IMF: Iran needs oil at $195 to balance budget
The International Monetary Fund estimates that Iran will need $195 a barrel of oil to balance its budget next year. That's more than three times the projected price of oil next year. Iran's exports will also decline, according to the report.
According to the International Monetary Fund, Iran will need oil at a price of about $195 per barrel to balance its budget next year.
According to Reuters, the International Monetary Fund announced on Monday, October 28, that Iran, as one of the most important members of the Organization of the Petroleum Exporting Countries (OPEC), is facing a budget deficit of 4.5 percent this year due to US sanctions.
The report, noting that Iran is expected to face a budget deficit of five and one-tenths percent next year (1399), predicts that the country will need oil at $194.6 per barrel to balance its budget next year.
This is while last Friday, the price of a barrel of North Sea Brent oil was trading at around $62, and the price of oil for next year is expected to be around $60.
Iran's oil revenues, which had increased significantly after the July 2015 nuclear agreement known as the Joint Comprehensive Plan of Action (JCPOA), declined sharply with the US withdrawal from the JCPOA in May of last year and the reimposition of sanctions against the Islamic Republic.
The International Monetary Fund has also predicted that Iran's economy will shrink by nine and a half percent this year, contrary to its previous estimate of a negative six percent growth. According to this reliable source of global economic assessment, Iran's real GDP growth is also expected to remain flat next year.
"It is estimated that the sanctions that were imposed last year and tightened this year will not have a cumulative effect next year," Jihad Azour, director of the IMF's Middle East and Central Asia department, told Reuters about the report.
The devaluation of the national currency in Iran after the return of US sanctions has disrupted foreign trade and increased the country's annual inflation. The International Monetary Fund has predicted inflation of 35.7 percent this year and 31 percent next year in Iran.
The Director of the Middle East and Central Asia Department of the International Monetary Fund has said that Iranian authorities should align the official exchange rate with the market rate to control inflation.
According to the International Monetary Fund's forecast, Iran's exports of goods and services have decreased from $103.2 billion last year to $60.3 billion this year, and will continue to decline in 2020, falling to $55.5 billion.
Source: DW
