Noting that several key reforms will be introduced in next year’s budget, Nobakht said, “For the first time, oil revenues will not be used to fund the government’s current expenditure; they will be committed to development projects only. Other resources will be identified to address needs related to running the government."
“Conducting a thorough review over tax base and hidden subsidies of energy will open up new potential revenue channels. Expanding the tax base is about creating more assets on the tax rolls. For example, capital gains tax and tax on total gross income of all members of households will be proposed among next year’s budget reforms,” he was quoted as saying by the Persian daily Donya-e-Eqtesad.
“Revenues gained from improving the efficiency of the government’s capital investments will also make up for oil revenue shortfalls in the government spending package,” Financial Tribune quoted Hamid Pourmohammadi, the deputy head of PBO, as saying.
“A committee to review the spending of different governmental bodies has been formed; planning and budget experts are tasked with removing excessive, unreasonable expenses. To this end, different organizations might be merged or even suspended."
Pourmohammadi noted that outsourcing to the private sector will also be taken into consideration.
Biennial Budget
Government Spokesman Ali Rabiei said on Monday at his weekly press conference that the budget bill of the fiscal 2021-22 will be attached to the next year’s bills and handed over to the parliament [in December].
Proponents of a biennial budget deal believe that long-term planning would reduce the number of unfinished government projects, given the fact that budget allocations needed to carry the costs of development projects up until their final stages will be envisioned in multi-year budget documents. This will help stop the squandering of resources and the removal of parallel unfinished development projects. Opponents, however, say a two-year budget will lead to further unpredictability of variables.
Inaccurate estimation of revenue and spending is commonplace among Iran’s financial policymakers, which usually appears in the form of a chronic budget deficit.
As a result, long-term planning would empower unpredictable variables and allow room for more of such planning errors.
On Sunday, President Hassan Rouhani communicated the bylaw on the next fiscal year’s budget to all executive bodies.
President Hassan Rouhani signed into law the current fiscal year’s (March 2019-20) budget following the parliament’s approval on April 5.
The budget bill was passed by lawmakers in 27 sessions in less than a month. Its outlines were passed on Feb. 16.
The president submitted the budget bill to the parliament on Dec. 25, 2018.
General resources in the budget bill stand at 4.07 quadrillion rials ($35.39 billion), making them 5.44% bigger compared to the budget law of the fiscal 2018-19.
The Central Bank of Iran's latest available budgetary report to date shows Iran’s budget deficit came in bigger than expected in the nine months of the last fiscal year (March 21-Dec. 21, 2018) to hit 451.1 trillion rials ($3.92 billion).
The shortfall, which was larger than the budget law’s forecast of 243.9 trillion rials ($2.04 billion) for the nine-month period, registered an increase of 17% compared with the same period of the year before.
To cover the deficit, the government sold 8.7% more bonds—a total of 653.7 trillion rials ($5.68 billion)—in the nine-month period year-on-year.
The government’s overall revenues during the nine months amounted to 575.8 trillion rials ($5 billion), indicating a rise of 69.2% YOY, while its spending hit 1026.9 trillion rials ($8.92 billion) to register a 41.5% growth YOY.
The government spent 321 trillion rials ($2.79 billion) on development projects during the nine months under review, posting a 6.2% growth YOY, yet lower than the objective of 468.8 trillion rials ($4.07 billion) set in the budget law.
Notably, tax revenues were estimated to hover around 1,074.3 trillion rials ($9.34 billion), but they reached 771.2 trillion rials ($6.7 billion), registering a 12.8% increase YOY.
The Central Bank of Iran has ceased publishing its budgetary reports ever since.