Growth in oil exports reduced 1400 inflation by 24%

Undoubtedly, the increase in oil exports and the receipt of oil revenues has been one of the greatest achievements of the thirteenth government in the first seven months of 1400, an issue that has been repeatedly criticized by President Seyed Ibrahim Ra’isi and Minister of Oil Javad Oji. A space of sanctions has been raised.

According to statistics, Iran’s oil sales in the 13th government have increased to more than one million barrels per day. This, along with the increase in world oil prices to $ 100 a barrel, led to a significant increase in oil revenues.

But there is a fundamental question; If Iran’s oil exports have increased, then why is there no impact on people’s livelihoods?

* Reduction of 227 thousand billion tomans of budget deficit 1400

Fars News Agency in a report entitled “Impact of oil export growth on people’s livelihood / reduction of 227 thousand billion budget deficitHe addressed the issue that inflation, as the main cause of people’s livelihood disorders, is rooted in two issues.Government budget deficit” And “Creating bank liquidityAnd until these two problems are solved, there will be no opening in the Iranian economy.

With the Thirteenth Government’s measures to circumvent sanctions and marketing for the sale of oil, the government’s total foreign exchange earnings from crude oil, gas condensate and natural gas exports increased to more than $ 17.5 billion in 1400 and were able to meet budget estimates. Prevent budget deficits from oil revenues.

According to the Parliamentary Research Center, a 124 percent increase in budget expenditures in the last year of the government of prudence and hope (1400) caused a deficit of 470,000 billion tomans to be imposed on the budget. The increase in oil revenues has reduced this budget deficit by 227 thousand billion tomans and has prevented the intensification of inflation on the country’s economy.

Figure 1 shows the budget expenditures and annual expenditure growth. According to the picture, in the last year of Rouhani’s government, the amount of expenditures has suddenly increased from 571 thousand billion Tomans to 1278 thousand billion Tomans.

Figure 1

In the first step in the 1401 budget law, the 13th government tried to manage the budget deficit and the resulting inflation in 1401 in general by controlling budget expenditures and growing it by only 9%.

* Reduction of monthly inflation after increasing oil sales, according to the Statistics Center

It has been mentioned so far that the increase in oil exports in the 13th government has prevented the escalation of inflation due to the budget deficit. We will now be a little more specific on the subject.

Figure 2 shows the monthly inflation statistics for 1400 compiled by the Statistics Center. According to the Statistics Center, monthly inflation has been increasing from the beginning of 1400 to September, and has decreased until the end of 1400 after the establishment of the cabinet of the 13th government.

Certainly, increasing oil exports and reducing the budget deficit have been the main measures taken by the 13th government to control inflation, and its effect on reducing “monthly inflation” is quite evident. Thus, monthly inflation has risen from 2.7 percent in April to 3.9 percent in September and then dropped to 1.3 percent in March.

In Figure 2, the blue color of the monthly inflation index and the red color show the general trend of inflation changes in 1400.

Figure 2

* Increased oil exports reduced inflation in 1400 by 6%

Figure 3 shows the monthly inflation trend if oil exports do not increase in the 13th government. According to the Statistics Center, inflation in 1400 was 40.2 percent.

Taking into account the new monthly inflation in Figure 3, it is estimated that if the inflation trend of the Rouhani government had continued in 1400, inflation in 1400 would have reached about 46 percent, which is an unprecedented record and a major economic disaster for the country.

Figure 3

In other words, the increase in exports of oil, gas condensate and natural gas in the 13th government caused the annual inflation to decrease by about 6% compared to the previous trend in the year when budget expenditures increased by 124%.

Figure 4 shows the inflation of previous years, according to the Statistics Center. The exponential acceleration of the creation of liquidity in the banking system and the budget deficit of 470,000 billion Tomans could have brought inflation to 45.7%, which ended at 40% at the end of 1400.

Figure 4

* 24% drop in point-to-point inflation by the end of 1400

Of course, the best indicator to examine the impact of oil sales on inflation in the second half of 1400 is the point-to-point inflation index, because the braking of the headline inflation index was largely influenced by monthly inflation in the first six months of the year, which has nothing to do with the 13th government.

According to the Statistics Center, point-to-point inflation at the beginning of the year (April) is about 50 percent and in March it reaches about 35 percent. In other words, the increase in oil sales and the reduction of the budget deficit have caused point-to-point inflation to decrease by 15% in 1400 (Figure 5).

Figure 5

Now, if the previous inflation trend in the previous government had continued in the second six months of 1400, point-to-point inflation would have risen from 49.5 percent at the beginning of 1400 to 58.6 percent at the end of the year (Figure 6).

Figure 6

Thus, if the Rouhani government continued in the second half of 1400, point-to-point inflation in March would have risen from 34.6 to 58.6 and increased by 24 percent.

* The rise of the Rouhani government to break the record of inflation in Iran in 1400

Figure 7 shows the annual inflation rate in the years after the Islamic Revolution. According to statistics, the highest inflation was in 1374 in the construction government, which was 49.4%. If the Rouhani government remained in power until the end of 1400, the inflation rate would have reached 45.7% this year, recording the closest number to the post-revolutionary inflation record.

Figure 7- Annual inflation in Iran after the Islamic Revolution

In total, the impact of increasing oil sales in the thirteenth government has been a reduction of more than 227 thousand billion tomans of the total budget deficit in 1400 and a decrease of about 8% of total inflation and a 24% decrease in point-to-point inflation this year.

According to experts, even a basic idea to solve the structural problems of the country’s macro-economy, even the daily sale of 2 million barrels of oil can not untie the knot of people’s living conditions and rampant inflation.

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