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Iran Prepares Plan B Budget For Worst Case Under Sanctions

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Next Iranian year [beginning March 21, 2019] will be an “exceptional year” in Iran’s contemporary history, the head of Management and Planning Organization (MPO) and deputy President of the Islamic Republic has predicted.

Under U.S. economic pressure, Iran’s budget will be prepared in an “exceptional” form matched with the sanctions, Mohammad Baqer Nobakht said, admitting, “The next year is going to be a tough one.”

Nobakht, renowned as a proponent of state-controlled economy, has also noted that a “shadow budget” will be prepared alongside the official one for being implemented in the worst possible future situation.

Although he did not elaborate on the meaning of “shadow budget”, but, apparently, he meant a “back-up” or “contingency” budget exclusively tailored for the worst scenario under renewed U.S. sanctions.

“Even with lack of financial resources, we can somehow manage the next eight months [of the current Iranian calendar year], but the next one is going to be difficult,” state-run news agency, IRNA, cited Nobakht as saying.

Devising a “back-up” or Plan B budget is not a new idea in the Islamic Republic. It was first proposed during Mahmoud Ahmadinejad’s presidency in 2006 but later shelved. President Rouhani’s cabinet also contemplated about it for a while before signing the nuclear deal with world powers in 2015.

Concerns over U.S. sanctions have reached a point that the Islamic Republic authorities have already started talking about storing and rationing food for emergency periods.

Before being sacked by Majles (Islamic parliament) last Wednesday, August 8, Rouhani’s Minister of Cooperatives, Labor, and Social Welfare, Ali Rabiei, had predicted the country will lose one million jobs by the end of the current Persian year on March 20, 2019, under the US renewed sanctions.

“We should be honest with the people and tell them that we are engaged in a real war and we need more public confidence in the government and its rational behavior,” Rabiei said in an interview with pro-reform daily E’temad August 4, adding, “The government, for its part, needs more diligence.”

The new round of US sanctions, targeting Tehran’s access to the dollar, metals, coal, car manufacturing and industrial software markets were imposed last Tuesday. The second round, scheduled for November 4, is going to target Iran’s oil exports and force Washington allies to stop importing Iranian oil.

However, while President Donald Trump has offered to meet presidnet Rouhani without any precondition, his Secretary of State, Mike Pompeo has set twelve conditions for any possible rapprochement between Tehran and Washington.

Meanwhile, to resist the sanctions, a myriad of governmental and academic entities and experts in Iran, including Nobakht, have offered a potpourri of plans.

On July 14, Nobakht in a letter to President Rouhani submitted a “comprehensive plan” to counter U.S. sanctions, Fars news agency reported.

The 12-point plan was a response to president Rouhani’s demand from the Planning and Budget Organization to propose solutions to deal with the impact of US sanctions.

According to Fars, the packages proposed by Nobakht include:

1: Studying impacts of different sanctions scenarios and giving specific tasks to each executive body on how to confront them.

2: Assessment of impacts of sanctions on the general budget and scenarios to compensate

3: Ways to control and manage the growth of liquidity

4: A plan to secure energy supplies under sanctions

5: A plan to supply essential and necessary goods and commodities for the public

6: Plans for sea, railway and air transportation under sanctions

7: Plans for industry, mines and trade under sanctions

8: Methods to transfer the government’s excessive properties to people (stocks and surplus real estate)

9: Facilitated public and private partnership to implement development plans

10: A plan to supply means of living for the poor and decrease absolute poverty

11: Plans to expand production and job creation

12: Preparation of special solutions to confront sanctions in the ICT and IT sector

In his letter, Nobakht underlined that additional parts of the comprehensive plan will be presented to president Rouhani after finalization.