5:26 pm 

    Empire dave as always instinctively rejects any positive developments as it sabotages his morbid world view of total collapse, where most of the world population perishes, except of course US preppers, aka The Last Man Standing.

    Nothing of that view will materialise.The world and industrial civilisation is far more resilient than he or other collapseniks on this board can imagine.

  20. Cloggie on Thu, 17th Oct 2019 5:29 pm 

    “anybody that utilizes solar will quickly realize the surface area of a vehicle is inadequate for useful solar supplies propulsion especially considering the cost benefit equation”

    You have no clue what you are talking about. The car is a net energy positive in Dutch weather conditions and average annual distance of 13,000 km.

  21. Davy on Thu, 17th Oct 2019 5:34 pm 

    Not worth the expense cloggo. No real world applications. Give your fake agenda a rest

  22. Davy on Thu, 17th Oct 2019 5:39 pm 

    “Empire dave as always instinctively rejects any positive developments as it sabotages his morbid world view of total collapse”

    Well as usual the cloggo puts words in my mouth. I am all for positive developments this is why I have a far superior solar system to your lame panels on the roof set up. I don’t talk about total collapse either I talk about a collapse process. You are a dishonest person on all levels. You are a disgusting person because not only are you dishonest you are can’t shut your fucking mouth Mr. 20/7/365.

  23. Cloggie on Thu, 17th Oct 2019 5:40 pm 

    Expense? Solar cells cost nothing. The current high price of the car is that of the first edition and will rapidly come down. Initial solar cells used by NASA were hundreds of times more expensive than today.

    You and your dull, negative, defensive attitude is a perfect illustration of US decline.

    Finally a collapse one can believe in.

  24. Davy on Thu, 17th Oct 2019 5:47 pm 

    “Expense? Solar cells cost nothing.”

    you have a reference on the cars cost? How about its performance criteria? Once you get that you will quickly understand this is a play toy for students. What a numb nut!

  25. makati1 on Thu, 17th Oct 2019 5:51 pm 

    Davy, Cloggie is even more delusional than you are. Must be something in the Nederlands water? I guess that Western Koolaid is addictive. Glad it has not reached Asia, other than places like Hong Kong, Taiwan and Japan where they are committing suicide, just like Amerika.

  26. Davy on Thu, 17th Oct 2019 5:56 pm 

    Gee, the little dog is yipping and yapping. Makato, we don’t care about your opinion. You are an old man in a 3rd world retirement thinking you are a rich influential man. You are a nobody in a nobody land with nothing useful to say.

  27. The REAL Davy on Thu, 17th Oct 2019 6:24 pm 

    Gee, the little davyturd is yipping and yapping. We don’t care about your opinion. I am an old man in a 3rd world backwater Missoura swamp thinking I am a rich influential man. I am a nobody in a nobody land with nothing useful to say.

  28. makati1 on Thu, 17th Oct 2019 6:26 pm 

    Davy, can’t you be original or isn’t your two active brain cells able to think without drugs? Maybe you need to spend your last years preparing for the coming 3rd world Amerika?

    I live comfortably down the ladder. No arrogant pretentious or lies to spew like you do. I am what I am, secure in my situation.

    I am free. Do you even understand the word? You certainly have no freedoms. Not one. You live in a Police State, chained to taxes, fees, 40,000+ laws, etc. Your leaders are all insane. Your capitalist democracy is draining your life blood.

    Your pathetic attempts at putdowns are laughable, Davy.

  29. Davy on Thu, 17th Oct 2019 8:44 pm 

    One of my too remaining brain cells resentedly died makato. So what.

    stupid dumbass

  30. Davy on Thu, 17th Oct 2019 8:51 pm 

    “Well as usual the cloggo puts words in my mouth. I am all for positive developments this is why I have a far superior solar system to your lame panels on the roof set up. I don’t talk about total collapse either I talk about a collapse process. You are a dishonest person on all levels. You are a disgusting person because not only are you dishonest you are can’t shut your fucking mouth Mr. 20/7/365.”

    Oops, sorry y’all. I was projecting again.

    For anyone that cares, i’m Tucking my fucking dumbass mouth in for the night.

    fuck i’m Stupid

    dumbsasses

  31. Davy on Thu, 17th Oct 2019 8:58 pm 

    “Cloggo, anybody that utilizes solar will quickly realize the surface area of a vehicle is inadequate for useful solar supplies propulsion especially considering the cost benefit equation.”

    IMA, the same doesn’t apply to aircraft. obv.

  32. Davy on Thu, 17th Oct 2019 9:34 pm 

    Thought PO.com would enjoy my latest REAL GREEN Deep Adaptation YouTube video.

    Learn something: https://www.youtube.com/watch?v=lrWGbsEMr5I

  33. joe on Thu, 17th Oct 2019 10:17 pm 

    form what ive heard the deal is quite a bit different to mays deal. crucially bojo has gotten the eu to state clearly that there will be no more extensions after 31Oct. next saturday bojo will put a simple vote before the house, either vote to leave with a deal or vote to leave without a deal, and that gets around the Benn surrender act. since in the case of northern ireland the deal clearly states that it remains in the eu for as tax zone (which is administered only by the uk government) and must be consented every 4 years, where it does not it rejoins the uk fully.
    imo, since Stormont hasn’t sat in years, its probobly never going to now in its current format. the deal also says northern ireland can be part of any third party free trade deals therefore this deal will be void if for example bojo makes Belfast a freeport and makes the whole of northern ireland a tax haven. this deal is nail in the eu coffin, Italy will provide the next nail.

  34. widdle davys mommy on Thu, 17th Oct 2019 11:47 pm 

    We’re so sorry you turned out the way you did widdle davy. We tried so hard to bring you up right. Please don’t call us anymore. You’re an embarrassment to the entire family.

  35. Cloggie on Fri, 18th Oct 2019 12:37 am 

    This just in: Solar Team Eindhoven has Once again the world solar challenge in Australia, like they did the previous three times, with ever better cars

    https://www.ed.nl/eindhoven/solar-team-eindhoven-als-eerste-over-de-finish-in-adelaide~a0a07b7d/

    https://en.wikipedia.org/wiki/World_Solar_Challenge

  36. Cloggie on Fri, 18th Oct 2019 12:45 am 

    The car that won;

    https://youtu.be/PX3Rfif2ffI

    https://youtu.be/tQAq3_M0LY0

    https://youtu.be/c5xgtadcgaw

  37. Cloggie on Fri, 18th Oct 2019 1:41 am 

    This is an order from the DailyMail: vote FOR the deal!

    https://www.dailymail.co.uk/news/article-7585891/DAILY-MAIL-COMMENT-MPs-snatch-disaster-jaws-victory-theyll-never-forgiven.html

    “DAILY MAIL COMMENT: If MPs snatch disaster from the jaws of victory, they’ll never be forgiven”

  38. Cloggie on Fri, 18th Oct 2019 6:41 am 

    LOL

    https://www.hln.be/nieuws/buitenland/guy-verhofstadt-brexitdeal-die-er-nu-ligt-was-eerste-eu-voorstel-dat-may-afwees~af3cc6c0/?referer=https%3A%2F%2Fwww.google.com%2F

    “Guy Verhofstadt: “Brexitdeal die er nu ligt, was eerste EU-voorstel dat May afwees””

    (EU Brexit bigwhig Verhofstadt: achieved Brexit deal is the same EU-proposal that was rejected by then PM May)

  39. Cloggie on Fri, 18th Oct 2019 6:45 am 

    Tomorrow there will be a pro-EU demonstration in London, that according to some could be the largest demonstration in British history. Went to London on exactly the right moment.

    #IWasThereWhenTheWestDiedHurray

    Cliffhanger latest:

    https://www.dailymail.co.uk/news/article-7587335/Boris-Johnson-facing-crunch-36-hours-tries-woo-Labour-MPs-backing-Brexit-deal.html

    “Boris Johnson’s 24 hours to woo Tory ‘Spartans’ and Labour: Boost for PM as 15 rebel MPs indicate they WILL vote for new Brexit deal – as DUP takes a sledgehammer to his charm offensive and urges ERG allies to ‘stand firm'”

  40. Cloggie on Fri, 18th Oct 2019 6:57 am 

    #GeopoliticsInFlux

    https://peakoil.com/publicpolicy/oil-for-development-budget-challenges-and-opportunities/comment-page-1#comment-708481

    “Gibraltar fury: Brexit Party MEP savages ‘opportunistic’ Spain over ‘colony’ jibe”

    In 1704 Gibraltar was captured from Spain by 2000 British and 1000 Dutch marines. Both countries where allies at the time, after the Dutch invaded Britain in 1690 in order to turn it into a decent Protestant-capitalist country. Both were at war against a French-Spanish alliance.

    Spain has tried to take it back by force three times, three times in vain.

    I bet it will succeed the fourth time, backed as it will be by tout Eurasie.

  41. Cloggie on Fri, 18th Oct 2019 7:09 am 

    Merkel probably overruled Juncker by saying that a Brexit delay is possible after all, if the Commons reject the deal tomorrow. This is a knife in the back of BoJo, who had hoped that he could increase the pressure by threatening that rejection means No Deal.

    It no longer does probably. Unfortunately.

    The loyal servant of the American empire Merkel wants to keep the West together, very much unlike me (but she counts, I don’t).

    https://www.dailymail.co.uk/news/article-7588017/Angela-Merkel-says-delay-Brexit-unavoidable-MPs-vote-Boris-Johnsons-deal.html

    “Germany drops a bombshell: Angela Merkel tells EU leaders a delay to Brexit is ‘unavoidable’ if MPs vote down Boris Johnson’s deal – just a day after Jean-Claude Juncker ‘ruled out’ another extension”

    Obviously the Brexiteer boobs cry foul again by claiming that Germany is domineering everybody. Merkel doesn’t, her bosses in Washington do.

    Until they don’t.

    That moment isn’t too far off. Russia was the first country that managed to escape in 2000. Most Eastern European countries resist The Agenda as well and Italy could be the first western European country to escape. And Germany probably the last, with France in between in 2022.

  42. Cloggie on Fri, 18th Oct 2019 8:59 am 

    Will be in the good company of Michael Heseltine tomorrow:

    https://www.independent.co.uk/voices/brexit-boris-johnson-final-say-march-peoples-vote-day-london-a9161061.html

    “If you care about the country, you’ll march with me for a Final Say”

    I will march indeed tomorrow but will leave my (neo-Gaullist) pro-Brexit banner in the hotel.lol

  43. Cloggie on Fri, 18th Oct 2019 4:19 pm 

    – London Calling –

    How to bluff your way into Brexit or the required vocabulary to be mastered:

    • “Customs border in the Irish Sea”

    • “Get Brexit done”

    • “The will of the people”

    • “17.4 million people”

    • “No more dither and delay”

    • “A reckless Tory Brexit”

    • “No-deal cliff edge”

    • “Chlorinated chicken”

    • “No one voted to be poorer”

    • “Race to the bottom”

    https://www.theguardian.com/politics/2019/oct/18/brexit-super-saturday-will-the-deal-pass

  44. Antius on Fri, 18th Oct 2019 5:03 pm 

    “Empire dave as always instinctively rejects any positive developments as it sabotages his morbid world view of total collapse, where most of the world population perishes, except of course US preppers, aka The Last Man Standing.”

    Empire Dave is correct in this case, Cloggie. 1m2 of solar panels will not provide much energy to charge a battery. In Europe in summer, insolation may reach 5kWh per day. So a solar panel will generate 1kWh of electrical energy per day. That is enough to take a Tesla about 7km. In winter, it would barely make 1km.

  45. Antius on Fri, 18th Oct 2019 5:17 pm 

    Ok, reading the spec sheet, I see there are 5m2 of solar cells. If they are very light, then maybe this invention reduces the burden on grids, during summer of course.

  46. Cloggie on Fri, 18th Oct 2019 5:18 pm 

    I wasn’t talking about the Tesla, that has no solar function.

    I was talking about the Lightyear One:

    https://ev-database.org/car/1166/Lightyear-One

    https://www.thisismoney.co.uk/money/cars/article-7178781/Lightyear-releases-106k-SOLAR-car-12-400m-year-using-energy-sun.html

    “Lightyears ahead: Dutch firm releases a £134,000 SOLAR car that is claimed to be able to do 12,400 miles a year using energy from the sun”

    Average Dutch driving distance 12,000 km (not miles).
    Lightyear One, a solar that EXISTS:

    https://youtu.be/bSbWwn_YCr8

  47. Cloggie on Fri, 18th Oct 2019 5:24 pm 

    “reduces the burden on grids, during summer of course.”

    The world is bigger than notoriously grey UK and Holland. In Arabia, Africa, Australia, New Mexico, etc. with predictable sunshine, this car is virtually autonomous at “normal usage”. You would hardly ever need to charge via the grid.

  48. Antius on Fri, 18th Oct 2019 5:41 pm 

    Impressive. A genuine perpetual motion machine. Provided you don’t need to go too far and can park in the sun.

    This vehicle would work best if it carried a small backup fuel cell or generator. That way, if you had to park under a tree or had to drive further that day, you would not have to worry about running out of charge.

  49. makati1 on Fri, 18th Oct 2019 5:51 pm 

    It would reduce the electric burrden on days it was not cloudy, raining, snowing, smoky, hazy, or it there were a lot of trees like in the burbs. Another sick joke perpetrated by techie dreams.

    Oops! Forgot about dust and dirt on the panels, bird shit, snow/ice in winter(if it is in a garage, no sun) etc. lol

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