Bud­get be­trays Iran’s fi­nan­cial cri­sis

Arab News - - Opinion - DR. MA­JID RAFIZADEH

At the end of each year, the Ira­nian gov­ern­ment pro­poses a bud­get bill in the coun­try’s Par­lia­ment (Ma­jlis). Care­fully ex­am­in­ing Iran’s bud­get is crit­i­cal be­cause the nu­ances of the bill can in­form pol­icy an­a­lysts, schol­ars and politi­cians not only about the Is­lamic Repub­lic’s cur­rent fi­nan­cial and eco­nomic sta­tus, but also its prospec­tive mis­sions and spe­cific ob­jec­tives.

Iran’s pro­posed bud­get for this year is in­trigu­ing for sev­eral rea­sons, and is dis­tinct from those of prior years. To be­gin with, the Ira­nian au­thor­i­ties have em­pha­sized that the cur­rent bill is de­signed to sig­nif­i­cantly as­sist the or­di­nary peo­ple by in­creas­ing the min­i­mum wage, cre­at­ing jobs, rais­ing the em­ploy­ment rate, and re­solv­ing peo­ple’s eco­nomic prob­lems. But, from a re­al­is­tic point of view, such prom­ises are im­pos­si­ble to ful­fill.

The pro­posed bud­get for 2019 is just 45 per­cent of the coun­try’s bud­get for the pre­vi­ous year. This is un­prece­dented in the his­tory of the Is­lamic Repub­lic. The bud­get bill that was pro­posed by Pres­i­dent Hassan Rouhani and passed in 2018 was ap­prox­i­mately $104 bil­lion. The cur­rent bud­get bill is roughly $47.5 bil­lion.

The main rea­son for such a de­cline is the de­ci­sion of US Pres­i­dent Don­ald Trump to pull out of the Iran nu­clear deal, and to re­new sanc­tions against the Is­lamic Repub­lic. Al­though the Ira­nian lead­ers dis­miss the move as not im­pact­ing the na­tion, the sanc­tions have put sig­nif­i­cant pres­sure on Iran’s econ­omy, specif­i­cally its en­ergy and bank­ing sec­tors. Ac­cord­ing to the In­ter­na­tional Mon­e­tary Fund, Iran’s econ­omy is of­fi­cially in re­ces­sion.

In ad­di­tion, a sig­nif­i­cant por­tion of Iran’s bud­get re­lies on the ex­port of oil. Ac­cord­ing to the bud­get bill, the regime is es­ti­mat­ing it will ex­port nearly 1.5 mil­lion bar­rels per day at $54 per bar­rel. This presents two im­por­tant prob­lems. First, the Is­lamic Repub­lic is less likely to gain this rev­enue be­cause Tehran’s oil ex­port mar­ket is de­clin­ing and the regime is in­ca­pable of trad­ing with US dol­lar. This will lead to a sig­nif­i­cant bud­get deficit. Se­condly, while the Ira­nian lead­ers, par­tic­u­larly Ay­a­tol­lah Ali Khamenei, re­peat­edly em­pha­size that the na­tion has a re­silient econ­omy in­de­pen­dent of oil sales, the cur­rent bud­get bill shows that the gov­ern­ment has not made any tan­gi­ble ad­vances in ful­fill­ing such prom­ises.

It ap­pears the only in­sti­tu­tion that has seen a no­tice­able in­crease in its bud­get is the

Is­lamic Rev­o­lu­tion­ary Guard Corps (IRGC). In­creas­ing the IRGC’s bud­get while cut­ting other cru­cial pro­grams will not re­solve the peo­ple’s eco­nomic dif­fi­cul­ties. Al­though Iran has an ed­u­cated youth pop­u­la­tion, al­most 30 per­cent of them can­not find jobs. In some prov­inces, the un­em­ploy­ment rate is over 60 per­cent.

In a nut­shell, Iran’s pro­posed bud­get re­veals the eco­nomic cri­sis that Tehran is fac­ing. The in­crease in the IRGC’s fund­ing, while many other sec­tors have wit­nessed cuts, points to the regime’s de­ter­mi­na­tion to pri­or­i­tize its rev­o­lu­tion­ary prin­ci­ples over its cit­i­zens’ needs.

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