TEHRAN- Last week, President Hassan Rouhani announced that the heads of the three branches of the government, namely the executive, legislative and judicial powers, would make decision on a plan that would bring about an “economic breakthrough” for the country.

The term “economic breakthrough” was then used by the Parliament Speaker Mohammad-Bagher Ghalibaf, and raised many questions among the officials and also the people, who wanted to know what an “economic breakthrough” it would be exactly.

As the president had announced, during a meeting of the Supreme Council of Economic Coordination on Monday afternoon, Rouhani, Ghalibaf, and Judiciary Chief Ebrahim Raisi, the administration’s top economic figures including Central Bank of Iran (CBI)’s Governor Abdolnasser Hemmati, Head of Planning and Budget Organization (PBO) Mohammad-Bagher Nobakht, Vice-President for Economic Affairs Mohammad Nahavandian, and Oil Minister Bijan Namdar Zanganeh decided to draw up plans to counter oil embargo and redirect the high liquidity, which is partly blamed for the high inflation rate.

First Vice President Es’haq Jahangiri, Presidential Chief of Staff Mahmoud Vaezi, and Interior Minister Abdolreza Rahmani-Fazli were also present at the economic coordination council meeting.

Also, Raisi’s top deputies attended the session. Two top MPs also were present.

At the session, Rouhani elaborated on the ways to counter oil sanctions and manage liquidity.

The proposal by the government's Economic Task Force to counter oil sanctions and manage liquidity was discussed and welcomed. Necessary decisions were also made to finalize it.

After the meeting, Eghtesad News website quoted an informed source as saying that the heads of three branches had made an agreement on the plan for the pre-selling of oil, which should be approved by the Leader of the Islamic Revolution to be implemented.

It is said that based on this plan, the government is to sell 220 million barrels of oil through issuing parallel salaf bonds in a course of one year.

A standard parallel salaf is an Islamic contract similar to futures, with the difference being that the contract’s total price must be paid in advance. 

While the details of the mentioned plan have not been still announced, it has drawn many criticisms.

It is highly doubtful that people would risk their savings in order to invest in oil transactions. Practical feasibility is another question.

But some of those who support the plan say that the government will guarantee that there is no risk of loss for the investors.

They also say that the parallel salaf bonds make it possible for the investors to sell the bonds in the secondary market if needed.

The other criticism on this plan is that it will transfer the commitments made by the present administration to the next one.

Mohammadreza Pour-Ebrahimi, the chairman of the parliament’s economic committee, who is also an advocate of the plan, says, “This plan is for selling the oil through IRENEX (Iran Energy Exchange) and based on the salaf bonds, but we should not transfer the current administration’s commitments to the next administration”.

Speaking in a live TV program on Monday night, Pour-Ebrahimi said, “We should benefit from the capacity of the capital market to reduce the pressure due to the sanctions on the oil exports.”

“This plan helps us to resolve the problems related to the sales of oil in cash, also in collecting the liquidity, which is one of the main concerns of the officials, and leading it toward productive activities, and in this way, it helps the country’s economy”, the MP noted.

But, Ahmad Tavakoli, a former MP, is of the opinion that this plan is “selling the future”. “It’s just moving today’s problems to tomorrow.”

And Hadi Haqshenas, an economic expert, says that selling oil through bonds is a short-term solution to reduce the budget deficit and the main breakthrough is achieved just through modifying the ways for foreign currency’s entrance to the country. 

Receiving all the criticisms and supports, the general outlines of the plan for selling oil in IRENEX based on the salaf bonds has been already approved in the Monday meeting of the Supreme Council of Economic Coordination, as announced by President Rouhani on Tuesday.

Rouhani expressed hope that the government can implement it after receiving the final approval, IRNA reported.

Some say that if just half of the government’s planned amount of financing through selling oil salaf bonds is materialized, it will be a big step to reduce the budget deficit.