TEHRAN, Iran, Dec 23
Trend:
The draft budget for next Iranian year (begins March 21, 2020) depends on assignment of government moveable and immovable assets, said an economics professor in Isfahan University.
Naser Yarmohammadian discussed details of next Iranian year's budget plan in an interview with Trend.
"The governments usually borrow loans and create debts in the final years of their terms to provide the financial needs or assign public companies' assets to secure the budget which is a common model," Yarmohammadian said.
"Two major ways of assigning capital assets is oil and gas condensate sale and assigning moveable and immovable properties," the professor added.
Although the share of oil sale revenues in next Iranian year's budget plan has shrunk to one third, the government increased the number of assignment of moveable and immovable properties by more than ten times, that created more dependency on capital assignment, Yarmohammadian noted.
"While oil and gas are natural capital, government moveable and immovable properties are considered physical assets; their assignment are toxic sources in budget," said the professor.
"If we count the oil revenues in calculating the budget dependency ratio, then without considering the assignment of assets it would be 26 percent in next year budget that is 34-percent reduction comparing to current Iranian year's budget plan," the economics professor added.
"However if we count the moveable and immovable assets, the budget dependency ratio on capital asset assignment sources will be 37 percent that is similar to current year budget plan. The following approach indicates that by final year of the government term it is moving toward assignment of assets to provide finances for its debts," Yarmohammadian said.
"Another approach is increase of debts and budget dependency on advances. The volume of government borrowing loan is reflected in assigning financial assets; the figure has increased 5.2 times in next year budget plan comparing to current year budget plan that shows intense dependency on borrowing," the professor said.
The governments pay part of their debts annually in a method that is called financial assets' ownership.
"A better method to review the volume of government debts in budget is calculating total net debt. It has The figure has increased 5.3 times in next year budget plan comparing to current year, indicating more dependency on borrowing and creating debt. It should be noted that debts include foreign government foreign debts and debts of its public companies," Yarmohammadian added.
"Therefore, the government behavioral model in next Iranian year's budget plan indicates increase of financial assets' assignment by allocating moveable and immovable assets," he said.
"The reason for this model is the final year of this government term, and its policy is explained by the concern over debt payment or asset assignment," the professor added.