Also Iran looking to diversify

Aug 13, 1999 02:00 AM

Iran's economy must be weaned from its dependence on oil exports, which account for 85 % of revenues, First Vice President Hassan Habibi said. "Getting away from oil receipts is the best way to improve the economic structure and move into a stage of transferring to non-oil exports," Habibi told.
"The $ 15 bn in oil receipts were spent to keep the country functioning. "We must make fundamental changes in our economic structure and promote an economy that is independent of crude (oil) receipts," said Habibi.
The past two years' drop in oil prices represented an annual loss of earnings of at least $ 5 bn for Iran compared to what it had budgeted for. Every dollar per barrel that oil prices drop results in a budget deficit of nearly $ 1 bn for Iran, the second largest producer in the OPEC.
The country currently yields 3.7 mm bpd, of which 2.4 mm bpd is for export. Iran's economy is also suffering from a severe drought which hit the rice paddies on the Caspian Sea coast and most other regions of the country this year.
The damage, assessed at $ 2.5 to 4 bn, is forcing Iran to make massive purchases of grain on world markets. The buys are wiping out this year's gains in the price of oil, Iran's main source of hard currency.
Iran's exports come to nearly $ 15 bn, and it imports more than $ 10 bn in goods. The government is also repaying $ 2 to $ 3 bn annually in external debt, which is estimated at nearly $ 13 bn.

Persian carpets account for 36 % of Iran's exports, pistachio nuts for 32 %, and steel and minerals, 15 %. The country also exports chemical products, clothing and plastics. Non-oil receipts are forecast to reach $ 3 bn by the end of the Iranian year in March.

Source: AFP via Iinoil
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