Iran Parliament Votes to Augment Transparency

EghtesadOnline: To help inculcate transparency in statecraft, the parliament ratified one amendment to the next year’s (March 2019-20) budget bill on Monday obliging government-affiliated firms to log their activities in an online system.

News ID: ۷۴۶۷۸۶

26 February 2019

According to the parliamentary news website ICANA, the Ministry of Economic Affairs and Finance and the Plan and Budget Organization are in charge of creating infrastructure by late July for launching an integrated online system to show the performance of government and non-government public companies.

The measure makes it mandatory for the entities as well as municipalities of cities with over one million people to register and regularly update data about their financial statements, budgetary performance, project investments, number of employees (mentioning the types of work contracts and wages) by the end of first half of the next fiscal in September.

The PBO is also required to allow the Economy Ministry and the Supreme Audit Court access the online data. The two bodies are required to report on the performance of companies operating within this system to the Majlis Plan and Budget, and Audit Economic commissions, Financial Tribune reported.

The bill warns that bodies that don’t abide by this law will be convicted of "adverse possession" of government assets.

The Supreme Audit Court is a government agency under the supervision of the parliament. It is tasked with controlling the financial records of ministries, institutions, government companies and organizations that use government funds in any manner.

State Companies' Budgets

The Majlis also tasked the PBO with submitting a detailed report on state-run companies when submitting the annual budget to the legislature. Accordingly, the budgets of state companies should be approved in their annual general meetings and be submitted for parliamentary review in a separate attachment to the annual budget plan.

The government usually presents state companies' budgets as an amendment to the budget bill and MPs review it without making any changes. But as their spending (many of which are loss-making) became heavier demands for closer supervision grew louder.

In cooperation with the Oil Ministry, the PBO is required to also draft the details about the new financial relations between government and affiliated companies of the Oil Ministry within the first half of the next fiscal on Sept. 22 and draw on that report for drafting the 2020-21 budget.

“The report should cover details about revenues and spending pertaining to oil and gas products, clarifying government ties to companies which in turn should boost their performance and corporate identities”.

In addition to the government-affiliated companies mentioned above, the PBO is also required to present in the budget attachment data about the value and volume of shares, dividends, and performance of companies in which the government ownership is below 50%.

Multiple Jobs Banned

Majlis banned the membership of government officials, including senior managers and deputies of executive bodies, to the boards of directors of state and non-government public companies. The ban covers their appointment in all executive positions

In the same vein, the government is obliged to determine the wages and perks of the general directors and members of the board of directors of state and non-government public companies within a month after approval of the new budget law.

Lawmakers agreed on an amendment to the budget bill which proposes 10 trillion rials ($74 million) to be allocated for renovating and boosting cooperatives and help create jobs.

The funds are to be secured via reimbursing debts incurred due to non-enforcement of the general policies of Article 44 of the Constitution on privatization by selling bonds and financial assets.

As per regulations, the government is required to allocate 30% of its earnings from divesting public assets to national cooperatives to alleviate poverty.  The fund is to be given to Tose’e Ta’avon Bank as capital raise to boost its lending capacity to improve cooperatives create jobs.

Article 44 of the Constitution states that the economy pivots on three primary sectors: state, cooperatives, and private.  It was amended in 2004 to allow for privatization of the bloated bureaucracy and downsize the government creating in its wake more space for private enterprise.

In addition, dividends of the Steel Pension Fund’s shares in the Iranian Tobacco Company to the ceiling 1 trillion rials, were approved by the MPs to be used for paying pensions and healthcare bills of steel industry retirees.