Baku, Azerbaijan, Feb. 21
By Khalid Kazimov - Trend:
Iranian MP Ahmad Tavakoli has said that Iran's national budget for its next fiscal year (starting Mar. 21) comes with a deficit of 890 trillion rials (27,500 rials making USD1), Mehr news agency reported Feb. 20.
He said, "The deficit is outwardly zero, but if we deduct the tax revenue from the entire resources and compare the remaining with costs, the real deficit will come out, which was about 1,050 trillion rials but changed to 890 trillion rials with adjustments made to it in the Modulation Committee, meaning 41 percent of the government's public resources."
The MP noted that the government's other resources are to sell oil assets, physical assets, and bonds.
He added that in case the government tries to make up for the deficit by petrodollars, it will lead to inflation.
According to the World Bank's report, oil makes up about 80 percent of Iran's total export earnings and 50 to 60 percent of government revenues.
Tavakoli then stipulated that selling bonds and non-oil assets to make up for the deficit will also have undesirable outcomes.
The lawmaker stated, "In the past 6 years of the previous administration, 1,190 trillion rials of bonds were sold and spent within the framework of the budget plan, which means about 200 trillion rials a year. Now, in the next year's national budget bill and the committee's report, permission has been given on selling 185,000 billion rials of bonds. They have also allowed the selling of civil projects, real estate, movable and immovable properties."
He noted that once the bonds are sold out, it will also lead to bankruptcy or necessitate heavier reliance on oil.
The administration of Iranian President Hassan Rouhani faced more than 100 trillion rials (about $3.2 billion) budget deficit in the first nine months of the current Iranian calendar year, started on March 21, 2014.
The administration's revenues hit 630 trillion rials (about $18.2 billion) in the first 9 months of the current Iranian fiscal year (Mar. 21 to , while the running costs amounted to 1010 trillion rials (about $28.8 billion), according to a report published by the Central Bank of Iran.
The International Monetary Fund says the sharp drop in global oil prices and an uncertain external environment will bring significant challenges to the outlook of Iran's economy.
The IMF released a report last month, saying that Iran's GDP growth reached 3 percent in 2014 after 8.5 percent- contraction during last two consecutive years, but it's expected that the country's GDP growth reach 0.6 percent in 2015. It also estimated that Iran's inflation rate has decreased from 34.7 percent in 2013 to 15.8 percent in 2014, but it's projected to re-rise to 17.3 percent in the current year.