Iran needs annual foreign investment of $30-$50 billion to reach an eight percent growth target and cash in on a nuclear deal with world powers, President Hassan Rouhani said Sunday.
Laying out the budget for the next Iranian year which starts March 20, Rouhani told parliament, a day after the implementation of the historic deal, that the collapse in global oil prices meant the government had to look to abroad to boost the economy.
"Untapped potential in many industries indicates that domestic demand cannot solely push the economy toward eight percent growth," he said, signalling a shift in policy.
"Attracting foreign investment will be the best way of using the opportunity of sanctions relief to boost the economy and security."
Low oil prices and years of US and European Union sanctions that barred much of Iran's foreign oil sales hammered its income from crude.
But despite global prices falling below $30 Iran intends to increase production after the nuclear deal to recoup lost market share.
Rouhani's government used a projected $40 per barrel price and exports of 2.25 million barrels per day -- a doubling of current sales.
Even (Taiwan OTC: 6436.TWO - news) at that level Iran's budget would be less than 25 percent reliant on oil sales, with a much higher 68 percent of revenues coming from taxes.
A 75 percent drop in oil prices, from $110 to $30 meant "oil revenues would not be considerable," Rouhani said.
"Such drastic drop in oil prices has been unprecedented in the past decades and we cannot base economic growth and employment on optimistic estimations."
The International Atomic Energy Agency confirmed Saturday (Shenzhen: 002291.SZ - news) that Iran had carried out measures agreed under last July's nuclear deal, ensuring sanctions would be lifted.
As well as next year's budget Rouhani submitted the Islamic republic's sixth five-year development plan, based on policies set by supreme leader Ayatollah Ali Khamenei, Iran's ultimate authority.
"Reaching eight percent growth requires attracting $30-$50 billion in foreign investment each year," he said.
Iran's budget had been ready and printed for weeks, but Rouhani decided not to present it until the nuclear deal was implemented because it was based on sanctions being lifted.