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Iranian Economy Readying to Leap

Service : Economy
TEHRAN, May 18 (ICANA) – Although talk of Iran's "economic crisis" is commonplace among the western powers, thanks to smart macroeconomic policies and rising oil revenues, the Iranian government is now earning high marks from outside observers such as the World Bank and Economist Intelligence Unit.
Wednesday, May 18, 2011 7:31:16 PM
Iranian Economy Readying to Leap

This is for implementing politically risky cuts in cumbersome subsidies, financial discipline, robust foreign exchange reserve, debt reduction and the pursuit of job growth in its mixed economy, thanks in part to its sanction-busting foreign trade and foreign investment, an Asia Time analysis said.

According to the analysis, Iran last year attracted about US$10 billion in foreign investments, and it has just concluded six new agreements with China worth $20 billion. The volume of Iran-China trade, currently at $30 billion, is expected to double by 2015.

Iran and its neighbors, above all Turkey and Iraq, are enhancing their bilateral relations, with Tehran and Ankara signing an agreement for shared power generators, while energy and trade ties are expanding between Tehran and Baghdad.

As a result, it is not "crisis" but rather growth and opportunity that lies in the near future.

This week, the watchdog Guardian Council approved a $508 billion budget for the fiscal year 2011-2012, one third more than the $347 billion budget for the previous year. Its decision came after months of parliamentary deliberations that cut some $34 billion from the initial budget submitted by President Mahmoud Ahmadinejad in February due to inflation fears.

The ambitious new budget foresees the creation of millions of jobs, which will depend partly on steady oil prices, projected at $81.50 per barrel for the budget purposes. Saudi Arabia uses a much lower $50 per barrel in its budget. Iran's estimate is based on hopeful expectations that despite a recent fall in oil prices there will be "price stability" come this summer.

The analysis said, despite a number of shortcomings, Iran's oil economy has primed the country for a tangible and significant leap forward in 2011-2012 that will likely yield positive results, barring the unforeseen consequences of a sharp decrease in world oil prices - unlikely to happen in light of the continuing Libyan crisis and continuing world economic recovery.

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