Experts differ on expansionary of Iran’s new budget

Azerbaijan, Baku, Mar.10/ Trend D.Khatinoglu/

On Sunday, the Iranian parliament approved a budget for the first quarter of the next Iranian calendar year, which starts on March 21, as the administration has delayed submitting the national budget bill. The parliament postponed discussing the national budget bill to the next year.

The next year's budget bill has increased by 20 percent in amount compared to the current year, amounting to 7.3 quadrillion rials (about $595 billion based on current official USD rate).

The official rate of U.S. dollar was set at 12,260 rials this year, but due to the fact that in new budget bill dollar-based oil revenues have decreased by 39.3 percent, but rial-based revenues decreased by just 1.5 percent, the dollar price has been set at 21,300 rials taking the difference between the dollar-based and the rial-based revenues into account.

According to the Central Bank of Iran, inflation rate exceeded 30 percent in the current year and rial lost 40 percent value against dollar.

Bijan Bidabad, the former senior consultant to the Central Bank of Iran, told Trend that the rise in the national budget would mean that it is expansionary, let alone the inflation rate and the loss of rial against dollar.

However, Ali Mazrooei, the former chairman of the parliament's economic committee, told Trend that considering that the Administration budget has increased by 15 percent and the inflation rate is above 30 percent, the national budget is contractionary, but a predictable budget deficit of 290 trillion rials (about $23.6 billion) will be inflammatory.

Iran's current year budget bill had forecasted oil revenues would hit $51 billion (excluding a 40 percent portion which includes shares of the National Development Fund, the National Iranian Oil Company, and underdeveloped regions). The figure is expected to decrease to $31 billion.

But, a rial-based calculation shows that the figures for current and next year are roughly the same. In other words, dollar has gained significantly against rial.Each crude oil price has set at $95 in budget bill, indicates 11.7 percent growth compared to current year.

Meanwhile, governmental incomes in new budget bill increased by 41 percent.

Tax revenues have been envisioned to reach 530 trillion rials (about $43.2 billion), showing 18 percent growth year on year. In the early March, the tribunal court announced that just 53 percent of projected governmental incomes have materialized during the first nine months of the current Iranian calendar year.

According to Mr. Mazrooei, the deficit problem was a result of economic sanctions, the fall in oil sales, and the decrease in taxes. The problem will be repeated if the sanctions are intensified and oil incomes do not meet expectations. The government is anticipated to face 540 trillion rials (about $44 billion) deficit, he said.

According to him, the next year's forecasted tax revenues do not seem to be materialized.

17 major macro figures in Iran's new budget bill (based on billion rials)

Current solar year

Next solar year

Y/Y percent

budget ceiling

5665610

7305260

28.9

administration's running budget

1442690

1668640

15.6

incomes

653290

919950

40.8

disposing capital assets

698760

673700

-3.6

revenues gained through exporting crude oil and gas condensates

665800

658700

-1.5

oil revenues (in billion dollars)

51

31

-39.3

dollar price set in the budget bill (in rials)

12260

21300

73.7

oil price set in the budget bill (in dollars)

85

95

11.7

disposing financial assets

74980

90630

- 17.3

current expenditures

1010000

1215040

20.3

possessing capital assets (developmental)

373710

397450

- 4

possessing financial assets

34530

80880

134

operating budget deficit

360000

295090

- 10.1

budget of government companies

4211760

5852640

38.9

paying civil servants off (salary)

313740

502130

60

income tax

457000

530220

16

subsidy reform resources

660000

1200000

81.8

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