Iran Gov’t Scales Back Revenue Forecast From Divestments

EghtesadOnline: The government’s income forecast from selling stakes in listed companies has declined sharply in the proposed 2022-23 budget.

News ID: ۷۸۷۴۳۴

15 December 2021

It expects to generate 710 trillion rials ($2.3 billion) from its remaining stake in several companies during the next fiscal year that starts in March, ISNA reported.

The estimated amount is 25% or 240 trillion rials ($800m) less than the in the present fiscal year. It seems that the inability of the government to realize the projected revenue this year convinced budget planners to change course and refrain from setting ambitious revenue targets.

Upbeat mood in the stock market in the first half of the previous fiscal year created an atmosphere in which the government presumed, albeit wrongly, that it could earn 950 trillion rials ($3.15b) from selling shares in selected companies.

A year before, the government had predicted 115 trillion rials ($383m) from such sale but the real income was over and above that amount as the government tapped further into the rare bullish run in the stock market in the heydays in the first half of fiscal 2020-21.

Total government income from selling shares exceeded 320 trillion rials ($1b) that year. Most of the earnings were from selling shares in giant companies via two exchange-traded funds. The government also embarked on retail sales of shares.

However, when the stock market bubble burst as never before in the second half  of that year, the government tried but failed to find buyers for its shares in assorted listed firms.

Data has it that revenue from selling state-owned assets was zero in the first half of the present fiscal year (March 21-Sept.22). The setback was reported by the Supreme Audit Court (SAC), the supervisory arm of the parliament.

In a report earlier in the month, the Majlis Research Center, the influential parliamentary think tank, said at best the government may realize 30% of the projection or 300 trillion rials ($1b) until March.

Earlier in the month, the newly appointed head of the Iranian Privatization Organization, Hossein Qorbanzadeh, concurred that his organization must make big changes in the privatization policies to be able to move forward.

Companies on the divestment list are giants like the Pars Agro-Industry & Animal Husbandry Company, Esfarayen Industrial Complex, Wood, Metal, Plastic and Electronic Industrial Complex (Sima Choob), South Aluminum Corporation (SALCO), Hegmataneh Petrochemical Company, Shahid Abbaspoor Dam & Power Plant Operation & Generation Company, Yazd Meat Company and Iranian Catalyst Development Company.

Highlight: Upbeat mood in the stock market in the first half of the previous fiscal year created an atmosphere in which the government presumed, albeit wrongly, that it could earn 950 trillion rials ($3.15b) from selling shares in selected companies