Iran to raid $62bn wealth fund as oil prices fall
The IMF estimates that Iran may need oil prices as high as $130 to balance its books
Falling oil prices will force Iran to draw on its sovereign wealth fun, according to Iranian Oil Minister Bijan Zanganeh.
"By drawing upon its National Development Fund to reimburse contractors active in upstream projects, Iran will make up for the impact of the oil revenue decline on these projects," Zanganeh said, according to a report by Iranian news agency Shana.
Iran is hoping to increase its oil and gas output in the coming months, assuming that international sanctions are lifted later in November. If it is to increase output, Iran will need to invest heavily in ageing production facilities and infrastructure. Current oil prices of around $80 per barrel has seriously reduced the money available to do that.
Iran's National Development Fund is worth about $62 billion, according to the Sovereign Wealth Fund Institute.
The International Monetary Fund has estimated Iran needs an oil price above $130 a barrel to balance its state budget; Brent crude is now below $80 a barrel. The IMF estimated last month that Iran would run a general government deficit of $8.6 billion this year, at the official exchange rate.