Iran will need to tap wealth fund for flood damage, ISNA reports

Bloomberg | : Flood damage in western Iran exceeds the government’s budget for disaster relief and officials will have to tap the country’s sovereign wealth fund to cover reconstruction costs, the semi-official Iranian Students’ News Agency reported.

Around 9.5 trillion rials — equivalent to $230 million at Iran’s official exchange rate — of damage has been caused to agricultural fields in the southwestern province of Khuzestan alone, Keykhosro Changlavaee, head of the Agricultural Administration of Khustanestan said, according to ISNA.

The floods that started last month have killed 70 people, according to the state-run Islamic Republic News Agency, and devastated swathes of Western Iran. The waters have destroyed towns and villages, mostly in the provinces of Lorestan and Khuzestan, prompting mass evacuations throughout the area.

“The government cannot finance the heavy cost of the damage alone,” Gholamreza Tajgerdoun, head of the parliamentary commission for budget affairs was cited as saying in the ISNA report. “There needs to be help from elsewhere. The overall cost of the damage hasn’t yet been finalized, but what’s clear is that the damage is greater than the annual budget has allowed for.”

Tajgerdoun said the government will probably have to dip into the National Development Fund, Iran’s sovereign wealth fund, which consists largely of income from oil exports. Iran’s oil sales have declined steeply in the past six months following the U.S. government’s decision to reimpose sanctions on the Islamic Republic’s economy and energy industry after abrogating the 2015 nuclear deal.

Earlier on Saturday, officials said some 36 villages in and around the city of Sushtar in Khuzestan were being evacuated before an expected increase in rainfall that’s anticipated to cause rivers to overflow further in the coming days.

One of the major dams serving Khuzestan, which borders Iraq and the site of several major oil fields, is at risk of overspilling and filled beyond normal capacity, Hamidreza Lashgari, deputy head of Khuzestan’s Water and Electricity Administration, told ISNA. Lashgari warned that authorities may not be able to control the dam if water levels continue to climb.