New Budget Bill in Parliament

In the next fiscal year (starting March 21, 2022), the operating budget (including revenues derived mainly from taxation and exports at the disposal of the government) has been projected to stand at 13,720 trillion rials (about $45.73 billion at the market exchange rate of 300,000 rials per dollar). 

Add to this, revenues earmarked for ministries and governmental institutions worth 1,332 trillion rials ($4.44 billion) take the total sum of the general budget to 15,052 trillion rials ($50.17 billion).

The budget of state companies, banks and for-profit organizations has been put at 22,314 trillion rials ($74.38 billion). 

All in all, the ceiling set for the government’s total budget is at 36,310 trillion rials ($121 billion), about 1,056 trillion rials ($3.5 billion) short of the general budget and that of state companies, banks and for-profit organizations combined.

The budget expects crude oil sales to stand at 1.2 million barrels per day to earn 3,818 trillion rials ($12.66 billion) in the fiscal 2022-23, accounting for about a quarter of the general budget. It has allocated up to €4.5 billion of oil sales to bolster Iran’s defense capabilities, Fars News Agency reported.

The share of tax revenues from the general budget is at 5,270 trillion rials ($17.5 billion).

Notably, for the first time, the budget counts on taxing all car owners with the value of their vehicle exceeding 10 billion rials ($33,333) as well as home owners with a value of their property exceeding 100 billion rials ($333,333). 

The parliament will now go through the details of the budget bill to make any necessary changes before it is passed into law.

Nuclear Talk Outcome Not to Affect Budget 

The Plan and Budget Organization says the next fiscal budget has been drafted regardless of the outcome of talks in Vienna, Austria, where Iran and the world powers party to the 2015 nuclear deal (formally known as the Joint Comprehensive Plan of Action) are negotiating to revive the agreement abandoned by the US during the presidency of Donald Trump.

Negotiators in Vienna made progress in rescuing nuclear talks between Iran and world powers, Bloomberg reported on Friday. 

Speaking to reporters in London, Iranian Ambassador Mohsen Baharvand said negotiations cleared up “misunderstandings” over Tehran’s revisions to draft texts on how to restore JCPOA.

The talks are the first since the Raisi government took power in Iran in August. Iran has held a series of discussions with its Chinese and Russian allies in recent days.

“A senior European official, who didn’t want to be named because of the sensitivity of the matter, said a new Iranian delegation could be expected to first seek to make political points. But negotiators were now advancing in a logical way, hoping to resolve seven or eight major issues,” Baharvand said.

Government officials, particularly the head of Plan and Budget Organization, Masoud Mir-Kazemi, have stressed that the next year’s budget has been drafted without deficit.

Yet, Iranian governments have had a streak of failing to meet the revenues and expenses in the budget year-on-year.

“PBO has seemingly tried to draw up the budget based on economic realities but it has not paid attention to the point that the current year’s budget is on course to run a 4,000-trillion-rial [$13.3 billion] deficit although it had envisioned the sales of 2.3 million barrels of oil per day priced at $50 per barrel. Since oil revenues have decreased by 40-50%, the realization of a budget without deficit for next year is uncertain,” Persian daily Arman-e Melli reported.

In talks with Hadi Haqshenas, an economic expert, he said one of the reasons behind the budget deficit of the last and current Iranian years is that the projected oil revenues were not materialized.  

“Any figure announced as the current year’s budget deficit will range from 3,000 to 5,000 trillion rials [$10-16.5 billion]. The next year’s budget deficit will be 50% more than that figure, assuming that the nuclear talks fail and we won’t be able to sell oil.”