Iran Gov’t Cuts Back on Spending Amid Growing Budget Deficit

EghtesadOnline: President Hassan Rouhani’s Cabinet approved plans on Sunday to cut down the government's unnecessary expenses.

News ID: ۷۴۶۱۲۰

17 October 2018

Any renting or purchase of new office buildings, recreational or sports facilities, or renovation of office facilities and equipment that will impose additional burdens on the current year’s budget has been prohibited.

Spending on operational expenses must not exceed 70% of the projected in the budget, Fars News Agency reported.

The cost of government officials’ foreign travels or their domestic missions, except for those by the International Department of the Oil Ministry, the Central Bank of Iran and the Atomic Energy Organization of Iran must not go beyond 60% of last year’s outlay, Financial Tribune reported.

In addition, costs incurred by conferences, forums and government organizations must not be greater than 30% of last year’s corresponding figure. Publications, which are irrelevant to the responsibilities of a government organization, have been proscribed.

The spending cuts have been undertaken in light of the government's widening budget deficit.

According to the latest data released by the Central Bank of Iran, the budget deficit came in bigger than expected in the first five months of the current fiscal year (March 21-Aug. 22) and reached 369.1 trillion rials ($2.6 billion).

The shortfall for the period was larger than budget law’s forecast of 137 trillion rials ($982 million) for the five-month period.

The deficit is 102% more compared with the preceding year’s corresponding period.

To cover the shortfall, the government sold 71.7% more bonds during the period under review year-on-year—a total of 397.1 trillion rials ($2.8 billion).

The government’s overall revenues during the five months amounted to 290.4 trillion rials ($2 billion), indicating a rise of 1.5% YOY, while spending hit 659.5 trillion rials ($4.7 billion) to register a 40.6% growth YOY.