Government Revenues Exceed Spending by $1.19 Billion

EghtesadOnline: Government revenues during the first eight months of the current fiscal year (March 20-Nov. 20) exceeded its spending by more than $1 billion.

News ID: ۷۵۱۶۶۵

08 December 2020

The Budget Law of the fiscal 2020-21 estimated 3,840 trillion rials ($14.76 billion) in revenues for the government in the eight months, of which 3,340 trillion rials ($12.84 billion) were realized, according to the head of Plan and Budget Organization, Mohammad Baqer Nobakht.

“Eight-month spending reached 3,530 trillion rials [$13.57 billion]. In fact, the government managed to economize 310 trillion rials [$1.19 billion] of the total sum it was allowed to spend,” he was quoted as saying by Fars News Agency.

Noting that the expenditure section of the budget is divided into operating expenses and capital expenditure, the official said, “OPEX registered a 35% growth during the eight months compared with the similar period of last year. A total of 1,040 trillion rials [$4 billion] were allocated to emoluments, indicating a 53% increase year-on-year. Also, 520 trillion rials [$2 billion] were paid in CAPEX [development projects], showing a 65% growth compared with last year’s same period.”

Nobakht added that a total of 500 trillion rials [$1.92 billion] estimated in the government’s eight-month revenues did not materialize, while on the side of expenditure, 310 trillion rials ($1.19 billion) were not spent.

“The government was forced to tap into the Central Bank of Iran’s cash resources to the tune of 190 trillion rials [$730.76 million], though it was allowed to use 390 trillion rials [$1.5 billion] or 3% of the budget from the CBI’s cash resources,” he added.

Fiscal 2021-22 Budget Bill

Vice President for Parliamentary Affairs Hosseinali Amiri submitted the budget bill for the next fiscal year (March 2021-22) to the parliament on Wednesday.

Unlike previous years, President Hassan Rouhani did not show up at the parliament for the budget day upon the advice of the National Coronavirus Headquarters.

In the next fiscal year (starting March 21, 2021), the operating budget (including revenues derived mainly from taxation and exports at the disposal of the government) has been projected to stand at 8,413 trillion rials ($33.65 billion at the market exchange rate of 250,000 rials per dollar).

Add to this, revenues exclusive to ministries and governmental institutions worth 884 trillion rials ($3.53 billion), which take the total sum of the general budget to 9,298 trillion rials ($37.19 billion).

The budget of state companies, banks and for-profit organizations has been put at 15,619 trillion rials ($62.47 billion).

All in all, the ceiling set for the government’s total budget is at 24,357 trillion rials ($97.42 billion).

Total tax earnings have been set at 2,515 trillion rials ($10.06 billion), including 591 trillion rials ($2.36 billion) from tax on legal entities, 491 trillion rials ($1.96 billion) from income tax, 238 trillion rials ($952 million) from wealth tax, 235 trillion rials ($940 million) from tax on imports and 957 trillion rials ($3.82 billion) from tax on goods and services.

Revenues from the transfer of capital assets have been projected to stand at 2,255 trillion rials ($9.02 billion). The transfer of capital assets consists of several sections, including domestic sales and exports of oil products. Notably, the government has projected that its oil and oil product revenues will stand at 1,992 trillion rials ($7.96 billion) next year.

The share of the National Development Fund of Iran from oil resources (crude oil, gas condensates and natural gas exports) has been set at 20%. The government is obliged to pay 14.5% of oil revenues to the National Iranian Oil Company and 14.5% of the revenues from natural gas exports to the National Iranian Gas Company.

Earnings from the transfer of financial assets, including sales of treasury bonds, are projected to reach 2,984 trillion rials ($11.93 billion).

On the side of expenditure, the government will spend 1,003 trillion rials ($4.012 billion) on financial assets, including bond interest payments.

It has considered an average of 25% rise in the wages of employees next year. Next year’s salary of government employees and pensioners should not be less than 35 million rials ($140) per month compared with the current year’s 28 million rials ($112).

Income tax exemption for government employees has been set at 480 million rials ($1,920) per year. The current year cap on public and private sector income tax exemption is 360 million rials ($1,440) per year.

The government will pay 428 trillion rials ($1.71 billion) in cash and non-cash subsidies next year as per the budget bill. On top of that, it will allocate 310 trillion rials ($1.24 billion) for the implementation of the so-called Livelihood Assistance Program, i.e., cash transfers as compensation for higher gasoline prices introduced in November 2019.

The government has also envisioned 70 trillion rials ($280 million) for production sector and employment, support for businesses hit by coronavirus crisis and rail transportation, and 263 trillion rials ($1.05 billion) for the Health Ministry, health insurance, the so-called Family Doctor plan, subsidies on pharmaceuticals and baby formula, treatment of patients with special diseases, population policies, and procurement and production of Covid-19 vaccine.

Parliamentarians now have 10 days (as of Wednesday) to study the bill and put forward their proposals to the parliament’s special commissions.

Members of the special commissions of the parliament will then have 15 days to submit their proposals and amendments to the budget bill to Majlis Joint Commission.

The commission is a parliamentary body responsible for reviewing the budget bill as well as the five-year economic development plans proposed by the government before its final ratification.

The commission will have one month to bring the budget bill to the open session of the parliament.

The parliament-approved budget needs the final endorsement of the Guardians Council—the body in charge of ascertaining the constitutional and Islamic nature of all laws.