Iranian Economy Minister’s interview with “World of Economy” Daily

(SHADA: TEHRAN) – Iran’s Minister of Economic Affairs and Finance Ali Tayyebnia had an interview with “World of Economy”, a Tehran-published economic daily. Here follows the full text to the interview.

QUESTION: What is the Government solution to finding an alternative to the main source of revenues for the Annual Budget (oil revenues) and adjusting the tax rates at the time of recession?

TAYYEBNIA: One of the structural challenges of Iranian economy is the reliance of Government budget on oil revenues. This has caused the Iranian economy, and economic growth in particular, to be greatly influenced by the fluctuations in crude price.

So logically we should try to cut back and remove the budget dependence on petrodollars and replace them with revenues coming from other sourced than the oil revenues. Tax revenues could be the best alternative.

Fortunately we have experienced a significant growth in tax revenues in recent years. However, it is worth mentioning that this increase has not been due to a rise in tax rates but thanks to expansion of tax bases and improvement of taxation and tax collection infrastructures.

QUESTION: What are the projections for the Government tax revenues in the next calendar year and how realistic are these projections?

TAYYEBNIA: During the first 11 months of the current calendar year (starting March 21, 2014), the Iranian Government tax revenues have jumped by 49 percent as compared to the corresponding period last year. And these revenues have meet up to 96 percent of the target figures set in the Budget Plant for the current fiscal year.

The ratio of the Government expenditures to tax revenues was 41 percent last year, 47 percent this year and is projected to stand at 52 percent next year, which I believe is quite feasible.

QUESTION: How are the funds required to help the country get out of recession going to be financed and through which resources?

TAYYEBNIA: This question does not concern the Economy Ministry as there are other executive bodies involved in this regard.

QUESTION: How long will the current anti-recession package proposed by the Ministry of Economy be valid and effective and is there a possibility of changing the presumptions in that package and/or proposing a new package?

TAYYEBNIA: How long these anti-recession policies are implemented and whether we need to change our economic policies depend on our evaluation of Iran’s economic conditions in the future. Despite all the efforts made to reduce our reliance on oil revenues, we still have a long way to go to reach an ideal point. Therefore we need to have a precise evaluation of possible shocks that might be exerted onto the Iranian economy from outside and also we need to wait for the outcome of the nuclear talks and its effects on the Iranian economy. The Government is closely watching and following these developments and has done necessary planning to address different scenarios that the country might encounter.

QUESTION: As an influential economic policy maker, what is your evaluation of Iran’s economic conditions in the coming year?

TAYYEBNIA: I am quite optimistic and positive about the economic developments next year. One of the greatest achievements of Rouhani administration is that it managed to restore and win people’s trust; trust in the Government’s rational and wise attitude toward economic and political issues.

I am quite hopeful that the Government’s policies in regard to economy, domestic affairs and foreign policy will help us reach our economic goals as set by our upstream documents such as the Fifth and Sixth Socio-Economic Development Plan.

QUESTION: How is the recession in the Iranian stock market related to the Government’s policies?

TAYYEBNIA: All of the Government’s economic policies are aimed at strengthening the Iranian capital market and promoting its role in providing long-term financial resource for businesses. However, we should not forget the fact that the Iranian stock market, just like the stock markets in other countries, is affected by and reacts to the investors’ expectations and projections about the future economic developments. These expectations could be formed by a right or wrong evaluation of the country’s economic and foreign policies.

The Government is doing its best to provide the public and the investors with accurate and transparent information about these developments so as to help them form more accurate expectations and projections.

Furthermore, we are in need of structural reforms aimed at unifying and coordinating all the policies related to the capital and money markets. Therefore, all the governmental officials and the parliamentarians should be aware of the effects of their decisions on different markets.