Provincial Spending Package at $13.7b in New Fiscal Budget Bill

EghtesadOnline: The government has allocated 3,536 trillion rials ($13.7 billion) in the spending package for Iran’s 31 provinces as per the budget bill for the next fiscal year (March 2021-22), of which 2,896 trillion rials ($11 billion) will go to the operating budget and 640 trillion rials ($2.46 billion) will be spent on development projects.

News ID: ۷۵۱۶۹۷

13 December 2020

Tehran Province will have the biggest share of provincial spending package next year with 444.81 trillion rials ($1.71 billion) and Qom Province will have the smallest share with 46.62 trillion rials ($179.3 million), Fars News Agency reported.

The resources earmarked for provinces in the next fiscal year won’t be limited to the aforementioned figures, because many of the development projects across the country have been classified under the national budget section that will receive separate funds.

Vice President for Parliamentary Affairs Hosseinali Amiri submitted the budget bill for the next fiscal year to the parliament last week.

In the next fiscal year (to start 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 ($32.35 billion at the market exchange rate of 260,000 rials per dollar).

Add to this, revenues for ministries and governmental institutions amount to 884 trillion rials ($3.4 billion), which takes the total sum of the general budget to 9,298 trillion rials ($35.76 billion).

The budget of state companies, banks and for-profit organizations has been put at 15,619 trillion rials ($60 billion).

All in all, the ceiling set for the government’s total budget is at 24,357 trillion rials ($93.68 billion).

Provincial Shares of GDP

Tehran Province accounted for 22.1% or more than one-fifth of Iran’s gross domestic product in the fiscal 2019-20.

The value of Tehran’s output stood at 7,400 trillion rials ($28.64 billion) in the last fiscal year to grab the lion’s share of Iran's GDP.

Real estate was the most productive economic sector in Tehran, accounting for one-fifth of the province’s GDP.

The industrial sector accounted for 15.1% of Tehran’s total production.

According to a report by the Persian economic daily Donya-e-Eqtesad, citing the Statistical Center of Iran, Khuzestan was the second biggest economy among Iranian provinces during the period under review as it comprised 14.8% of Iran's GDP, despite a 1.6% decrease it registered compared with the year before.

Decline in oil output over the past two years due to the imposition of sanctions is to blame for the downturn in Khuzestan’s GDP. Sixty-eight percent of the province’s GDP came from mining sector, though.

Tehran and Khuzestan constituted more than one-third of Iran's production in the fiscal 2019-20.

With 2,020 trillion rials ($7.76 billion) in GDP, Bushehr was the third largest economy among Iranian provinces during the period.

“Supply of electricity, gas, steam and air ventilation” was the most productive economic sector in Bushehr, thanks to its natural gas and nuclear power plants, accounting for more than half of province’s total output.

Isfahan and Khorasan Razavi ranked fourth and fifth largest economies of the country.

Isfahan’s economy is built on industries: 31% of its GDP are produced by its industries. Real estate also plays a significant role in the economy of Isfahan but not as much as in Tehran. But like Tehran, “wholesale and retail, repair of motor vehicles and motorcycle” has a considerable share in the province’s GDP with 16.3%.

When it comes to Khorasan Razavi, agriculture sector has the biggest share in GDP. The “Agriculture, hunting, forestry, and fishing” sector accounts for 11% of the province’s GDP.

Tehran, Khuzestan, Bushehr, Isfahan, Khorasan Razavi, Fars, East Azarbaijan, Mazandaran, Alborz and Kerman provinces accounted for more than 70% of Iran’s total GDP in the year ending March 2020.

Unlike Khorasan Razavi, its neighboring provinces, namely North Khorasan and South Khorasan had the smallest share in Iran’s GDP. They accounted for 1% of the country’s GDP together.

As the biggest economy, Tehran’s share in GDP is 50 times bigger than South Khorasan's, Iran’s smallest economy. Even Khorasan Razavi’s economy is 10 times bigger than South Khorasan. Agriculture plays the most significant role in South Khorasan’s economy generating 17.6% of its GDP. The positive point about South Khorasan's GDP in the last fiscal year was the increase in the shares of industries and services compared with the preceding year.

Agriculture sector constituted one-fifth of North Khorasan economy, followed by industries, construction and wholesale services.

Mazandaran and Fars had the highest shares of agricultural output in the country with 8.36% and 7.81%, respectively. In the industrial sector, which includes extraction of petroleum, natural gas and other minerals, water supply, electricity and construction, Khuzestan and Bushehr had the highest shares while in services sector, Tehran accounted for 33.41% or 5,280 trillion rials ($20.03 billion) of GDP, the Statistical Center of Iran reported.

Following is the shares of all provinces in Iran's GDP: Markazi with 1.9%, Gilan with 2.2%, Mazandaran with 3.3%, East Azarbaijan with 3.5%, West Azarbaijan with 2%, Kermanshah with 1.5%, Fars with 4.7%, Khuzestan with 14.8%, Kerman with 3.1%, Khorasan Razavi with 4.9%, Isfahan with 5.8%, Sistan-Baluchestan with 1.4%, Kurdestan with 0.9%, Hamedan with 1.2%, Chaharmahal-Bakhtiari with 0.6%, Lorestan with 1.1%, Ilam with 1.2%, Kohgilouyeh-Boyerahmad with 2.2%, Bushehr with 6%, Zanjan with 1%, Semnan with 0.9%, Yazd with 1.8%, Hormozgan with 2%, Tehran with 22.1%, Ardabil with 1%, Qom with 1%, Qazvin with 1.5%, Golestan with 1.2%, North Khorasan with 0.5%, South Khorasan with 0.5%, Alborz with 2.8%, and trans-provincial areas with 1.6%.

The Iranian economy experienced a 7% contraction in the fiscal 2019-20.

The GDP shrank by -0.6% without taking oil production into account.

The sectors of "industries and mines" and ""services" registered a respective contraction of 14.7% and 0.3%.

This is while Central Bank of Iran Governor Abdolnasser Hemmati has put last fiscal year's growth at -6.5%. Excluding the oil sector, he put the growth at 1.1%.

According to Hemmati, the oil sector shrank by a whopping 38.7% amid sanctions on Iran's oil sales.

The sectors of agriculture and "industries and mines" experienced a respective growth of 8.8% and 2.3% while services contracted by 0.2%, he added.

All rial values in the above text have been converted to dollar based on current market rates as of Monday's close.