Financial Tribune- The economy minister in his latest press conference elaborated on the country’s oil income and banking system partly in response to the claims of candidates running for president in the May 19 elections.

“In the previous fiscal year (ended March 20, 2017), when all the sanctions were removed and we reached the height of our exports, our oil income was 720 trillion rials ($ 19.2 billion),” Ali Tayyebnia was also reported as saying by Mehr News Agency.

According to the minister, the country must invest three times the amount of that oil income to increase cash subsidies, which would entail a threefold increase in taxes.

If that were to happen, it “would exert a negative effect on the livelihood of the people and manufacturing units, will bankrupt everyone and will increase unemployment”, he added.

His remarks were in response to claims by principlist candidate Ebrahim Raeisi who had said in the latest presidential debate that the country is unable to receive its oil income and he also promised to increase subsidies allocated to the lowest-income deciles of the country by three times.

The economy minister noted that the national income had dwindled by 20% in 2013 and the public felt the hardest blow. This led the government to focus on incomes, but it had to be done by creating stability in the economy and the currency market.

According to Tayyebnia, 950,000 new jobs must be generated annually and this requires an 8% GDP growth that can only be realized when the government and the private sector jointly invest 7.7 quadrillion rials ($) per year.

He underscored the importance of annually attracting foreign investments worth $65 billion and said the confidence of private sector investors and trust of foreign investors must be boosted and coupled with widespread reforms in the banking sector.

The Iranian economy’s government- and oil-centered basis was criticized by Tayyebnia who said these hinder the country’s success in reaching its 8% GDP target.

The administration of President Hassan Rouhani has been emphasizing the necessity of generating tax revenues to replace oil income and lower oil dependency, with Tayyebnia calling it “the most important project implemented in the country” in his press conference.

General reforms in the Iranian banking regime was also a hot-button topic, a main propeller for which have been intertwined with government plans to increase the capital of banks and repay its debt to them.

With the implementation of the plans, “the capital of the government in state-owned banks, which was 112 trillion rials ($) in 2012, has now reached 540 trillion rials ($)”, he said.

“That is because we know that with every single rial of capital increase in the banking system, the lending power of banks is increased by 12 times.”

As outlined by the economy minister, 130 trillion rials ($) of government debts to the banking system were cleared during the previous fiscal year, with a further 100 trillion rials ($) earmarked for the current year.

The minister of economy said the ratio of non-performing loans to total loans has dwindled from 14% four years ago to 10% at present, saying a number of banks have managed to reduce it to 7%.  In response to Raeisi’s claim that the Iranian banking system is still cut off from international banks, Tayyebnia said 250 correspondent banks are now working with Iran, while their number stood at 40 in 2012.

“This is while one of these banks alone has correspondent relations with more than 1,000 banks,” he said.