Azerbaijan, Baku, Feb. 21 /Trend, T.Jafarov/
The EU advisor for economic affairs Mehrdad Emadi believes that the 46 percent increase in the Iranian budget for the next year (the new year in Iran begin on March 21) is caused by the unsuccessful economic activities conducted in the country.
"The increase in the Iranian budget has been caused by two facts - more decline in the expenses as a result of abolition of subsidies and lack of high technical potential of companies that have assumed the economic projects in the country," Emadi told Trend in a telephone conversation on Feb. 21.
On Feb. 20, Iranian President Mahmoud Ahmadinejad presented to the Iranian parliament preliminary draft new annual budget. The Parliament needs 45 days to approve the draft budget. Although the details were not reported, Ahmadinejad stated that the new budget totals $539 billion, or by 46 percent more than last year. The 2010 budget totaled $368 billion.
Emadi thinks that the budget expenses for subsidies were expected to reduce after the abolition of the subsidies, but the situation was not as expected.
"The government expected the budget expenses to reduce 8-10 percent after the abolition of subsidies, and there are several reasons for this. In general, the estimation was not conducted accurately in the implementation of the subsidies abolition project. The implementation of the project was not accurately counted," Emadi said.
The Iranian parliament approved a law to increase the prices of energy resources in October 2009. Under the law, Iran must gradually increase the price of oil and oil products to no less than 90 percent of the energy prices set at the FOB Persian Gulf. The average price for natural gas on the domestic market should reach at least 75 percent (including VAT) of the price of exported gas. Ahmadinejad hoped to reduce budget expenses with the abolition of the subsidies.
Emadi added that the expenses of companies run by Islamic Revolution Guards Corps (Sepah) on the completion of economic projects are increasing every day. "The technical potential of Sepah-run companies is weaker compared to other private companies and it leads to an increase of expenses on works done by these companies," Emadi said.
Over recent years of Ahmadinejad's presidential term, many of the large-scale oil and gas projects in Iran have been given to Khatam al-Anbiya Construction Headquarters of Sepah. Khatam al-Anbiya participates in the development of the 15th and 16th stages of Southern Pars project. Currently the 21st, 22nd and 23rd stages of Southern Pars project is given to Sepah.
Emadi said that currently the companies owned by Sepah and Basij run about 1,800 economic projects. It needs to increase the investments in half of these projects by 20-25 percent, and this forces the government to increase the budget, Emadi said.