Iran's budget for 2013 as mirror of economic opportunities

Iran's budget for 2013 as mirror of economic opportunities

Azerbaijan, Baku, Nov. 22 /Trend/

Ellada Khankishiyeva, Trend Analytical Center Head

Iran is preparing basic financial document - the state budget for next year, which begins on March 21, 2013 in the country. The bill will be presented to the Parliament of Iran until December 5.

Based on the fact that Iran hasn't achieved any success in economic terms this year, but on the contrary, mired more in economic sanctions against the country, it can be assumed that the overall state budget for the next Iranian year will be an extension of this year's budget. Iran's state budget revenues for 2012 are projected at 5.66 quadrillion rial (about $461 billion).

Generally the revenue and expenditure side of the budget for next year isn't known yet, but there is no doubt that the budget will be scarce and the deficit will be significant. Thus, Iran expects a deficit of 540 trillion rial (about $44 billion) this year contrary to the strategy adopted for the gradual reduction of the budget deficit. Today, many sectors of the country don't receive even less part of what they should to receive according to the budget.

The reason is the decline in Iran's oil trade by 40 percent this year - the main source of revenue.

The Iranian government has long been discussing ways to reduce dependence on oil revenues of the state budget and looking for replacement options. But as these discussions have not yielded results and an alternative to oil revenues isn't found then expected revenues from the oil sector will again account for a based part of the state budget for 2013. According to the forecasts of Iranian Foreign Ministry, which sometimes go against independent estimates, oil production in Iran will increase annually through the development of joint deposits and reach5.2 million barrels per day by March 2016 compared to the current 4 million barrels.

The rest of the state budget revenues, such as taxes and fees, as well as funds released as a result of cuts in state subsidies for energy, despite their importance, are purely secondary for the country at this stage.

The budget expenditures are mostly composed of funding of direct social spending, which has increased sharply in the current year. The Iranian parliament approved a law on suspension of the governmental subsidization plan's second phase on October 7. According to secretary of Iranian Expediency Council Mohsen Rezai, as a result, cash subsidies to citizens should be raised to 1.1 million rials (about $ 90) per person, from 450.000 rials (about $ 37), which are currently paid by the state.

Provision of production sector with liquidity will also become a priority next year. Iran is planning to independently produce consumer goods, which are currently imported. As in the current Iranian calendar year, about 800 trillion rials (about $ 65 billion) are required for the manufacturing sector of the country to meet the needs, next year, given the ambitious plans to expand the range of manufactured goods, the manufacturing sector will require even more public investment. Iran plans to achieve great success in its defense sector and to achieve self-sufficiency in production of essential military equipment and systems.

The measures to ensure the country's food supply, in particular, the creation and preservation of these resources, will require additional funds from state budget next year. Therefore, if previously food products were stocked for three months, today under sanctions, Iran extended this period to nine months.

The expenses on the state apparatus may be reduced this year as it was done last year, but it will not affect the financing of defense spending, health care, education and science.

During the discussion of the draft budget for 2013 in Iranian parliament the basic contours of the budgetary system will stand out more clearly. But based on the current conditions of Iran's socio-economic and socio-political development, it can be assumed that, in general, except for a strategically important industry, the investment focus of the budget next year will not be strengthened, and the efficiency of the social sector's public expenditure will not be improved through changes in their structure. It is known that the society can afford to have a system of state budget, which most accurately reflects its realities, and Iran's realities today are not a secret for anyone.

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