February 28, 2009
The sharp downward spiral of oil prices has prompted economists to predict that Tehran is facing severe financial hardship within the space of a few months.
Iran’s presidential contenders have to address the budget deficit brought about by the plummeting oil prices and the world banking crisis.
The country’s economy is almost totally dependent on oil, which accounts for 80% of the country’s foreign exchange receipts, while oil and gas make up 70% of government revenue.
Cash rolled in when the price of oil was above $140 a barrel and the country amassed huge foreign currency reserves, but with the price falling to around $40, that revenue has dried up accordingly.
For the first time since the Islamic revolution in 1979, Iranians will turn away from geopolitics and focus instead on the state of their economy when they go to the polls in June.
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