The Iranian parliament has effectively torpedoed President Hassan Rouhani's plan to make up for the country's nearly 50 percent budget deficit.
Deputy Majles Speaker Amir Hossein Ghazizadeh confirmed at the open session of the Majles on Sunday, August 16 that the chiefs of the parliament's economic and plan and budget committees have protested against Rouhani's plan at an Economic Coordination Council meeting, attended by the heads of executive, legislative and judiciary branches of the government.
Last week, President Rouhani revealed a plan that involved listing Iran's oil in the country’s Energy Exchange and selling oil bonds to the people with a three-year maturity date.
The plan was meant to absorb huge amounts of cash in foreign currency and Iranian rials that the government believes is currently kept at people's homes to make up for the administration's budget deficit.
Meanwhile, Abolfazl Aboutorabi, the MP for Najafabad, said that Majles Speaker Mohammad Baqer Qalibaf and Judiciary Chief Ebrahim Raisi have sent a letter to Supreme Leader Ali Khamenei stating their opposition to the plan.
The plan referred to by President Rouhani as an "economic breakthrough" must be approved by the heads of the three branches of the government before the final approval by Khamenei.
Mohammad Reza Pourebrahimi, the head of the Majles Economic Committee, told Fars News Agency on Sunday that the plan involved selling 200 million barrels of oil for 160 trillion toumans to the people and paying 80 trillion toumans of profit to them on the maturity date.
Pourebrahimi said that the plan will create 260 trillion toumans of financial obligations for the government, which is equal to half of Iran's annual budget.
The government's plan involved building several small refineries and facilitating the export of oil products. However, the government did not explain its plans to achieve that objective, nor why the Rouhani administration would center its efforts around selling crude oil to citizens if they were in fact capable of building and running these refineries.
Meanwhile, Mohammad Saleh Jokar, an MP for Yazd, said that the Rouhani administration is optimistic that the sanctions on Iran's oil industry will be lifted during the next two years, but he did not say how.
Earlier, President Rouhani's Chief of Staff Mahmoud Vaezi also said that the sanctions will be lifted during the coming months. He made the statement despite the fact that the United States plans to activate the snapback option, established in the 2015 nuclear deal with Iran, which would return all previous sanctions as part of its maximum-pressure policy meant to change Iran's behavior. The U.S.’ continued efforts against Iran include encouraging the country to re-negotiate its nuclear deal, give up its ballistic missile development plan, end its destabilizing behavior in the region including the sponsoring of terror, and curb its human rights violations.
During the past two years, following the U.S.’ withdrawal from the nuclear deal, the U.S. imposed sanctions on Iran which have led to a dramatic decline in Iran's oil sale. Some reports say Iran currently exports 100,000 barrels of oil per day, compared to its daily pace of 2.5 million barrelsl before the sanctions.
Iran's current budget was based on selling one million barrels of oil per day at $50 per barrel, but not only Iran's oil sale has dropped, the price of oil has also hovered around just $31 per barrel in the oil market for months. And with the discounts Iran currently gives to buyers, the country in fact earns much less than the $31 per-barrel amount.
As a result of the current economic climate, Iran can hardly expect to export $18.250 billion of oil before the end of the Iranian year in March, with the Rouhani administration subsequently looking for new solutions to recoup its losses, including selling crude oil to Iranians.
As part of the plan, Central Bank Chief Abdolnasser Hemmati has been encouraging Iranians to buy oil bonds, hoping that this would harness the rising inflation and make up for the budget deficit.
However, the Rouhani administration will be out of the office before the end of May 2021, and conservative Majles hopes to see a like-minded president in office by then, and will discourage the new government from entering office in debt and saddled with financial obligations.
A similar plan was proposed in the 2010s under President Mahmoud Ahmadinejad, but remained inconclusive for similar reasons. Meanwhile, economic analysts doubt whether Iranians would trust the Rouhani administration's financial promises, due to citizens’ frustrations with the failure of his economic policies.